Chancellor Group Inc., Las Vegas, Nev., has agreed to purchase 100% of B&L Co.'s interest in the Shinkle oil field in Greenwood County, Kan., for $1.75 million. Payment will include a maximum of 400,000 restricted shares of Chancellor Group common stock and $750,000 in cash, with $100,000 down and the balance in 90 days. Equity financing for the transaction has been arranged.
The property has 5 million proved recoverable barrels of sweet, 23�-gravity oil. Core samples and detailed technical analysis indicate the field could hold up to 15 million recoverable bbl, said the Chancellor Group.
The group will have a 100% working interest and an 87% net revenue interest in the field.
Shane X.G. Rodgers, vice chairman of the Chancellor Group, said the deal is expected to close in late November. Chancellor will then spend $200,000, including $50,000 for remedial work and $150,000 to drill the first two of 20 infill wells to 1,300-2,800 ft depth. Each well will take about 10 days to drill.
When completed, Chancellor expects the 20 wells will produce a minimum of 60,000 bbl/month, which could double if oil can be produced from the granite wash at the base of the section at 2,800 ft.
Abundant coal seams encountered in the older wells could indicate the presence of coal bed methane gas. Two wells are planned to test this potential next spring. The company also plans a seismic survey early next summer.
