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Sun Resources: Moves Closer To Securing Delta Oil Project In Prospective Eagle Ford Shale Fairway

Sun Resources' (ASX: SUR) shares are changing hands 9% higher in early morning trade today at $0.024, as the company continues to deliver a positive string of announcements to the market concerning the acquisition of acreage in the highly prospective Eagle Ford Shale Fairway of Texas.

Sun Resources now controls a 100% working interest in total of 6,803 acres of leases in the project, which is situated along trend of a prolific oil and gas fairway in Texas.

Sun will continue to work with the vendor to complete what appears to be a low risk acquisition of the target 10,000 acres, subject to completion of due diligence.

Matthew Battrick, managing director, commented on the continued success of the acquisition, saying:

"Sun Resources is pleased to be continuing to grow its outstanding lease position covering high quality acres in the Eaglebine play of East Texas, on trend with the world-class, Eagle Ford Shale gas and oil fairway.

"We look forward to working with the vendor to deliver the remaining leases as we target 10,000 net acres, at a working interest of 100% (75% NRI)."

Review of the prospectivity of the Delta Oil Project

Announced in 2011, independent consulting firm Ralph E. Davis has estimated unrisked 10 million barrels of net Prospective Oil Resources in one sand unit of the Delta Oil Project.

Assuming production of the 10 million barrels of Prospective Resources, Ralph E. Davis estimated the NPV of the Delta Oil Project of US$310 million would equate to:

- NPV of US$10,333,333 per well; and
- NPV of US$31 per barrel of oil for 10 million barrels of oil from one 20 feet thick sand unit.

Recent horizontal wells within 35 miles of the Delta Oil Project have obtained initial flow rates of 900 to 1,200 barrels of oil per day from multi-staged fracced laterals of 6,000 to 7,000 feet in sandstone units and operators are reporting Estimated Ultimate Recoveries (EUR) of 300,000 to 600,000 barrels of oil per well.

Sun has entered into a binding Term Sheet with a Houston based private oil and gas company, where Sun will acquire 100% working interests in all of the leases, each with a minimum 75% net revenue interest, a three year lease term and in most instances, also have a 2 year option to extend the lease term.

Highlighting the potential of the project, independent petroleum engineering and geological consulting firm Ralph E. Davis estimates unrisked 10 million barrels of net Prospective Oil Resources in just one sand unit.

The consultants also pointed to the potential upside of a further unrisked 10 to 20 million barrels of Prospective Oil Resources in other sand units in the 450 feet thick prospective sequence.

Review of recent flow rates near the Delta Oil Project

Further boosting the potential of the acquisition is that nearby operations have experienced some decent flow rates.

Recent horizontal wells within 56 kilometres (35 miles) of the Delta Oil Project have obtained initial flow rates of 900 to 1,200 barrels of oil per day from multi-staged fracced laterals.

These laterals are 2,000 metres to 2,300 metres (6,000 to 7,000 feet) in sandstone units and operators are reporting Estimated Ultimate Recoveries (EUR) of 300,000 to 600,000 barrels of oil per well.

The significance of these results is that they are comparable to wells in the Eagle Ford Shale oil zone in the well-known producing areas.

In addition, the Eaglebine target reservoir depths of 1,700 metres to 2,600 metres (5,000 to 8,000 feet) are shallower than typical Eagle Ford Shale wells resulting in materially lower well costs.

The impact is this should materially improve the net present value (NYSE:NPV) of individual wells.