Executive Summary
The Trinity
Prospect
Onshore, Texas Gulf Coast
Due
to the highly confidential information underpinning the Trinity Prospect,
location information is disclosed only to those demonstrating a need to know,
imminent to a transaction and subject to a certain Non-compete, Non-disclosure
Agreement.
The Trinity Prospect is a 3D Seismic amplitude
anomaly supported, conventional, stacked-pay prospect. The potential to recover
large reserves of high gravity, sweet crude oil and liquids-rich natural gas
appears strong, based on size and thickness of target pays and geochemical
analysis of the source rock. Located in close proximity to mature
infrastructure and premium markets on the Texas Gulf Coast, the Trinity
Prospect presents the opportunity for a high return on investment.
Geological
Overview: The largest amplitude anomaly of the Trinity Prospect is the
“Upper Target” of the Channelized Package which covers ~212 Acres. The Lower
Target covers ~130 Acres. A third potential Pay Target is present but with
weaker amplitude. The cut and fill
(submarine) Channelized Package is a stratigraphic trap with structural
conformance. It is fault bound on the west and east. Its gross thickness is ~
1160 feet, with net thickness of the Upper and Lower Targets estimated at ~250
feet. The Trinity Prospect is
similar to the deepwater, submarine Channel deposits found Offshore but is
located Onshore and is therefore accessible at a fraction of the cost and turnaround time from discovery to
production. The Test Well will be drilled to a vertical depth of 11,135
feet.
Projected
Cash Flow to 100% Working Interest Before Payout: Assumes Initial Flow Rate = 2100 BOEPD, $ 85 Oil flatlined. Definitions: BOEPD = Barrel of Oil Equivalent
/Day; NRI = Net Revenue Interest (net of Royalty and ORRI Interest), fixed at
70%; ST = State Tax / Ad valorem tax on Oil fixed at 4.6%; LOE = Lease
Operating Expense assumed at $ 4000/Mo; BIAPO = Back In After Payout interest
earned by MPG, fixed at 25% WI; ROI = Return on Investment; D&C = Drilling
and Completion Cost
2100 BOEPD x 30
Days x $ 85 Bbl x 70% NRI x .954 ST = $ $ 3,576,069 – $ 4000 LOE = $
3,572,069 Net per Month
After Payout
Monthly Projected Cash Flow to 100% WI = $ 3,572,069 x .75 = $ 2,679,052
Projected
Payout to 100% Cost of Test Well: $ 7,758,951 D&C Cost / $ 3,572,069 Net per Mo. = 2.2
Months to Payout
Projected
Recoverable Resources Assuming Mid Case Estimate: 6,198,750 BOE
Projected
Value of Reserves in USD: (Assumes $85 Oil, Mid Case Recovery, Net includes ST, NRI & BIAPO
Interest to MPG)
Gross: $ 526,893,750 Net: $ 263,894,735
Full
Project Development ROI : (D& C Cost of
Initial Test Well $ 7,758,951, plus 2 assumed Development Wells est. @ $ 4 M
each to be paid for out of cash flow)
$ 263,894,735 Net Reserve Valve / $ 15,758,951 Est. Full Project
Dev. Cost = 16.7:1 ROI
Terms: Upfront Drilling Cost of Initial
Test Well = $ 57,812 per 1% Working Interest; Test Well Completion Cost = $
19,777 per 1% WI (to be collected at Casing Point); Total D&C Cost = $
77,589 per 1% WI. 70% Net to
Investor before payout,
52.5% Net to Investor After Payout; 270 Subject Acres; MPG
Operates; Private JV, Subject to Prior Sale, withdrawal or change in terms prior
to contract.
8700 Crownhill Blvd., Suite 804, San
Antonio, Texas, 78209 * 1-210-822-7770 * www.mpgpetroleum.com
The Trinity Prospect
A classic cut and fill
(submarine) Channel Deposit
