Page 19 - Sun Resources Annual Report 2013

Normangee Oil Project: Targeting Lower
Woodbine (Sun 50%WI)
On 22 October 2012, Sun Resources announced that,
pursuant to a binding Sale and Purchase Agreement
with an unrelated third party vendor, it had purchased a
50% working interest in a 3,952 gross acre package of
oil and gas leases located on the Leon County-Madison
County border, Texas, USA (Normangee Oil Project). The
balancing 50% WI in the Normangee Oil Project was
purchased by Amerril. Sun’s 50% share of the acquisition
cost was approximately US$3.3 million, which was met
from existing cash reserves.
The Normangee Oil Project extended Sun’s footprint in
the Woodbine Tight Oil Play along the strike of the fairway
which extends from Leon County west and south into
Madison and Grimes Counties. The Normangee Oil Project
is on trend to the southwest of Sun’s existing Delta,
Amerril and Beeler Oil Projects, providing additional scale
to the lease position in the highly prospective Woodbine
Tight Oil Play that Sun commenced building approximately
18 months ago. There is existing oil production in both
vertical and horizontal wells drilled into the Sub-Clarksville
and Woodbine formations, immediately to the east of the
Normangee Oil Project.
Amerril Oil
Project Area
Normangee Oil
Project Area
Figure 4: Location of Normangee Oil Project
The original Woodbine Tight Oil Play discovery field, the
Kurten Field, is only 10 miles (15km) to the southwest.
There is evidence of oil shows in historical vertical
wells located within the boundaries of the acreage that
constitutes the Normangee Oil Project within the Sub-
Clarksville, Woodbine and Buda Formations, again
delivering the potential for stacked pay zones.
Flour Bluff Gas Project
The Flour Bluff Gas Field continued to produce gas and
minor oil at uncommercial rates throughout the period.
Sustained low gas prices since December 2008 precluded
any interest in new investment in the field and a program
of well work overs to increase the production and
profitability of the field. At the end of the reporting period
Sun elected to surrender its interests in all leases relating
to the East and West Flour Bluff field,as well as Pita Island.
This election was accepted by the Operator, Amerril during
July 2013 and Sun therefore has no future interests or
liabilities. This will be the last report on this asset.
Margarita and Redback Projects
Sun retains a net 37.5% working interests in the Margarita
and Redback Projects, onshore South Texas, which
consists primarily of a 430 acre lease covering the TBF
1.46 oil prospect. The prospect, named La Capilla, has
the potential to contain 0.5M barrels of prospective oil
resources in the Lower Frio Formation. The exploration
well for this prospect is available for farmin or purchase
and the company is continuing to progress with its
intention to divest its interests in all these projects.
Thailand (100% Farmout)
Sun announced that 100% of the L20/50 Concession in
offshore Thailand had been farmed out to Siam Moeco
Limited (SML) in October 2012 and as a result, neither
Sun, which held a 45% interest or its partner holding
the balance, Carnarvon Petroleum Ltd, had any further
exploration or development commitments in relation to the
Concession. Terms of the farm out are that SML would
pay CVN and Sun a gross amount of $US8.5M upon the
commencement of commercial production and would also
pay CVN and Sun a 2% royalty capped at $US 10M (Sun’s
share of each being 45% of each). This will be the last
report on this asset.
Malta
There has been no activity during the reporting period and
the Operator, Pancontinental Oil and Gas NL, has ceased
reporting on these exploration areas. As a consequence,
Sun has deleted its interests in this country from its
tenement directory and will no longer report on activities or
record any interests in Malta.
Australia
On 30 October 2012 it was announced that, pursuant to a
binding Sale and Purchase Agreement with Hydra Energy
(WA) Pty Ltd Sun agreed to sell its 9.25%WI in the WA-
47-R Retention License. The WA-47-R block contains the
small, undeveloped Sage field which was not considered a
strategic fit with Sun’s focus on high potential exploration
and production in the Woodbine Tight Oil Play of Leon
County, Texas.
REVIEW OF ACTIVITIES 17