| OPERATIONS REVIEW |
| Huasna Oil Project - US |
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| Excelaron LLC is the operator of the project and is is 35% owned and jointly managed by AOC and Mogul Energy. We are seeking a Conditional Use Permit from the County of San Luis Obispo for the establishment of four production oil wells and transportation of produced crude oil to a refining facility outside of the county. The project includes three phases: construction, exploration, and production. |
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The Construction Phase includes improvements
to existing well pads and the shipping
area as well as rehabilitation of existing roads
accessing those sites.
The Exploratory Phase includes reactivation
of one existing idle well and an evaluation
of the quantity and quality of produced
crude, replacement well if the existing idle
well does not meet production standards,
and the drilling of three additional wells.
If excess water is encountered, an existing
well will be rehabilitated for injection purposes
only.
When the exploration phase is complete,
The Production Phase could include the
incorporation of a shipping/staging area for
operations facilities and storage and above
ground piping from production wells to
shipping area. |
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LOCATION
The project is located in California on the west side of Huasna Townsite Road, approximately one mile south of Huasna Road, approximately 12 miles east of the City of Arroyo Grande.
The development will take place over two parcels of land totalling 260 acres. An additional 1200 acres has been leased adjacent to the area where this exploration and development program is planned to take place.
Operations
The heavy oil in this area averages 9° API. Based on historical evidence and operational practice, hot water injection has been the most effective method of an enhanced oil recovery. In order to effectively test the production possibilities an operating system including hot water injection facilities will be constructed on the site. |
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| The operational plan calls for replacing existing equipment such as stock and wash tanks, boiler, pumps, pipes, and generators. Due to the viscosity of the crude oil, all pipelines, tanks, and storage facilities will be heated and insulated. Crude oil will be delivered to an onsite shipping point for truck transportation to a nearby refinery. Wastewater will be re-heated and used for enhanced oil recovery and any natural gas will be fed into the operating system’s heater. |
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Geological Information
A number of wells in this area have been drilled into the Monterey Formation, which is the producing horizon for a number of oilfields in the Santa Maria Basin, just south of the project
site. The Monterey Formation is composed of diatomite, siliceous shales, dolostone, porcellanite and chert. Reservoir development is associated with fractures and porosity within sandstones of the formation.
There are two seismic lines and six wells in the vicinity of the site. Of these wells, five are very
shallow. The geology of the area is structurally complex, so the seismic lines are of limited utility. |
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Seismic Ventures International of Houston was contracted to reprocess the existing data and achieved significant quality improvement. Our consultants have used this seismic information, well data, surface geological maps and all other available data to generate a structural map on the top Monterey Formation. The map indicates that the field continues at depth and extends beyond the existing well control. There is potential to trap in excess of 2000 feet of oil bearing Monterey
Formation on the Huasna anticline. The Union-Dickies 01 well located on the Huasna anticline recovered 32 + API oil in the section below the Monterey. This show offers potential for conventional oil production at depth within the Huasna structure. |
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| PL 17 Surat Basin Queensland - 40% Equity Interest |
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AOC has a 40% interest in PL 17 situated in the Surat Basin in Queensland and a 30% interest in the Leichhardt Exclusion Zone located within this licence. Excluded from the interest are the Bennett 1 well and Leichhardt 1 well which are separately owned by the Operator of PL 17, Southern Cross Petroleum & Exploration Pty Ltd.
We conducted a detailed evaluation of historical technical data which we provided to the operator. We are awaiting advice from the operator regarding the feasability of re-entering the Bennett 4 well which is located north east of the Bennett 1 well. |
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| EP 435 Carnarvon Basin Western Australia - 17% Equity Interest |
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We are awaiting the drilling of the Bee-Eater well in EP 435 which is expected to take place in early
2009 and following this well the participants will evaluate whether to drill a further adjacent well. |
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| PEL 182 Cooper Basin South Australia - 5% Equity Interest |
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We retain in addition to our 5% interest in the permit, a 12.5% interest in Emily 1 exclusion area
adjacent to the Emily 1 well which was completed as a production well.
Audax Resources Limited which holds a majority interest in the permit has taken over as operator and is completing a detailed evaluation of the technical information and the ongoing exploration program.
The Vanessa well which was completed as a gas producer is also being evaluated by the operator
regarding additional development wells, transport and gas pricing. |
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