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Deal Summary

As ordered by the U.S. Bankruptcy Court of the Western District of Texas, Energy Advisors has been retained to market six (6x) shallow New Mexico waterflood projects and additional assets. By virtue of financial conditions, these assets are currently shut in but offer immediate opportunities.

As described herein the portfolio consists of ~25,000 gross acres broken into 6-Core areas and 1 Non-Core assortment.

The 306-Wells (281-Producers & 25-Injectors/SWDs) have a gross production of 134 BOPD & 1,462 MCFD (378 BOED) and the package is made of existing waterflood units with significant development upside with a total proved net reserves >12.1 MMBO and 16.4 BCF.

A 2-phase exploitation plan is outlined in the package presentation which entails the enhancing and expanding of current waterflood operations followed by the drilling of new producers and injectors to further increase production.

Majority 100% Operated WI for the Core Areas incorporated in the package with all WIWs and SWDs being owned and operated by Remnant Oil.

Area #1 Turkey Trac Sec. 3 Unit
Eddy Co., NM
100% OPERATED WI & Up to 75% NRI
28 Wells (25 Producers & 3 WIW)
Average Gross Production (01/18-12/18): 7 BOPD, 14 MCFD, 213 BWPD & 74 BWPD Inj.
Total Proved PV10: $21,002 as of 03/01/19

Area #2 North Square Lake Unit
Eddy Co., NM
100% OPERATED WI & 63% Avg. NRI
90 Wells (80 Producers & 10 WIW)
Average Gross Production (01/18-12/18): 54 BOPD, 582 BWPD & 647 BWPD Inj.

Area #3 South Red Lake II Unit
Eddy Co., NM
99% OPERATED WI & 74.5% NRI
18 Wells (10 Producers & 8 WIW)
Average Gross Production (01/18-12/18): 3 BOPD, 4 MCFD, 24 BWPD & 174 BWPD Inj.

Area #4 Lusk Seven Rivers Unit
Lea Co., NM
100% OPERATED WI & 74.6% NRI
6 Producing Wells
Average Gross Production (01/18-12/18): 14 BOPD, 4 BWPD & 0 BWPD Inj

Area #5 Hackberry Waterflood Pilot Project Area
Eddy & Lea Co., NM
100% OPERATED WI & 74.5% NRI
25 Wells (24 Producers & 1 Active SWD)
Average Gross Production (01/18-12/18): 15 BOPD, 74 BWPD & 194 BWPD Inj.

Area #6 Pecos Slope Area
Chaves Co., NM; Abo Gas Play
50%-100% OPERATED WI & 75% Lease NRI
94 Conventional low-rate dry gas wells
Average Gross Production (01/18-12/18): 1,273 MCFD (100% Gas)

Area #7 Random NonCore Assets

The U.S. Bankruptcy Court of the Western District of Texas is entertaining offers on individual areas highlighted within the package but a preference will be given to an offer for the total portfolio.

Comments on Production & Leases
The Remnant assets have not reported any production since March 2019. We expect the Seller and the Court to provide some updated production numbers by January 30, 2020 as the firm gets caught up on their lease reporting for the time period January 2019-March 2019. EAG will also update the sale pkgs with any new production as soon as both the company and the Court update us.

As for lease and land rights in Southeast New Mexico, the vast majority of our acreage is HBP by either our wells or other wells associated with the base lease. There are other shallow wells or deeper wells that are holding rights.

EAG has already prepared a land schedule as Tab 4 in the Package QuickLook in the VDR. We have also marked some leases w relevant land data such as the North Square Unit is well bore only. Unlike Texas, most New Mexico fee leases or UL leases have lack of production clauses that address lack of production, non-economic production, and or shut-in royalties. State Lands and BLM acreage again it typically held by a base lease and not zone dependent.

Asset Highlights:

  • NEW MEXICO BANKRUPTCY COURT
  • 7-Asset Groups; 306-Wells. ~25,000-Acres
  • CHAVES, EDDY & LEA COS., NM
  • 5-NORTHWEST SHELF WATERFLOODS
  • MULTIPLE EXPLOITATION PROJECTS
  • SAN ANDRES, SEVEN RIVERS, QUEEN
  • GRAYBURG, YATES & ABO GAS
  • Immediate Return To Production Options
  • Majority 100% OPERATED WI For Sale
  • Prior Production: 134 BOPD & 1,462 MCFD
  • TWO PHASE REMEDIATION PLAN:
  • PDNP Workovers, RTPs & New Drilling
  • Currently ShutIn From Financial Pressure
  • Total Proved Net Rsvs >12 MMBO & 16 BCF
  • COURT WANTS OFFERS BY FEB 12, 2020

Permian Basin Chapter 11 Sale - Energy Advisors Group

Click here to view the online data room or visit www.energyadvisors.com/deals to view our other 30+ assignments.

For more information, contact Blake Dornak, A&D Associate with EAG, at [email protected] or 713-600-0123.


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