Stratex Oil & Gas Holdings, Inc. (STTX) ("Stratex" or "the Company") is pleased to provide the following operational update.
Stratex is currently producing approximately 98 gross, 65 net barrels per day (b/d) of oil, both from its historical non-operated and operated properties in the Bakken Shale and Montana, respectively, and its operated south Texas lease. Pursuant to the Company's previously announced Joint Development Agreement signed in December 2013 and amended in January 2014, in exchange for the Company's commitment to frac a certain well known as the Matthews 1H prior to March 31, 2014, the Company received an assignment of an undivided 50% working interest ("WI") in an oil & gas lease covering approximately 2,629 acres in Zavala County, Texas (the "Zavala Lease"). The frac of the Matthews 1H was completed in March and the well was recently placed on production at an average rate of 30 gross b/d of oil over the past 10 days. The Company holds a 66.67% WI before payout and a 50%% WI thereafter.
In connection with the Company's WI in the Zavala Lease, management is presently assessing additional drilling opportunities regarding various zones which produce locally, including the Eagle Ford Shale, Austin Chalk, and Buda formations. Local operators have successfully exploited these formations utilizing horizontal drilling and multi-stage hydraulic fracs on 60 to 80 acre spacing units. Management believes that there are at least 42 horizontal locations in the Eagle Ford Shale, 14 horizontal locations for the Austin Chalk, and 32 horizontal locations for the Buda on the Zavala Lease, providing a multi-year drilling inventory.
Pursuant to our Joint Development Agreement with Quadrant Resources, LLC, announced in April 2014, the first 4 (of a total of 8) pilot wells on the Zavala Lease have been staked, and permitting is underway. Stratex expects operations to commence during this present quarter. The remaining 4 pilot wells are anticipated to be drilled and/or reworked by year end. The initial 8 pilot wells are being drilled/reworked by Quadrant at no cost to Stratex and are intended to exploit the San Miguel medium to heavy grade oil underlying the Zavala Lease. The Company owns a 25% WI in the entire project except for one of the pilot wells. Management believes that there can be a drilling inventory of up to 200 locations. According to past Texas Railroad Commission filings, approximately 97,000 barrels of oil from the San Miguel formation have been previously produced from the Little Tom Field.
Pursuant to the terms of our agreement and plan of merger with Richfield Oil & Gas Company ("Richfield"), announced on May 7, 2014, Stratex has agreed to advance Richfield up to $3.0 million in the form of a secured loan. Up to $2.0 million of the loan will be specifically dedicated to a defined low-risk work program designed to accelerate production prior to the completion of the merger via reworks and recompletions within Richfield's scalable properties located within the Central Kansas Uplift. The work program, consisting of the rework/recompletion of 17 wells has commenced, with 3 rigs presently running. Management anticipates Richfield will complete the project by the end of the third quarter of 2014. Beyond the completion of the work program associated with the aforementioned $2.0 million loan, subject to the completion of the proposed merger, management expects to allocate meaningful future capital to fully exploit the post-merger company's Kansas drilling inventory of 95 drilling, behind pipe, salt water disposal, offset and rework/recompletion opportunities in the Arbuckle formation (57 new drilling, 38 recompletions), as well as unbooked horizontal Mississipian locations.