Delta Oil and Gas, Inc. (OTC:BB – DLTA) is pleased to report that Delta and its partners have drilled, cased, cored and logged the first well (the “Garcia #3”) in its new Northwest Premont Drilling and Re-Entry Prospect located west of Corpus Christi, Texas. The Garcia #3 was drilled to a total depth 3,780 feet and was cased, logged and cored in preparation for perforating, testing and tie-in. A completion rig is expected to be on-site within 3 weeks for single zone production. After stabilized production is achieved, additional zones are expected to be perforated. Although the Garcia #3 is subject to “tight-hole” status, Delta can report that the logs and cores indicate as many as 9 pay zones in the Gulf Coast “Frio” and “Miocene” sands with the potential to produce commercially viable quantities of hydrocarbons. Delta and partners are very happy with the tests of the Garcia #3 so far which has proven up the geological projections of the field.
After the Garcia #3 is perforated, tested and tied-in, Delta intends to re-complete 2 previously drilled well bores in the vicinity in which Delta expects to find analogous pay zones to the Garcia #3. Additionally, Progas is considering an offset well to the Garcia #3. Though the parameters of the field are uncertain at this time, substructure mapping of wells drilled in the area indicates it is larger than anticipated with a larger areal extent than most Frio fields. By participating in the Garcia #3, and paying its share of previous development expenses and lease acquisition costs, Delta earned a 10% right of continued development in the field which includes the drilling of no less than 15 additional wells.
Additional information regarding the completion of the Garcia #3 and other initiatives within the Area of Mutual Interest (“AMI”) as it becomes available.
Delta’s Interest in the Prospect
Delta acquired its 10% interest in the Garcia #3 and the continuing development rights in the field on August 20, 2012 by way of an agreement with Progas Energy Services LLC, a Texas Oil & Gas Company (“Progas”) to jointly develop, along with other industry partners, a newly re-discovered Frio and Miocene field located in Jim Wells County, known as the Premont Northwest Field. Delta acquired these interests through a combination of cash and the issuance to Progas of treasury shares at an initial cost of $0.15 per share. The option to pay drilling costs with its securities remains open for the next three wells drilled in this Prospect. The value to be used for determining the issue price of the common shares for future drills shall be based on the average closing price of the shares over a three day trading period immediately prior to receipt of any forthcoming Authorities for Expenditure, but in no event shall Delta issue shares as a payment for less than $0.15 per common share. Delta is fully paid to the point of production on the Garcia #3.
Progas, the developer of the field stated that it was “very happy to have aboard the professionals and experience that Delta brings to the field and its future development.”
The agreement stipulates, among other things, that Delta is able to participate in the drilling of no less than 15 wells, several re-completions and all other wells drilled or re-completed within the AMI. In addition, Delta has been given the right to acquire more than its 10% share if and as more becomes available.
About the Premont Field
Originally the Northwest portion of the field was thought to be a small field extension of the Premont Field. The Premont Field has made over 5,000,000 bbls of light oil and 30 TCF of natural gas from the Frio and Miocence sands at depths of less than 4400’. This agreement to participate in the development of the field included an agreement to drill the Garcia #3, followed by no less than 3 more test wells prior to drilling another 10 wells to delineate the perimeters of the field. The agreement also includes and earns Delta the continued right of participation in the field including the right to participate in additional re-entry wells controlled by Progas.
The Garcia #3 well was the 4th successful well drilled in the field in an effort to discover and prove up the field. The Garcia #3 was drilled to a total depth of 3,780 feet in August 2012. On August 13, 2012 Weatherford logged the well and took 45 sidewall cores in the potentially productive oil and gas sands. Core samples were not taken of several zones, which the operator felt were adequately proven up in offsetting wells. The well was cored with 139 feet of potentially productive oil and gas sands, 3 oil (29 feet of sand) and 6 gas sands (104 feet of gas sands), proving a total of 9 zones for potential hydrocarbon production. Encountering this many zones in a well is quite unusual for the depth drilled but is becoming more common for wells drilled in the field thus far giving Progas good reason to be optimistic for additional drill targets within the Field. Initially only oil sands are to be completed and thereby leaving the gas behind pipe until natural gas prices rebound.
The Primary target of the Garcia #3 was the oil bearing Lower Barnsdall sand which was present at 3,420 feet. The well was a pleasant surprise since the oil sands seem to be much more developed and much higher on structure than anticipated. Logs and cores indicated the presence of the Lower Bardsdall and that is was 11 feet thick. The Lower Bardsdall is 8 feet structurally high to the producing sand in the Garcia #2 well one location to the north which has produced nearly 30,000 bbls to date. The zone has an average porosity of 26%. In addition to the Lower Bardsdall sand, two other sands cored oil: The 16 foot thick Bardo sand (with 2 distinct and separate lobes), and a 5 foot section of the Caddo sand below a 4 foot gas cap. The Bardo sand is 11 feet higher on structure than offsetting wells. It too is showing a 3 foot gas cap which Progas believes will enhance initial production rates as well as the recoverability factor of the reservoir. The average porosity of this sand is also 25%. Offset wells with similar shows down dip, 4–5 locations to the east tested at 59, 89 and well over 100 bopd.
The Caddo appears to be running about 2 to 3 feet higher on structure than offset wells and the oil sand is 4 feet thick under 2 feet of gas, also indicative that this well has both gas and water drive which is expected to allow us to produce much higher volumes of over the life of the well. This zone has a porosity of 24%.
About Delta Oil and Gas
Delta Oil is an exploration company focused on developing North American oil and natural gas reserves. Delta Oil’s current focus is on the exploration of its land portfolio comprised of working interests in acreage in King City, California; Newton County, Texas and South Central Oklahoma.
On behalf of the Board of Directors,
DOUGLAS N. BOLEN, President
Safe Harbour Statement
Statements in this press release which are not purely historical, including statements regarding Delta Oil’s intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. It is important to note that the Company’s actual results could differ materially from those in any such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Our business could be affected by a number of other factors, including the risk factors listed from time to time in the company’s SEC reports including, but not limited to, the annual report on Form 10-K for the year ended December 31, 2008 and the quarterly reports on Form 10-Q filed subsequently. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Delta Oil & Gas, Inc. disclaims any obligation, and does not undertake to update or revise any forward-looking statements in this press release.
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