Mosman Oil and Gas announces Welch Permian Basin Project acquisition, West Texas
Monday, Sep 11, 2017
Mosman  Oil  and  Gas  Limited  (AIM:MSMN) the  oil exploration,  development  and  production company, announces it has today executed a contract to acquire several oil and gas leases that comprise the Welch Permian Basin Project located in Dawson County, West Texas for a consideration of USD$310,000, which will be funded from existing cash reserves.

Mosman's strategic objective continues to be that of identifying, acquiring and operating projects with cash flow and development upside, whilst continuing to add value to our existing exploration permits with further technical work.

The 34 bopd Welch Project exactly fits this criteria, with near term upside from low cost workovers and medium term development potential.  

Welch Permian Basin Project Overview

The Project is located in the Permian Basin, in and around the Welch township in Dawson County, West Texas, approx. 550 km west of Dallas. It consists of 653 acres of leases (held by production) with 10 producing wells, 7 injector wells, and 10 shut-in wells. The acquisition includes production equipment and facilities.

The Project is a small part of the larger Welch Oil Field, which was discovered in 1941 and has produced in total over 170 million barrels. Oxy is the Operator of the Welch West and Welch South unit, and is having considerable success with drilling, fraccing and producing horizontal wells in the area. Devon Energy is the Operator of the Welch North Unit and has also been very successful with horizontal wells.

After waterflood commenced in 1997, the Project produced at rates of between 100-200 bopd until 2009, and then gradually declined. The average sales volume from the Project over the last 13 months has been 34 bopd (gross). There is no formal resource estimate available for these leases.

Walsh Petroleum, Inc. (one of the previous owners of the Project) had developed plans for three horizontal wells on the Welch leases based on adjacent acreage analogues that could add potentially significant additional daily production to the Project. These plans look attractive but further technical work needs to be done by Mosman before a decision could be made to proceed with drilling these horizontal wells.

In the near term, Mosman's plan is to critically manage the lease operating expenses and low cost initiatives to increase production to increase cash flow. Mosman has already identified existing shut in wells that will be considered for workovers in the shorter term. This is a similar strategy to the approach adopted successfully by Mosman at its recently acquired Strawn leases (50% interest and Operator) where workovers significantly increased oil production to 440 bbls (gross) in July. The medium term development potential at Welch, such as horizontal wells, provides further significant upside potential.

John W Barr, Chairman, said:

'The Welch Permian Basin Project is an ideal acquisition as it meets Mosman's stated objectives, immediately doubles our oil production and has significant upside potential. Many similar opportunities are under review and I am pleased that we are able to demonstrate the active execution of our Business Plan.'

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