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1. Acquisition Opportunities The Company reviews numerous acquisition prospects to continue making opportunistic investments close to existing operations. An example, in late 1998, the Company purchased Apache’s producing property in the Section 28 Field, St. Martin Parish, Louisiana which is contiguous to the Company’s existing operation in that same field and presents upside potential for remedial work, tertiary recovery, and participation in a large 3-D seismic shoot. During 1999, Termo closed the purchase of a group of properties adjacent to existing Los Angeles Basin operations from Davis Investments. Since 1999, the Company has acquired additional interests in existing properties from other working interest owners that are non-operators. |
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2. Exploitation Producing reserves can be increased by developing and improving existing properties. When a property is purchased, Termo’s staff studies the existing producing wells and determines how improvements in production can be made at a reasonable cost. For example, when Termo purchased the Davis Investments properties in Long Beach, California, the wells were producing approximately 90 barrels of oil per day. By making some rather simple downhole changes and upgrading production equipment, we were able to increase production to 160 barrels of oil per day. Also, in recent years, there have been rapid improvements in technology available for downhole stimulation. Our operations team follows these procedures and implements new techniques whenever possible. Not only do we review properties we acquire, but we also review our more senior properties on a regular basis looking for methods to improve production capabilities. Properties also receive geologic review by outside consultants that are specialists in the areas we operate. |
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3.0 Exploration Exploration for moderately sized domestic oil and gas reserves is dominated by the independent companies. The Company intends to focus its efforts in specific areas that are amenable to 3-D seismic and are within regions in which the Company currently operates and has extensive experience. During 2007, 3D seismic was acquired over The Termo Company's Willow Field properties. Several prospect leads have been identified as drilling targets. Two new wells were drilled and completed in the Aliso Canyon/Oat Mountain Field area last year. In the Powder River Basin of Wyoming, 3-D seismic led to the discovery of two new fields located near Recluse, Wyoming. One of the fields was developed into a water flood project and has recovered over 1,500,000 bbls of oil so far. The second field is producing from the Muddy formation and has recovered in excess of 325,000 bbls of oil and over 750,000 Mcf of gas. |
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