American Petro-Hunter Views Recent Gains in Oil Prices as Trend Indicator
American Petro-Hunter, Inc. views the recent price increases of crude oil as extremely positive news for both the economy and the Company. Last week, oil prices jumped to almost $58 a barrel thereby extending gains to near six-month highs on investor expectations that the global economic environment is beginning to grow and may begin to rebound before the end of the year.
Oil has broken above the relative trading range of approximately $45 to $55 a barrel that it’s been at since dropping from a record high of $147 last July. These gains are boosted by investor perceptions that the worst of a severe U.S. recession may be over. Governments across the world, led by the U.S. and China, have announced massive fiscal stimulus packages that should eventually spark economic growth and demand for commodities, said Francisco Blanch, head of global commodity research at Bank of America Merrill Lynch. In addition, Production cuts by the Organization of Petroleum Exporting Countries (OPEC) have helped bolster prices, and the cartel meets again on May 28 to discuss further possible output reductions. OPEC leaders have stated they want oil at $70 a barrel.
American Petro-Hunter’s management believes that a steady rise in the price of oil will occur throughout the year and that prices forecast to be above the $70 per barrel range are both realistic and even possibly conservative given the dramatic drop from last year’s record highs. With this in mind, the Company has moved quickly to secure its first oil acquisition, a low-risk conventional target in Kansas. As a further means of rapidly capitalizing upon the sectors encouraging growth indicators the Company is currently reviewing several promising production purchase scenarios in both the U.S. and Canada.
As announced previously, the Poston Prospect in Kansas targets productive oil formations within Mississippi Dolomite and/or Cherokee sands as indicated by significant 3D Seismic anomalies. The 750 acre block contains a potential multi well program with the first drilling location registered as the #1 Lutters Well. The operator of the project has reported that site preparations are fully underway with drill rig mobilization to the site planned within a week.
In the event of commercial production at the #1 Lutters Well an additional 2 to 3 offset locations are proposed in order to fully exploit the acreage. Engineering estimates of the potential production from the indicated pay zone is between 35 and 100 barrels per day from a successful well. Full development of the field could produce up to 400 BOPD of light oil. There is excellent support infrastructure and transportation access in the area which will easily and cost effectively facilitate regular storage tank transfers to nearby sales depots.
