The company says it has entered into an agreement to acquire a 100% working interest in the North San Ardo heavy oil field in the Salinas Basin, where it has planned an appraisal program including four shallow wells for the first quarter of next year.
This program is expected to confirm an oil resource between 3.3 and 7.5 million barrels and enable field development planning, REL claimed.
“If drilling is successful, there is potential for early oil production from the appraisal wells prior to full field development using steam injection and mostly horizontal production wells,” managing director John Begg said.
The field neighbours the San Ardo Oil Field, which has so far produced over 500 million barrels, he said.
In addition, REL says it has also earned the right to earn a 25% working interest in the South Buena Vista prospect in the San Joaquin Basin by funding 50% of the exploration well cost.
The prospect, which has the potential for 100 million barrels of oil, is scheduled for drilling by the end of this year, it said.
“The South Buena Vista well will test the mapped extension of a thick sandstone reservoit, which hosts a 113-million-barrel oil field immediately to the south,” Begg said.
“The prospect has been generated from good well control and 3D seismic coverage.”
REL and NEG are also in advanced negotiations to acquire a broad portfolio of exploration leases in the San Joaquin Basin, which is expected to result in a multi-well exploration program over the next 24 months, it said.
The company said drilling targets were expected to include established, high flow potential reservoirs in traps either improperly tested or in new prospects mostly defined by 3D seismic.
“The board believes that this acquisition is an exciting opportunity for the company and has the capacity to add considerable value for shareholders, given the prospectivity of the areas being acquired in proven geological settings,” Begg said.
Subject to shareholder approval, the company will issue 15 million ordinary shares and 15 million unlisted options at 30c each to fund the projects.
