TXCO Resources Inc. (Nasdaq:TXCO) today provided estimated oil and gas
sales volumes for the second quarter and first half of 2008 and updated
current operations. Highlights include:
Record combined oil and gas sales for both periods;
Record Glen Rose Porosity oil sales;
Eleven rigs drilling currently;
A total of 59 wells spudded to date this year.
Net, second-quarter oil and gas sales were approximately 3,690 bopd and
9.3 mmcfd, a combined rate of approximately 31.4 mmcfde, 33 percent
above first-quarter 2008 and a 37 percent increase from last year’s
second quarter.
TXCO Estimated Oil and Gas Sales Volumes*
2Q 2008
2Q 2007
% Change
1H 2008
1H 2007
% Change
Natural gas/mmcf
844.9
644.5
+31.1%
1,510
865.3
+74.5%
Oil/bbls
336,138
240,621
+39.7%
583,386
392,081
+48.8%
Natural Gas Equivalent/mmcf
2,862
2,088
+37.0%
5,010
3,218
+55.7%
Barrels Equivalent/boe
476,963
348,034
+37.0%
835,015
536,306
+55.7%
* 2008 periods unaudited. mmcf=million
cubic feet, bbls=barrels, boe=barrels of oil equivalent
Operations Review
Currently, TXCO has 11 rigs running, including nine on its core Maverick
Basin acreage and two in the East Texas Fort Trinidad Field. The Company
has had record drilling activity this year with 59 wells started through
mid July, and is on track to achieve its record 2008 CAPEX program of
more than $125 million, which calls for drilling or re-entering more
than 100 wells.
In the Maverick Basin, the Glen Rose Porosity play had record quarterly
sales of 226,024 barrels, or 2,484 bopd, a 40 percent increase above the
year-earlier period and the highest quarterly total in the six-year
history of the play. The Company has completed or spudded 18 of 35
Porosity wells scheduled for this year.
TXCO is now drilling or completing four wells targeting the Pearsall
shale gas resource play. The Company performed a horizontal fracture
treatment on the Comanche 34-1H (78 percent working interest) last week.
Four stages were fraced and fluid flowback is under way with 600-900
mcfd of gas at 590 psi flowing tubing pressure, rising slowly. While
initial flowback results were lower than expected, 25 percent of the
frac fluid has been recovered and gas flow is expected to increase as
the well continues to clean-up.
Drilling has been completed and casing set on the Myers 2-683 (100% WI)
and a multi-stage fracture stimulation is scheduled to start by the end
of this month. The targeted horizontal lateral was fully cased and
cemented while the first two fracture-stimulated Pearsall wells used
uncemented liners. Utilizing a nearby offset well, TXCO also will
conduct a microseismic survey that will capture key information from the
stimulation treatment that will improve future frac designs. On the
Briscoe-Chupadera 1ST (50% WI), the lateral currently is being
re-drilled following mechanical problems with the initial horizontal
wellbore. A fourth 2008 Pearsall well, the San Pedro 1H ST (50% WI), is
expected to spud within the next few days.
On TXCO’s San Miguel oil sands pilot projects,
the initial formation pre-heat phase is under way on the steam-assisted
gravity drainage (SAGD) pilot (50% WI). High-temperature steam injection
is scheduled to start during the current quarter and should be followed
by production in the fourth quarter. On the fracture-assisted steamflood
technology (FAST) pilot (50% WI) installation is under way on two, 50
mmBtu steam generators that have been delivered from China. Steam
injection for the pre-heat phase in both the vertical FAST pilot and
horizontal FAST pilot is expected to start during the current quarter.
In the East Texas Fort Trinidad Field’s Glen
Rose play, the MG 1 (50% WI) and Forrest 4H (100% WI) have vertical
completions under way in the lower Glen Rose, while the Forrest 3H (100%
WI) has begun a horizontal lateral that is now drilling in the Glen Rose
B zone after testing determined lower zones were uncommercial through
vertical completions. The Maples 1H (100% WI) was spudded in June and
drilling continues vertically in the Glen Rose interval. A fifth Glen
Rose well, the Shelly 1 (100% WI), is scheduled to spud following
completion of the Maples well.
Management Perspective
“TXCO had an excellent quarter with record oil
and gas sales and drilling activity,” said CEO
James E. Sigmon. “We are making significant
progress not only in the Pearsall shale play but also the San Miguel oil
sands and the Glen Rose play in East Texas.
“We’re building on
results from our initial Pearsall efforts and anticipate that we will
gain more knowledge on how best to complete wells in this emerging play
as we go forward,” he added. “We’re
also learning more about the San Miguel sands as our pilots progress
towards full steam injection and ultimately commercial production
status. We continue to expect record production, reserves and
profitability for TXCO in 2008.”
Property Sale
TXCO is expected to close by the end of the month on the sale of its
interests in 15 non-core properties, primarily in South Texas and the
Gulf of Mexico, to Traditions 2008 Investments, LLC for $9.6 million.
The properties have current net production of approximately 1.3 mmcfd
and 3.7 bcfe of proved reserves. TXCO acquired the acreage through its
2007 purchase of Output Exploration LLC.
Earnings Announcement and Webcast
TXCO expects to announce second-quarter and first-half earnings on
Wednesday, Aug. 6, with a conference call on Thursday, Aug. 7. Also, the
Company will present at EnerCom’s 13th
Oil & Gas Conference, set for Aug. 10-14 in Denver. TXCO is scheduled to
present at 1:55 p.m. MDT (2:55 p.m. CDT) Monday, Aug. 11. A webcast will
be available via the Internet on TXCO’s web
site, http://www.txco.com/presentation.html,
and the conference web site, www.theoilandgasconference.com.
About TXCO Resources
TXCO Resources is an independent oil and gas enterprise with interests
in the Maverick Basin, the Gulf Coast region and the Marfa Basin of
Texas, and the Midcontinent region of western Oklahoma. It has a
consistent record of long-term growth in its proved oil and gas
reserves, leasehold acreage position, production and cash flow through
its established exploration and development programs. TXCO’s
business strategy is to build shareholder value by acquiring undeveloped
mineral interests and internally developing a multi-year drilling
inventory through the use of advanced technologies, such as 3-D seismic
and horizontal drilling. It accounts for its oil and gas operations
under the successful efforts method of accounting and trades its common
stock on Nasdaq’s Global Select Market under
the symbol “TXCO.”
Forward-Looking Statements
Statements in this press release that are not historical, including
statements regarding TXCO’s or management’s
intentions, hopes, beliefs, expectations, representations, projections,
estimations, plans or predictions of the future, are forward-looking
statements and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such statements
include those relating to budget and drilling plans, capital
expenditures, production levels, the timing, number and cost of wells to
be drilled, new projects and expected results, and establishment of
reserves. It is important to note that actual results may differ
materially from the results predicted in any such forward-looking
statements. Investors are cautioned that all forward-looking statements
involve risks and uncertainty, including without limitation, the costs
of exploring and developing new oil and natural gas reserves, the price
for which such reserves can be sold, environmental concerns affecting
the drilling of oil and natural gas wells, as well as general market
conditions, competition and pricing. TXCO undertakes no obligation to
revise or update any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise. More information about potential factors
that could affect the Company’s operating and
financial results is included in TXCO’s
annual report on Form 10-K for the year ended December 31, 2007, and
Form 10-Q for the quarter ended March 31, 2008. This and all previously
filed documents are on file at the Securities and Exchange Commission
and can be viewed on TXCO’s Web site at www.txco.com.
Copies are available without charge, upon request from the Company.
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