Hemi Energy Group, Inc. Kansas and Texas Update
December 18 2007 - 9:45AM
Business Wire
Hemi Energy Group, Inc. (Pink Sheets:HMGP): Kansas Leases We are
seeing improved response from 53 reworked oil wells which have
resumed production in October. The dewatering of the Purcell,
Tebbens, Orth-Silvey, Reno and Bennett leases has yielded increased
oil production, and nine of the wells are reporting improving
natural gas cuts. This sets the stage for a continued increase in
oil production as the gradual dewatering of the Woodson County
leases, continues. Simply put, in the new wells we drilled during
2007, we noted the oil water contact point had changed from when
our older mature wells were drilled and completed. The influx of
formation water, raised the oil water contact point above the
existing well perforations, which displaced oil with water. The
dewatering of this formation has advanced to a point where
increased oil production is now seen at the producing wells. As of
today we have lifted and disposed of over 10,000 barrels of water
from the producing formation. We have maintained a water injection
rate at 200 barrels of water per day. Additionally, we have noticed
an increase in natural gas pressures in the southern and western
areas of these leases. To date, we have not attempted to sell this
natural gas, choosing instead to leave it in place in order to help
with the re-pressurization of these oil fields. The Montgomery
County lease currently has three mature oil wells that have
returned to production on the Sturgeon lease. The new well drilled
on the Sturgeon lease earlier this year primarily showed more
amounts of natural gas than oil in the lower Bartlesville
formation. Given the lack of natural gas infrastructure and
pipelines in the area, this natural gas cannot be economically
produced when compared to crude oil. Therefore we are preparing to
come uphole and recomplete the well in the upper Bartlesville
payzone. This recompletion work is expected to be conducted in
January, pending weather and equipment availability issues. Texas
Leases In December we acquired 125 acres of property in
Throckmorton County, Texas (the Bailes lease) on which the
discovery well was located. We have the exclusive opportunity to
lease approximately 700 acres of additional land contiguous to our
lease. There are three mature wells on this lease, and each
produced more than 100 barrels per day for several years. They were
abandoned for economic reasons in the mid-1980s, although each was
producing approximately 30 barrels per day (which is consistent
with the normal Texas decline curve for this type of formation).
Management's experienced opinion is that re-pressurization of this
geological formation has occurred after more than 20 years of no
production or new wells on this lease. We have detailed drilling
records and well logs of the three wells that show three to four
producible pay zones. Several oil and gas companies have expressed
interest in acquiring or developing our lease acreage in Sabine
County, TX. and we are currently exploring all options (joint
venture, farm out, partnership and royalty positions) in the
development of our leases that possess proven gas pay zones. We
have the well records from the drilling & logs that shows
detailed information about the multiple gas pay zones. We have
acquired five-year leases on the Barnett Shell formation located in
urban Fort Worth. We are actively negotiating with several other
owners to acquire additional leases. These leases are wedged
between two major urban drilling programs that are being developed
and expanded by two large New York Stock Exchange oil companies
with home offices in Fort Worth and Oklahoma City. Each gas well in
the Texas Barnett Shell formation is a multi-million dollar project
and requires large acreage spacing in order to be legally and
economically produced. Management strongly believes our leases will
be needed, integral parts of the pooling these major development
drilling programs. Hemi Energy Group is an independent crude oil
and natural gas producer employing a unique business model
capitalizing on technological advances to exploit mature fields
with millions of barrels of proven oil remaining in the ground,
using attractive lease/royalty packages Hemi has secured in its
history of tens of thousands of acres of productive domestic
projects. The company's forward-thinking strategy has placed it in
an enviable position at a time when prices and global demand for
oil continue to rise. Building on decades of experience in enhanced
oil recovery, Hemi has successfully amassed a substantial and
attractive portfolio of these high quality domestic properties. By
streamlining operations through cutting-edge technologies, Hemi has
the ability to operate more effectively and efficiently than larger
oil companies. "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995 Statements in this press release
relating to plans, strategies, economic performance and trends,
projections of results of specific activities or investments, and
other statements that are not descriptions of historical facts may
be forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking information is inherently subject to
risks and uncertainties, and actual results could differ materially
from those currently anticipated due to a number of factors, which
include, but are not limited to, risk factors inherent in doing
business. Forward-looking statements may be identified by terms
such as "may," "will," "should," "could," "expects," "plans,"
"intends," "anticipates," "believes," "estimates," "predicts,"
"forecasts," "potential," or "continue," or similar terms or the
negative of these terms. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. The company has no obligation to update these
forward-looking statements. For additional information please go to
http://hemienergy.com.
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