Past Successful Operations & Discoveries
Oletha Field (Travis Peak), Limestone County, Texas
The Oletha Field is located approximately 12 miles southeast of Groesbeck, Texas in Limestone County. The field was originally discovered in 1951 by The Texas Co. (Texaco). Texaco drilled a total of eight wells in the Rodessa carbonate section from 6788-6804′. Three additional producing wells were drilled by independents. In February 1992, the company leased, assembled and discovered the Oletha (Travis Peak) field with the Lula Mason #2 being perforated between 8969-9031′. Prior to the field’s sale in 1999 to Marathon Oil Corporation, HSP along with its partners drilled and operated an additional thirty- three wells (three dual completions). Two wells were drilled, plugged, and abandoned. There were two Cotton Valley Sand completions, 27 Travis Peak completions, and one Rodessa completion. Between May 1992 and December 1999 the field produced 50+ BCF of gas. The field consists of approximately 7,100 acres held by production and an additional 2,000 acres northeast of the field.
The development of the Oletha field (Travis Peak) was almost entirely accomplished with cash flow from the completed wells. Between 1992 and the ultimate disposition of the field to Marathon Oil Corporation in December 1999, the company and the working interest holders made 41.75 times their initial investment and received cash flow and sales proceeds totaling $108.6MM. The IRR was 309% per year over the eight year project. Oletha Field has made 101 BCF and 140,000 BC to date.
Kincy Field, Grayson County, Texas
The Kincy Field is located south of Dexter, Texas in Grayson County and was discovered by the company in 1995. The company acquired leases on approximately 1145 acres. HSP shot 13 square miles of 3D seismic to delineate the field. Multiple prospective well sites were identified utilizing the 3D seismic and available good shallow well control data from adjacent leases. One Oil Creek Sand well and four Davis Sand wells were completed. The company currently owns and operates the Kincy Field. HSP’s IRR on the field has been 130% per year.
|Kincy Field – Operational Statistics|
|Total Historical Production from 1996-2014||1,900,200 BOE|
|Remaining Reserves||978,190 BOE|
|8/8ths Finding Cost||$0.90/BOE|
R & C Petroleum, Inc.
On May 6, 1994, R & C Petroleum, Inc. (“R&C”) entered a voluntary petition Chapter 11 bankruptcy filing in the United States Bankruptcy Court for The Eastern District of Texas in Tyler, Texas. On March 28, 1995, Netherland, Sewell & Associates, Inc. estimated R&C’s net PDP oil and gas reserves to be 123,121 bbls and 11,499,019 MCF. R&C’s PUD oil and gas reserves were determined to be 23,163 bbls and 3,226,080 MCF. R&C’s PV10 was estimated to be $14,075,300 by Netherland, Sewell.
On June 22, 1995, the company submitted the winning bid to the bankruptcy court trustee to purchase 100% of R&C’s working interests located in Smith, Gregg, Harrison, Panola and Wood Counties, Texas. The company’s tax basis in the R&C properties was approximately $4.04MM. The company operated the remaining R&C properties until September 30, 1998 and received total monthly net income before depletion allowance of approximately $3.14MM. On October 1, 1998, the company sold its interests in the project for $2.45MM. The company held the R&C properties for three years, during which time it received a 97.9% return on its investment.
Eanes Field, Montague County, Texas
In 1999 the company began a regional study of the Eanes Field located near Bowie, Texas and concluded that the Eanes Field could be extended further west. The company acquired leases covering 1071 acres and shot 3D seismic. The company found a new Ellenberger horst block trap in addition to other prospective well sites. In May 2000, the company drilled the Hickman #1 to a depth of 6700′ and made a discovery completing the well in the Ellenberger dolomite. The company drilled and completed four additional wells, including completions in the Ellenberger dolomite, Mississippian Reef, Atoka conglomerate, and Caddo conglomerate. The company currently owns and operates this field. From 2000-2014, the company realized a net internal rate of return on its working interest of 59.9% per year.
|Eanes Field – Operational Statistics|
|Total Historical Production from 1996-2014||254,430 BOE|
|Remaining Reserves||77,465 BOE|
|8/8ths Finding Cost||$8.50/BOE|
Big Indian Field, Grayson County, Texas
Big Indian Field is located in the Lake Texoma area near the Texas-Oklahoma border about 75 miles north of Dallas, Texas and about 5-7 miles southwest of Pottsboro, Texas in Grayson County. The field is comprised of approximately 2,462 gross contiguous acres. The field was discovered in 2003 by the company. The discovery well, the Bryan #1, encountered 200’ of net pay in multiple Red Strawn and Gray Strawn sands. As of August 2005, a total of 10 wells were drilled in the field with eight wells being completed as producers. In August 2005 Haas Petroleum Engineering Services, Inc. estimated the net PDP, PDNP and PUD reserves to be 4.1MM BOE. The company’s finding and development costs were approximately $7.56/BOE. In August 2005 the company sold the Big Indian Field to Chesapeake for approximately $68 million on an 8/8ths basis.
|Big Indian Field – Operational Statistics|
|Total Proved Reserves Sold||4,120,183 BOE|
|Total Production 2004-2005||450,107 BOE|
|Total Production CHK 2006-2010||748,771 BOE|
|8/8ths Finding Costs HSP||$7.56/BOE|
|CHK Acquisition Cost||$16.50/BOE|
Dornick Hills Midstream, Ltd.
In November 2004 the company formed Dornick Hills Midstream, Ltd., and with its partners acquired a 24 MMCFPD capacity gas processing plant located in Grayson County, Texas. The partners contributed $10MM in equity. Dornick Hills enhanced the efficiencies and operations which substantially increased throughput and cash flow. In October 2006 the plant was sold to SemGas. The partners received $65MM net or 6.5 times their original equity investment in their two-year investment.