Introduction:
This is a compelling investment opportunity in the Bateman Field Acidizing Project, situated in Bastrop County, TX. This proposal outlines the key aspects of the project, emphasizing its lucrative nature, low entry barriers, potential for immediate cash flow, and substantial returns for investors. The primary highlight is a unique 3-to-1 write-off opportunity at the end of the year, providing a substantial tax advantage to participants.
Project Overview:
The Bateman Field Acidizing Project involves the acidization of 30 shallow wells (2000′ to 2500′) in the Dale Lime and Austin Chalk formations. These wells cover 340 acres, with 23 fully equipped and 7 partially equipped wells. The strategic location, geological attributes, and historical production data indicate significant untapped potential.
Geological Advantage:
The limestone formations in this field, particularly the Austin Chalk and Dale Lime, exhibit remarkable porosity (20 to 28%) and fracture-induced secondary porosity due to unique geological conditions. Recent successes in acidizing similar formations resulted in impressive production rates, validating the efficiency of acid jobs over traditional fracking methods.
Production Potential:
While the surface equipment may require refurbishment, the wells remain in excellent condition, capable of producing 1 to 3 barrels of oil per day. Notably, these wells are positioned at the top of the field structure, having produced 300,000 barrels from 20 wells, demonstrating substantial reserve potential.
Financial Benefits:
Tax Advantages: The project offers a 3-to-1 write-off, allowing participants to deduct the entire investment (cash plus note) from their taxable income, thanks to IRS considerations on non-cash taxable payments.
Low Entry Barriers: A modest initial funding amount of $350,000 grants participants a 25% working interest, with 50% going towards payout. The remainder can be covered by a note, effectively minimizing the immediate cash outlay.
Cash Flow & Rapid Payout: Initial wells are projected to pay out within 10 to 30 days, ensuring swift returns. The cash generated from production covers the remaining development costs, reducing or eliminating the need for future cash calls.
High Return on Investment (ROI): The expected ROI is 3 to 1 in the first year on the initial funds, with a 10 to 1 return over three years on the total investment, presenting an attractive proposition for investors.
Stable Oil Price Assumption: The financial model assumes a conservative oil price of $75 per barrel, providing a realistic and sustainable basis for revenue projections.
Diversified Production Strategy: With up to 5 undeveloped zones per well, the project ensures a multi-zone production approach, allowing for sustained production rates and extended reserve life.
Managed Decline Rates: Conservative decline rates (50% for the first two months, followed by 25% for five months, and 20% thereafter) ensure a methodical and sustainable exploitation of the reserves.
Proven Geological Success: Historical records, recent drilling successes, and newspaper articles highlight the geological richness of the field, reinforcing its potential for substantial oil recovery.
Operational Efficiency: The project is structured to optimize operational efficiency, with the operator providing oversight, engineering, infrastructure, and equipment, allowing participants to focus on the financial benefits of the venture.
Risk Mitigation through Injection Wells: Seven wells will be converted into injection wells, enhancing primary and secondary recovery, further securing the longevity and profitability of the project.
Conclusion:
The Bateman Field Acidizing Project presents a rare and lucrative opportunity for investors seeking high returns, tax advantages, and a strategic entry point into the oilfield investment landscape. The combination of geological richness, efficient operational strategies, and favorable financial terms positions this project as a compelling venture for those looking to capitalize on the potential of the oil and gas industry.
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