Oil and Gas Exploration, Development and Production in Texas and New Mexico
Permex Petroleum Corporation (CSE:OIL,OTCQB:OILCF) is a junior oil and gas company with over 6,500-acres in assets across the Permian Basin of west Texas and the Delaware sub-basin of southeast New Mexico. The company is focused on identifying, evaluating and acquiring oil and natural gas assets in North America as well as enhancing and developing its current properties. Permex is combining its low-cost development projects with its blue-sky projects for scalable growth, creating value for its shareholders.
Permex acquired its current portfolio in the oil and gas downcycle, which provided the company with significant cost savings. Land prices in the area are currently as high as US$95,000 per acre and were US$2,000 per acre when Permex purchased its assets. Permex’s properties also reside in the Permian Basin, which includes the San Andres, BoneSpring and Wolfcamp formations, all of which are known to be oil and gas-producing.
Permex’s flagship ODC San Andres and Taylor properties are located in Gaines County, Texas in the Midland Basin. The ODC San Andres unit hosts 35 active oil wells, two shut-in wells and 15 water injection wells, while the Taylor unit hosts one producing well and one water supply well. Permex intends to restimulate the producing wells, frac the well that has low fluid entry and bring online the shut-in wells. In addition to this, the company is also considering additional vertical and horizontal wells on the property to increase Permex’s production rate, providing the company with a near-term cash flow opportunity.
The Pittcock properties are located in Stonewall County, Texas. Over the course of 2018, Permex was able to increase its waterflood enhanced oil recovery (EOR) program at the Pittcock North property to 2,000 barrels of water injected per day (bwipd), which is expected to help the company raise its production output as they open new wells and optimize old ones. The Pittcock South property has a cumulative production of 270 million barrels and hosts six producing wells, 13 shut-in wells and two saltwater disposal wells. Moving forward, Permex intends to re-enter 11 wells and drill 12 new wells at Pittcock South.
The Mary Bullard property is located in Stonewall County, Texas, and has produced 177,000 barrels of oil and 2.8 million cubic feet of gas. The property currently has one producing well, four shut-in wells and two water injection wells. Permex intends to restore production in the producing wells and will also be drilling additional wells.
Permex also has two exploration-stage projects in New Mexico: Henshaw West and Oxy Yates. When the Henshaw West unit was formed in January 1966, it had 41 wells that produced 1.735 million barrels of oil. Waterflooding was initiated on the property in December 1966 and produced approximately 2.5 million barrels of oil. The Oxy Yates property, meanwhile, has produced 27,000 barrels of oil and 4.25 million cubic feet of gas. Permex intends to continue drilling and optimizing existing wells to move the projects into production.
Permex has an offset partnership in place with Occidental Petroleum Corp. (NYSE:OXY), an international oil and gas exploration and production company with operations in the US, Middle East and Latin America. The company is also looking at forming partnerships with other operators in the area. Permex is led by a team of experienced operators in exploration, production, geology, engineering, field development and M&A. Management owns 12 percent of shares and looks to increase its position in the company when the opportunity arises.
Permex’s Company Highlights
- Operating in the Permian Basin of western Texas and southeast New Mexico.
- The San Andres formation has produced approximately 12 billion barrels of oil and two trillion cubic feet of gas.
- Permex controls over 6,500 acres of land which was bought at a discount.
- Permex has over 145 oil and gas wells, 72 producing wells, 37 shut-in wells, 34 saltwater disposal wells and two water supply wells across eight properties.
- As of November 2018, the company has proven and probable reserves of 7.69 billion barrels of oil and 8.24 million cubic feet of gas.
- Offset partnership in place with Occidental Petroleum Corp., an international oil and gas exploration and production company with operations in the US, Middle East and Latin America.