This would be the first time Comet Ridge has worked as operator on a US property.
It has signed a letter of intent to acquire a 75% working interest and 60% revenue in 35 square kilometres of non-producing leases on the Tow Creek anticline in Routt County, northern Colorado, which overlap the four oil fields, the company said yesterday.
Comet Ridge will pay US$697,000 in two instalments to Houston-based Ponder Exploration Ltd, which will be granted a free carry through of US$150,000 in additional leasing costs and the drilling of two wells.
Following the Rocky Mountain Area of Mutual Interest signed in July this year, Comet’s partners – AJ Lucas Group and Strike Oil – also have the right to participate, which could see Comet eventually hold a 25% stake and 20% net revenue interest in the project.
AJ Lucas’ directional drilling expertise would be central to the project.
“These historic oil fields and the adjacent acreage were targeted for acqusition because the reservior characteristics of the Niobrara Formation lend themselves ideally to the directional (sub-horizontal) drilling capabilties provided by Lucas,” Comet Ridge said.
Initial production began in the mid 1920s from the fractured shale intervals in the Cretaceous-aged Niobrara Formation, but the area has seen little activity since the 1970s and 80s, the company said.
In addition to the oil potential in the Niobrara Formation, strong oil and gas shows have been seen in deeper conventional reservoirs on the structure, said the company, which also expects further potential for coalbed methane gas development to exist in the shallower Williams Fork Formation coals.
There are seven named oil fields on the Tow Creek structure that have collectively produced in excess of 5 million barrels, with all, or part of four, of the fields located on the acquired leases.
One notable well – which is an immediate offset to one of the acquired leases – started production at over 900 BOPD, said the company.
Geological, geophysical and reservoir engineering studies will now start in preparation for drilling in the second quarter of 2006.
Perth-based Comet Ridge will be closely watching the progress of two other Western Australian juniors - Elk Petroleum and Louisiana Petroleum - which have been well rewarded by investors for projects that rework old US fields with modern tecnhiques.
