Joint Venture – Colorado/Utah
Brownstone is a significant land holder in one of the most vibrant areas in the US oil and gas market. The Rocky Mountain acreage contains multiple prospects in the Piceance, Uinta and Paradox Basins that straddle the Colorado-Utah border. These basins are noted as being some of the most active in North America and are estimated to hold 300T (OGIP) of potentially recoverable natural gas according to a 2005 report from the Potential Gas Agency, a national research group based at Colorado School of Mines. In 2007, Utah produced 386 billion cubic feet of natural gas, and 19.5 M barrels of oil. Colorado is the 6th highest ranking producer of natural gas, Utah is ranked 10th in the United States.
Brownstone currently owns interests approximately 300,000 acres:
(1) Retamco Interests
-164,000 gross acres
-Joint Venture owners:
-Brownstone - 10% (working);
-Dejour Enterprises (Dejour) (DEJ:TSX) - 25% (working)
-Retamco Operating Inc. (Private company) - 65% (working)
-Net revenue interest (NRI) - 77.5%
-Initially acquired June 2006
-Partners had drilled 2 Barcus Creek wells in 2007 before selling them to Retamco (see press release dated June 18, 2008)
(2) Dejour Interests
- 125,000 gross acres
-Joint Venture owners:
-Brownstone – 28.57%
-Dejour – 74.13%
Acquired in June 2008 and include:
North Rangely
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Roan Creek
1,500 gross acres
Williams fork
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Gibson Gulch
2,200 gross acres
Williams Fork/Mancos combination
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Rangely
21,971 (15,700 net acres)
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(3) Georgetown Interests (Paradox / Unita Basins)
-14,000 gross acres
-Joint Venture owners:
-Brownstone - 10%
-Dejour - 25%
-Fidelity Exploration and Production Company - 65%
-Fidelity purchased interests from Retamco and is operator of the acreage (see press release dated June 24, 2008)
Key Highlights of the Piceance/Unita Basins
- The Piceance Basin is a 6,700 square mile area located in the northwest corner of Colorado.
- The Uinta Basin is a 14,450 square mile area located in eastern Utah.
- The Basins are characterized by thick gas accumulations primarily in the Williams Fork Formation. Nearly all of the undiscovered gas resource is unconventional.
- As of 2006, the combined Basins had produced more than 7.3 TCF of gas and 1,525 million barrels of oil.
- Over the past 10 years, more than 9,800 wells have been drilled, creating effective drilling economies of scale.
- Repeatable drilling utilizing the latest completion techniques provide for a 60-80% recovery rate per well, estimated at 100 BCF/section.
- Success per well depends on two key factors: the recovery per well and the number of wells drilled per square mile. Optimal spacing in the Piceance is down to 10 acres, or 64 wells per section and average recoveries of 96 BCF representing about a 65% recovery factor of gas in place. The nature and extent of the accumulations make this an ideal resource play.
- The region features relatively low political, economic and development risk.
- A well advanced pipeline network is already in place and is growing with capacity.
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Further Reading & Related Information
Post Independent: Energy Company Readies to Drill Piceance (05/17/07)
RMN: Marathon is betting Piceance Basin worth returning to the game (05/16/07)
Denver Post: W. Slope wells sell for nearly $1 billion (04/19/07)
Houston Chronicle: Delta to Drill Colorado Acreage (04/16/07)
Post Independent: Pipeline from Piceance Basin to the Midwest will be Nation´s Largest (02/20/07)
Oil & Gas Investor Article on the Piceance Basin November 2006
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