since 1986 - MONOCO PETROLEUM, INC. Established 1986 MPI

SINCE 1986
McMullen County, Texas
30+ BCF per Well
100 - 300 BCF Potential
89% W.I. & Operations Available
LOCATION: 10 miles south of Tilden in McMullen County, Texas.
1,216.5 Acres
16,800 Ft.
ON STRIKE: Clifton Wheeler #1 produced 32.6 Bcf (Sligo)
Sligo: 1000 Acres x 90 Ft. Net Pay x 825 Mcf/Ac.Ft = 74 BCF
Edwards: 640 Acres x 70 Ft. Net Pay x 825 Mcf/Ac.Ft. = 37 BCF
AFE: Dry Hole Cost: $6,654,250
Completion: $1,744,188
Total Est. Cost: $8,398,438
TRADE TERMS FOR 89% W.I.: This offer is subject to prior sale or removal from the
market at any time at the sole discretion of MPI.
1) $950,000 for Geological, Geophysical, Engineering, Land, and Legal expenses.
2. 1/3 for 1/4 through hook-up on 1st well only.
74.5% NRI
Olmos: Productive on North side of the La Jolla Lease (AWP Field)
Lower, Middle & Upper Wilcox Sands:
Yegua/Jackson/ Cole Sands:
938 Kingwood Dr Suite 828
Kingwood, TX
Productive in the area
Productive in the area
TEL. (281) 358-5400
SINCE 1986
The La Jolla Prospect Overview
McMullen Co., TX
The Cretaceous age Sligo and Edwards reservoirs along the Gulf of Mexico basin have proven to be
prolific gas producers when sufficient porosity and fracture induced secondary porosity are developed.
Faulting and fracturing within the Sligo sequence are effective fetch mechanisms for reservoirs when
wells are located close to the fracture sequence.
Well control is limited to offsets two to three miles along the Cretaceous reef. Penetrations along the
shelf near target area have proven to be capable of producing 4 to 32.6 BCF with sustained rates in
excess of 15MMCFPD. The Edwards and Sligo have not been penetrated in the target area.
The target area comprises approximately 1,250 acres in McMullen Co., TX. It is prospective for Sligo
and Edwards reservoirs southwest of a reef structure which was penetrated by the Clifton Wheeler
Kilroy #1 and produced 32.65 BCF in 12 years. This well had gas to sales of 17mmcfgpd, averaged
16MMcfgpd for the 1st year it produced, and was still making 8mmcfgpd after producing 20BCF. The
well holds title to the largest production unit ever assigned by the TRRC to a single well.
This area has recently processed 3-D seismic data which has significantly added to well performance
analysis and identification of additional exploration targets. 3-D processing reveals a structural high in
the subject area that is likely to contain Sligo and Edwards sections relatively high on a reefal structure.
The risk factor in the target area is based on locating a penetration close enough to the shelf margin
interval to encounter a high porosity/permeability section of the reservoir, encountering gas filled pore
space, minimizing reservoir damage and being able to effectively stimulate/complete the well.
Seismic Summary
3-D seismic indicates a wedge shaped reef structure along the Sligo which is most productive along the
edge of the Sligo margin. The paleo structure at the prospect location indicates similar reef development
to the reef in the area of the Clifton Wheeler #1. Structurally, the proposed drill site is slightly high or
flat to the Clifton Wheeler #1. The seismic anomaly (pull down of the second peak within the upper
Sligo formation) occurring at the Clifton Wheeler #1 also is found in the prospect area. The seismic
2902 Valley Manor
Kingwood, TX 77339
TEL. (281) 358-5400
FAX (281)358-5554
velocity control is from the Texas Gas Clifton Wheeler #2 located 10200' northeast of the proposed
location and 6000' southwest of the key well, the Kilroy Clifton Wheeler #1.
La Jolla Prospect (cont.)
Page 2 of 5
Seismically there are three major factors in determining the Sligo Prospect:
(1) Paleostructure of the Sligo reef was mapped using an isochron thickness of the overlying sediments
immediately above the Sligo formation. Thinning of the overlying sediments indicates areas where the
Sligo reef was best developed. This thinning is observed on the 3D seismic occurring from the
southwestern edge of the prospect area to an area northeast of the Clifton Wheeler #1, trending thirty
thousand feet in total length and two to three thousand feet in width. A similar, but not as well
developed, reef feature is seen in the area of the Glau #1 and Rives #1. Also a thickening or less welldeveloped area is found immediately around the Clifton Wheeler #2.
Paleostructure is key to determining the best development of the Sligo Reef, therefore the thickest and
hopefully highest porosity reservoir rock. It also indicates areas of facies change where the reef is not
well developed, as in the areas around the Blankenship #1. The reef facies trending from the area
northeast of the Clifton Wheeler #1 and extending to the southwest edge in the prospect area ends and a
low energy, fine sediment environment begins and extends to the area near the Glau #1 and Rives #1.
The sediments of this low energy environment produced rocks with little permeability and porosity and
form the updip trap for the prospect.
(2) Present day structure of the Sligo formation was mapped using a seismic peak coinciding with the
log top found in the Clifton Wheeler #1 and #2. This peak also fits relatively well with other logs in the
area. Structurally, the Sligo top at the proposed location (3.460 seconds) will be slightly high to the
Sligo top found in the Clifton Wheeler #1 (3.464 seconds) and considerably high to the Clifton Wheeler
#2 top at 3.496 seconds. Velocity at the Sligo depth is around six feet per millisecond. Although the
Glau #1 and Rives #1 Sligo tops are high to the tops found in the Clifton Wheeler wells and the
proposed location, they are separated by the facies change found on the southwestern edge of the
prospect area.
(3) A seismic thickening in the upper Sligo section seen in the Clifton Wheeler #1 also occurs in the
prospect area. The second seismic peak below the Sligo mapping peak does not conform to reflectors
seen above it. There is a seismic flattening or pull down of this second peak indicating possibly porosity
development and hydrocarbon. This seismic anomaly is not seen in Blankenship #1 and is not well
developed in the Glau #1 and Rives #1.
Edwards Potential
The Edwards formation is reportedly producing several MMFD in the Clifton Wheeler #1 that is on
trend northeast of the prospect area. The Blankenship #1 that is southwest of the prospect also produced
90 MMCF from the Edwards. Although there are few penetrations and fewer tests of this formation in
2902 Valley Manor
Kingwood, TX 77339
TEL. (281) 358-5400
FAX (281)358-5554
the immediate area, geologically the Edwards is probably not reefal (shelf edge) at the prospect. The
production in the area is probably more dependent on fractures. The best place to find fracturing would
be where the formation drapes over previous structural highs (the Sligo reef), as is the case in the
La Jolla Prospect (cont.)
Page 3 of 5
prospect area. Although most of the Sligo relief would be compensated by subsequent deposition, the
softer sediments around the hard Sligo reef would differentially compact allowing for drape and
fracturing of the Edwards.
La Jolla Sligo Reservoir Evaluation
The geo-pressured high temperature Sligo and Edwards reservoirs appear to respond best to low water
loss - water based mud with HCL as a cleanup/stimu1ation fluid. An acid induced hydraulic fracture in
this area could also yield excellent potential for encountering multiple fracture and porosity sequences
adjacent to the wellbore. As described in the Summary a chance factor of success of 58% is
recommended for the initial penetration in the target prospect area.
This report documents analysis of the reservoir potential of the Sligo reservoir in the target area. The
analysis focused on the potential performance of a prospect to the west-southwest of the Kilroy# 1 well.
The study utilized volumetric analysis; and decline curve analysis of the Kilroy # 1 and other Sligo
producers in the area. The extensive 3D seismic data over the prospective area was also used to
determine drainage areas of other producers including the Wheeler # 1 well. The drainage area of the
Kilroy #1 was carefully analyzed, given the prolific amount of gas produced from the well.
This is of importance to ensure any offset wells would not penetrate an area which could have
experienced pressure depletion from the Kilroy # 1. The result of the analysis indicates potential for
additional wells along the shelf margin of the Sligo reservoir west-southwest of the Kilroy #1 well.
Clifton Wheeler # 1 Performance
The Clifton Wheeler #1 was spudded in 1982 as a test of the Lower Cretaceous reservoir sequence. The
well penetrated approximately 260' of the Sligo with 140' of net pay indicated by open hole logs. The
Sligo was cased with a 5" liner and 90' of the section was perforated. After a 15,000 gallon acid wash
the well flowed 7.7 MMCFPD on a ¼ in. tubing choke at 11,850 psi flowing tubing pressure. A
subsequent four point back pressure test was performed indicating an absolute open flow potential of
111mmcfgpd. After surface facilities and a pipeline tie-in were installed the well was placed on
commercial production at approximately 17 mmcfgpd.
Clifton Wheeler # 1 Drainage Area
2902 Valley Manor
Kingwood, TX 77339
TEL. (281) 358-5400
FAX (281)358-5554
Decline curve analysis of the Clifton Wheeler # 1 indicates a predominately depletion drive mechanism
in the Sligo with production at 8 MMCFPD after 20 BCF of production and 2.7 mmcfgpd after 31.6
BCF production. There is however some indication of pressure maintenance. This pressure maintenance
La Jolla Prospect (cont.)
Page 4 of 5
is likely from a weak water drive or matrix drainage of gas into the fracture sequences as drawdown
increases during recovery. The well was abandoned at approximately 100 MCFPD and cumulative
production of 32.65 BCF. Reservoir calculations & 3-D analysis corroborate a conclusion that the
drainage area for the Clifton Wheeler Kilroy #1 was likely between 360 to 420 acres.
Sligo Production SW of Prospect Area
The Sligo reservoir has also proved productive from wells SW of the prospect area. The Umma
Resources Glau well and the Texas Gas Corp. Rives Trust # 1 wells both penetrated the Sligo north of
the shelf edge. Each well recovered approximately 4 BCF of gas.
The relatively lower recovery from these wells in comparison to the Kilroy #1 is likely attributable to
lower porosity & less fractures in the Sligo reservoir away from the shelf edge. Additionally these wells
were drilled only 3000 ft.' apart and within two years of each other and were likely competing for the
same fetch area. It appears likely that a single well in this area could have drained the 8 BCF of gas
recovered from these two wells.
Prospect Potential
The subject 1,220+ acres has approximately 600 to 825 acres of potential exploitation based on 3D data.
3D interpretation indicates the likelihood of a paleo and current day structural high along with apparent
porosity in the subject area. Reservoir quality is dependent on sufficient porosity/permeability to
establish a conduit from the matrix porosity to the fracture system and wellbore.
There appears to be a prospective potential for commercial wells in the Sligo formation along the shelf
margin reef west- southwest of the Kilroy # 1 well. This is an underexplored section of the Cretaceous
Sligo Carbonate reef. Recently processed 3D seismic data provides key, new, excellent information to
effectively analyze the structural setting of the Sligo Formation in this area. Penetrations near the shelf
edge carbonate structure are likely to be the most productive due to higher porosity and the likelihood of
encountering fractures in the reservoir which would enhance well productivity and ultimate recovery.
This trend is highly prospective – a very good area for a Sligo/Edwards test. If a successful well is
developed, 3-D indicates sufficient fetch area to drain 600 to 825 acres. A success case could develop
30-40 BCF of recoverable gas from a single Sligo producer. The entire prospective (approx) 825 acres
2902 Valley Manor
Kingwood, TX 77339
TEL. (281) 358-5400
FAX (281)358-5554
could yield 95 BCF from 3 wells. Nearby Edwards production, immediately NE and SW of the La Jolla
acreage block, adds to the economic potential of this prospect.
La Jolla Prospect (cont.)
Page 5 of 5
Summary of Nearby Sligo Wells
Kilroy Clifton Wheeler #1
Drilled 1983, located 16,300' northeast of proposed drill site
Cumulative production was 32.8 BCF from the Sligo
This well averaged 16MMcfgpd for the 1st year it produced.
Presently producing >2MMcfgpd the Edwards formation.
Texas Gas Wheeler #2
Drilled 1985, located 10,200' northeast of proposed drill site
Structurally 180' low to Wheeler #1 and low to proposed drill site.
Mud log show in the upper part of Sligo within gas column of Wheeler #1.
Completion not attempted
Texas Gas Blankenship #1
Drilled 1983, located 16,200' southwest of proposed drill site
Situated within the low energy facies southwest of the prospect area.
Drilled in a front reef fault block not seen in prospect area or Wheeler area.
Reportedly tested 2 MMCFD in the Sligo but never produced.
Completed in the Edwards formation.
IP 2MMcfgpd and produced 90 MMCF.
Texas Gas Rives #1
Drilled 1985, put on production in 1987.
Located 31,300' southwest of proposed drill site.
Initial pressure > 13,000 lbs.
Interpreted as a separate reef development from prospect area and Wheeler wells.
Produced 3.8 BCF from Sligo.
Total Glau #1
Drilled 1989, located 27,800' southwest of proposed drill site.
Initial pressure > 13,000 lbs.
Interpreted as a separate reef development from prospect area and Wheeler wells.
Produced 3.8 BCF from Sligo
2902 Valley Manor
Kingwood, TX 77339
TEL. (281) 358-5400
FAX (281)358-5554