Citadel Exploration, a pure-play, CA-based oil developer focused on the rich Salinas and San Joaquin Basins, entered into a new era today with the report that it has begun drilling at their Rancho Grande project in the San Joaquin Basin (at the foot of the Tehachapi Mountains), their very first drilling since inception back in 2011.
CEO of COIL, Armen Nahabedian, projected a high probability of early success thanks to abundant potential in the first two well targets and noted that the participation agreement with project operator, Sojitz Energy Ventures, was a great deal at 22.22% cost share for 20% WI. More importantly, COIL has secured a letter of intent that provides long-term operational presence for the company at Rancho Grande. These first two exploratory wells will each be going after their own unique prospect with multiple objectives and Nahabedian expressed supreme confidence in the outcome, extolling the performance of the Sojitz team thus far.
This site is target-rich, with some 23 prospects identified by COIL and its JV partners. Multiple hydrocarbon-bearing zones (Eocene Sands, Monterey, Olcese Pool, Reserve Sands, Santa Margarita Sands, Steven Sands, and the Vedder Oil Pool) with depths as shallow as 1k feet and as deep as 7k feet comprise a gross unrisked potential envelope in the 200M bbls or more range. Given the extensive extant seismic definition and other control data on these prospects, the Rancho Grande project falls directly in line with COIL's established business philosophy that the best place to find the oil is where it has already been found.
Nahabedian is clearly tipping his hat to the market here about the long, bright future between COIL and Sojitz, with $1M to $2.5M typical costs (depending on depth and how large the set of objectives is) per well in the area and outputs ranging from 50k to 200k bbls of estimated ultimate recovery. The JV plans to do as many as eight wells over the next six months before going into single-rig mode to develop discoveries, with maybe a second rig being brought in thereafter depending on success of the program. Given that the Nahabedian family has drilled this region for two generations, their prospecting shop was able to secure a 52k-acre concession here back in 2010 (paid for by Sojitz).
Also of interest to investors is the announced acquisition of some 3k more acres of prime territory from California-based Exxon/Shell JV, AERA Energy, LLC. The combined 2D/3D seismic analysis already performed on this new acreage, in concert with extensive empirical well data and the site's proximity to the Yowlumne oil field, which has produced over 100M bbls, is a strong indicator that this latest expansion of the company's portfolio will help drive bottom-line shareholder growth substantially.
To get a closer look at Citadel Exploration, visit CitadelExploration.com
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