(27th May, 2009)
TULSA, OK, Jul 30, 2009 (MARKETWIRE via COMTEX) — CAVU Resources, Inc. (”CAVU”), which trades as (PINKSHEETS: CAVR), announced today that the Company has acquired EnviroTek Fuel Systems, Inc. (EnviroTek) in a stock purchase agreement. EnviroTek owns a 3,140 acre project in Nowata County, Oklahoma, which is about an hour north of Tulsa, OK. Spread across three townships (or 13 miles), the project contains about 12 producing natural gas wells, 6 shut-in wells awaiting rework or completion in another zone, and about 40 to 50 proven and undeveloped (PUD) locations for new wells. As part of the acquisition, CAVU also has purchased about 35 miles of pipeline that connects the wells and acreage position in this project; the total acquisition is valued over $470,000.
One unique and very valuable quality of this project is that several traditional reservoirs and coal methane zones are charged with hydrocarbons, thus providing multiple pay zones in one well. These zones may be produced individually or commingled to increase production rates for each well. Primary hydrocarbons are oil, natural gas and methane gas, with estimated pay thickness of 2 to 20 feet for reservoir rocks. Most coal seams range in thickness from 2 to 8 feet of pay with about 3 to 4 feet being the average pay thickness in this project.
“One advantage we have in developing this project is that with our own drilling equipment we can take our time when drilling these wells so that we can optimize production from the many hydrocarbon bearing zones all in one well,” said William C. Robinson, President of CAVU Resources, Inc. “Obviously, another advantage we have here is that we own the pipeline and are able to deliver our natural gas direct to market without having to sell to a third party who typically charges anywhere from 20-40% of the production revenues for transportation charges. As a Company, we are thrilled to have a low risk project where we can make a well almost every time one is drilled and quickly tie it into our gas gathering infrastructure.”
Historically, production rates in this area have ranged from 2 to 50 barrels of oil per day (BOPD) per well with typical results averaging between 7 and 15 BOPD. Initial production (IP) rates can be higher for a short duration before settling into this range with the quality of crude being excellent (33 degrees to 42 degrees API oil). Natural gas is the fall-back position in this area due to a shallow Excello shale that blankets the area as do several methane gas bearing coal seams. As such, natural gas is almost always produced in a well in this area with production rates ranging from 5,000 to 200,000 cubic feet of gas per day (5 to 200 MCFD).
Since most of this gas is produced from coal seams, initial production rates are actually lower and increase over the first few months because coal seams must “dewater,” where water in place in the coal seam is brought to the surface freeing up the gas to begin coming to surface through the well bore. As a result, a typical scenario would be for a well to produce from a coal seam and after dewatering for about a month to start giving up its natural gas. The flow rate of between 950 to 1050 BTU gas will usually start around 5 MCFD and increases as the water comes off with most wells settling in around 30-50 MCFD.
“In CAVU’s project area, there is an estimated 98% completion rate and 100% discovery of gas, making it one of the lowest risk exploration areas in the country,” said Robinson. “We also have some joint ventures with other companies in the area that we feel could offer an opportunity for us to expand our project and increase our reserves.
“This area of northeastern Oklahoma has an extensive drilling history extending back to the early 1900s. With access to so much historical data and well control, the Company has been able to formulate a development plan that includes the drilling of new wells off-setting good producers (wells that had initial production rates of 50-150 MCFD) as well as reworking wells to improve current production rates.
“By partnering with some of the companies who have experimented with completion techniques in this Northeastern Oklahoma Shelf area coupled with our own experience drilling and completing wells in this area, we believe that this project can quickly be expanded and cash flow and reserves can be increased as a result. In the 12 months ending 2008 EnviroTek produced over $900,000 in revenues; based upon reserve reports done for other companies in this area, we believe that this project should end up accounting for about 3.0 Bcf (billion cubic feet) of gas and roughly 40,000 barrels of oil. Add to this the third party gas we can purchase and transport through our pipeline and you can see how this project is shaping up to be a small little cash cow for us,” stated Robinson.
About CAVU Resources, Inc.
During World War II, Navy fighter pilots would look up at the sky and if it was a ‘CAVU’ day then it meant ceiling and visibility unlimited. The founders of CAVU Resources chose the name CAVU because they believe that the Company will be the embodiment of its name. CAVU was formed with the goal of becoming a recognized regional player in the independent oil and natural gas industry by growing the company’s oil and natural gas reserves. CAVU is a natural resource company engaged in the acquisition, exploration and development of oil and natural gas properties. The Company operates in the upstream segment of the oil and gas industry with planned activities including the drilling, completion and operation of oil and gas wells in Oklahoma, Kansas, Colorado and Texas. The Company also owns two pipelines in its area of operations which will be used for gathering its gas and oil and the gas and oil production of other producers. The Company has acquired leases and is currently exploring additional opportunities in oil, gas and helium leases. The company has acquired significant oil and gas equipment including rigs, trucks and completion equipment. CAVU’s 100% owned subsidiaries, CAVU Development, LLC has also targeted low income housing and plans to utilize the recently approved home energy credits and rehab abandon or foreclosed housing additions utilizing new energy saving construction and solar to offer both utilities savings and low cost housing. CAVU Drilling, LLC provides contract drilling services to oil and natural gas exploration and production companies. CAVU Operating Company, LLC plans to expand operations not only in the traditional Oil and Gas business, but also to invest in Geo-Thermal, Wind, Solar and security, taking advantage of the changing environment and in the world’s need for new, green and innovative resources.
More information is available at the company’s website at http://www.cavu-resources.com.
Cautionary note: This report contains forward-looking statements, particularly those regarding cash flow, capital expenditures and investment plans. Resource estimates, unless specifically noted, are considered speculative. By their nature, forward-looking statements involve risk and uncertainties because they relate to events and depend on factors that will or may occur in the future. Actual results may vary depending upon exploration activities, industry production, commodity demand and pricing, currency exchange rates, and, but not limited to, general economic factors. Cautionary Note to U.S. investors: The U.S. Securities and Exchange Commission specifically prohibits the use of certain terms, such as “reserves” unless such figures are based upon actual production or formation tests and can be shown to be economically and legally producible under existing economic and operating conditions.
CAVU Resources, Inc.
SOURCE: CAVU Resources, Inc.
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SUBJECT CODE: Energy and Utilities:Pipelines
Energy and Utilities:Oil and Gas