CAVU Resources, Inc. Announces Letter of Intent for a Two Million Dollar Acquisition
Friday, August 14th 2009
CAVU Resources, Inc. announced that the Company has entered into an Letter of Intent to acquire all of the outstanding shares of Filo Quip Resources, LLC., in a cash and stock transaction valued at two million dollars. In the acquisition, CAVU will purchase a 140 acre lease in Garvin County, Oklahoma that has two producing wells and three wells that can be completed in down-hole reservoirs.
The two producing wells were originally drilled in the 1950s to the Bromide formation at about 3,000 feet. The wells were re-entered during the 1990s when companies in the area began testing deeper reservoirs. The wells were then deepened to the Oil Creek formation at about 3,800 feet. The two wells are currently producing a combined 40 barrels of oil per day (BOPD).
CAVU plans to re-enter the other three wells on the lease and deepen them to the Arbuckle at about 4,000 feet. On the way, the McLish and Oil Creek formations would be tested. Based upon results of the two producers and other wells contiguous to the lease, CAVU anticipates each of the three wells to have average initial production rates of between 30 and 40 BOPD.
“Based upon results in this field, we are very confident that we should hit our targets for these three wells, which would put our combined production at between 130-160 BOPD,” said William C. Robinson, President of CAVU Resources, Inc. “Some companies have successfully tested the Arbuckle in this area with tremendous results, which provides a nice upside potential for us. There is also some open acreage in the area, which would allow us to grow the project and quickly add to our reserves.”
At current market prices, 150 BOPD would generate about $150,000 per month in net production revenues. Management plans to then leverage its reserves and cash flow to expand the project.
“We believe this area has the potential to be developed and with the drilling of several new wells could quickly become very valuable project duplicating the projected production,” added Robinson.
