SYDNEY, AUSTRALIA: Winchester Energy Limited (ASX: WEL) announced the acquisition of a 100% working interest in the Varn Oil Field, located 18 miles to the east of Winchester’s existing producing assets in Nolan County, Texas.
The Varn Oil Field contains existing Proven and Probable (2P) of 1,068,000 barrels of oil (boe) comprised of 994,000 barrels of oil and 442 thousand cubic feet of gas (mmcf).
Production is derived from the Fry Sands (a sub-unit of the Strawn Sands) which, together with the Ellenburger Formation, is currently producing 611 barrels of oil equivalent per day net to the Company at Winchester’s existing Nolan County operations.
With an up-front acquisition and development cost of US$5.61 per barrel of oil equivalent that will be exclusively funded from existing cashflow, Varn represents a significant advancement in Winchester’s strategy of acquiring high-impact oil and gas projects that add substantial value.
Winchester Non-Executive Director James Allchurch commented: “With the cashflow currently being generated from Winchester’s net 611 boepd Nolan County operations, the Company has been reviewing a host of opportunities to which we think our highly-skilled Houston-based operations team can add immediate and significant value.
“At a gross upfront cost of US$415,000, the Varn transaction adds over 1 MBOE of 2P reserves to our inventory with the prospect of production commencing early next year. When combined with the MoU signed with leading US-based stranded gas technology company CryptoTherm, this is a compelling transaction in the current strong oil and gas market.”