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TXCO Resources Inc.

Mon, 1 Dec 2008|



Up next as TX CO resources and can only guess enterprise headquartered in San Antonio joining us they would be hearing current. Thank you everybody. It's our pleasure to be presenting at this conference for the second time -- And we'll update you on other issues activity. The typical forward looking statements read them at your leisure. She XTO resources is an emerging resource company from. We have a tremendous acreage position mostly located in the maverick basin -- -- Southwest Texas we have one point three million gross acres with an hander in 2000 net acres. It's 90% undeveloped most of the development to accomplish in that acreage. Centers around two. Very emerging and significant shale plays the personal shale play and they go for show shale play we have actually the thousands of locations. Is is multiple thousands of locations. Considering the magnitude of the shale plays. From here and 07 reserves for about 92 BC have. Our nine month production was seven point three BCF it's nine months ended 2008. With sales that third quarter of 2.5 BC. And -- most of the key metrics you can see that we're moving in the right direction. We'll see how we look a year from now based on. Commodity prices it's getting a little bit more difficult but I think we'll do just. The slides been updated like everyone. Has has adjusted their budgets -- and ability going you know and I -- Reminded ourselves -- we're going to be drilling out of cash flow for the rest of the way and -- and I. We've spent 130 million dollars this year we'll spend a little bit more will follow probably spend about 60% of that next year. Totally due to the decline in the commodity prices and again another summary of our proved reserves by area. You can see most of our reserves are in the maverick -- we expect that. Piece of the -- and it grows significantly over the next year. Again our production exists mostly in the maverick basin. That that will probably remain about the same on -- percentage basis. We spent our money well over the years when we measure ourselves against other North American companies we we spend our dollars wisely and and have a good reserve growth per -- number. To locate you you can see the biggest the biggest circle there is in the maverick basin is located in central southwest Texas. It's our core area it's the location of our doctors owning for shale plays are going rose porosity legacy play. And our heavy oil project -- currently under way I'll update you on all those here a minute. As I mentioned the pure soft shell was. Is -- to grow we are conducting that activity under two major farm outs when we think -- and and when when Anadarko. There -- also conducting legal for shale play in with Anadarko and on our 100% owned acreage. The San Miguel oil sands is in its early development stage we have two pilots active right now. Say depots injecting steam and the fast pilot is it is appreciated -- of -- we expect. To learn more about those results in the next six months. Two and I kind of zero in on the acreage that you can see there we hold interest and all the colors on the -- The colors are very depending on who are partners are blue would be Anadarko the yellow would be -- can. And the other colors represent a 100% acreage or other. Other partners. The red outline that came in there at the last of that slide is the 3-D area that we have it's. According to the three G coverage it's about 600000. Acres of 3-D. 3-D has been reprocessed over the years and it's quite good quality. Moving to the shale plays this is the view of -- Some of the most important shale plays I guess exist within the country. Hesitated there. The -- -- network we're talking about that part of the country against the but. You can see them ourselves -- -- of normally would for the burner on that map. The thing the thing that we like about our pure soft shale. Is its location relative to the -- who were both sort of on the south suffered these side of this -- line and we're also over pressured. You can see -- here on this comparisons slide which which we have. Comparing the personal. Properties against these other shale plays. You can see that if you look down their sick of from the bottom of pressure gradient in the haynesville being seven to nine PS I prefer it. Is very similar to that we see in the personal -- -- to pack more gas into the force base. Which I think is one reason you're seeing some good productivity -- To estimate. What this could mean to our company we we. Measured the gas and in conventional core. Estimated -- recovery factor. Determine that we had sixteen to 24 BCF per section we haven't build enough wells you have to understand how many wells per section we need to drill. If it's four wells per section you can see with our 533. Net sections that's over 2000 -- -- -- -- world's perception that's over 4000 miles. That's assuming that all -- our acreage is productive and it's probably not all as productive as we like that even at that I think you can see that this represents a tremendous growth assets of the company. And we're pushing it along just as quickly as we can you know. This will give you -- feel for the activity here the thing to note here is the the well that tested three and a half million cubic feet today a couple of months ago -- -- Myers well that was the first well that we completed by -- -- in the liner. We submit in the liner and state track five stages and got actually almost four million and they re. First thirty days of production in that -- was over two million today those numbers with. That number of stages ranks very favorably against some of the other sellers -- thing. Other people have our activity. Has been -- here on the completion side due to a lack of the -- -- available properly. We have tracked our southern most well there on the Anadarko acreage -- might be worth noting that the southern most well. Which is flowing back gas sector -- and our northern most well. The three and a half and you've. Treated very well those those wells are about forty miles apart so this is very very large area. And we don't see within with our existing well control we don't see any difference is really in the rock properties over that very large area. So. Until we get quite a few more wells under bill. You know we're drinkers this to the scope. You see one note there that we're waiting on profit. We're actually going to go in and do slick water for in the tail -- stage. That well while we're waiting on the profit. Some other operators have had good results with no problems with -- tracks we're going to -- we hear with. This is the this is a slide that you've probably seen with other shale plays -- it measures. The volume of rock disturbed by the track versus its initial potential court's initial -- The higher the -- Versus the amount -- -- disturbed as an indicator of the final productivity of the rock or or. The ability of the -- to take the Franken and flown back to gas. You can see that that are personal. Information from from very few whales -- Does indicate that we're gonna range that does lenders to believe it. We're going to see some some pretty meteors -- we get that information and experience and you know. -- -- -- -- -- I'm sure you've seen some of the current. Notices and releases by some other companies in the area. Company and by the way that have more -- experience and we do and and it is encouraging we've got to legal for -- our production right now market to those in the manner. But you see some similarities there I was very go for -- to some of these other shale plays a few. Taken note specifically to the total porosity in the gas -- -- -- remembers -- -- quite quite numbers. We think that that's that's a meaningful. Reason to believe that we're gonna get some good productivity. Well. This is a new representation here where we think this -- will go -- to -- where acreage is it does seem to be separated into two. Two relatively distinct windows we have to the south the -- -- -- window which covers a very large area it encompasses the new picture -- announcement there and soft -- And it continues west and a little bit north across most of our acreage as you go further notes on our acreage block staying in the US. We have seen from our growing that we do get a lot more compensate rich production. So we think we're -- a possible for her way up there. So how big is the -- for potential we did the same exercise here. Measuring just the amount -- resource in the guest come and -- window we have no comment here on the -- potential. As you can see based on the large acreage block that we control. The potential is quite large at seven to ten to see. To update you on the activity. Again on these same maps you can see that. In the yellow -- to the self -- Anadarko -- an area. Are scheduling a reentry we've got two wells on production. Those wells were and cemented liners. They were not perforated and they were five -- only. You would contrast that with scripture talks example. Ten stages two million pounds of profits versus -- 700000 pounds. With us 300. Feet between stages. Over 3000 feet we did five stations 500 feet each over -- 500 feet. So there track obviously disturbed more rocks and we did and they got a higher rate. And next attempt from us will be two conduct a larger cracked a longer lateral to see if we can increase the rate similar to what. -- uninteresting well that Russians within the next week. Moving to -- heavy oil resource play this is. And heavy oil assets zero gravity -- -- about 15100 feet located also and maverick -- But ignored me -- estimate their seventh to ten billion barrels of oil in place. The median estimate of recoverable oil net -- on acres that we -- 600 million barrels. You can see by the black -- the location of our current pilots the southern pilot was saying -- is currently steaming injecting steam in the program forming its steam chamber. We're starting to see -- of world coming back. But nothing is significant -- if you're familiar with this type of a production it does take us several months for two. Heat up the -- were sufficiently to maintain constant flow and we're just beginning to get into that phase right now. The fast pilot to the north -- vertical five spot pattern officer about wars -- old modified files. Both are steaming and -- as we speak we expect to start injecting within the next. Few weeks -- so we expect to see results from these two pilots. Second quarter -- the first quarter into the second quarter next year you need some kind of timeframe behind you to match your production histories. To your simulation models and see. -- estimates are correct -- If you haven't seen what is saying he looks like it's simply to parallel one above the other horizontal wells. From the upper one. Inject steam or one produces the -- And it's well proven process in Canada it's what. It's what all the non mind Canadian assets essentially. Again just some photographs of our steam generator facility there to fifteen million -- -- generator came from China. Quite an extensive project together. Under way themselves fixes this is the fast pilot. You can see that it's a five spot you have and inject her with four producers on the corners. You track the wells and then. Keep the risen work through those Phrack perforation. And inject an increase -- preparations in the -- And produced pushed the oil to the five. Wells on the corners of the five -- It's technique that was perfected by -- go back in the eighties in this exact same area. They in fact produced 300000 plus barrels of oil out of -- that they did. We're simply. Duplicating them that. Technology -- to determine its economics under present day present day conditions. Again some photographs of the surface equipment there. Moving on to our legacy oil play -- Glen rose porosity this remains. An area where we continue to spend quite a bit of money it'll it'll take it probably took 50% of our budget this year maybe a little more. That we have a high degree of success here -- these wells. Coming and -- and high rates of world 400 to 600 barrels a day choked back. We have. Good good results here drilling off from -- high resolution 3-D seismic data. We'll continue to drill here. Continue to see good results. If you. Look me in more detail on our 3-D seismic you can see these are these are and these are seismic amplitude -- seismic apple to -- present. High porosity in case within a very very -- limestone. Amplitude is an indicator of the -- for Andy and 80% of the cases hundreds of course -- of war. Can -- do we inner terrorism or horizontally. -- -- higher structural position. To delay or limit the amount of water in flux. And are successors been quite good you can see over time that we've. Bill production and maintained its level if not slightly increased to -- lately. And even though this is maturing as a field we still see we still see some very very good results drilling these institutes. Of course we've been taking a look at the this is still the players who wanna spend our money considering. Considering commodity prices -- actually did this slide before the crisis came down we didn't think we needed fifty dollar. Flying on there. We certainly do not want -- -- point five but. You can see the net our existing. He Yorker royals about a 130000 barrels were quite quite good on and I are basis. If you back down the recoveries which is the reason we did the slide we want to understand the return on our many if the targets. Got smaller and and you can see -- -- and even fifty dollar world still see some very good returns. So that's kind of what we are as a company. We continue to grow we we continue to. Pursue some very very large opportunities for a company our size every one of those things that you've looked at with the exception of our legacy will play in the -- -- for Austin's. There's definitely a company maker play. We've adjusted our budget for 092 drill out of cash flow and to focus on these plays -- specifically the curse on me before. And we're looking for a price of two hopefully sometime around mid year you'll be able to increase our growing. Levels -- that. Thank you very much and I'll be in the breaker -- driven from the question.

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