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Sun Resources Acquires More Delta Oil Project Acreage

Sun Resources (ASX: SUR) has expanded its Delta Oil Project holding to 9,888 net acres after acquiring a further 1,541 acres from the vendor as it builds up its Woodbine Tight Oil Play in Texas.

The company, which is targeting 15,000 net acres in the Delta Oil Project and 35,000 gross acres in the broader Woodbine, now holds 16,262 net acres in Leon County.

Besides its Delta Oil Project, Sun had recently acquired stakes in the Amerril Oil Project and the Richland Oil Project.

Sun plans to capitalise on the "runway" potential within its leases by applying horizontal drilling and multi-stage fracture stimulation that have been so successful in other shale and tight oil plays.

Beeler-1H

The first application of this is expected to occur with the Beeler-1H horizontal well that is expected to spud on or about 15 August 2012 and be drilled, fracture stimulated and completed by 25 September.

Success at Beeler-1H will add substantial value to Sun's asset base and possibly provide cash flow.

This well targets the same productive Woodbine Formation interval as that in the PMO Oil Field, which Halcón Resources Corporation paid Petromax Operating Company US$378 million (A$370.7 million) for a 75% stake in.

It is located about 6.76 kilometres from the Gresham A-1H well that is the second best well of the 15 horizontal Woodbine wells that make up the PMO oil field. It currently produces about 600 barrels per day of oil.

Woodbine

The Woodbine is a multi-zone tight oil play, sourced from the Eagle Ford shale, with the reservoir having a high percentage of silica and clastics (sandstone).

It has been identified by former Petrohawk Energy chief and present head of Halcón, Floyd Wilson, as one of the top developing tight oil plays in the U.S.

Sun had noted previously that operators in Leon and Madison counties had the most success with horizontal well bores of up between 6000 and 7000 feet (1829 to 2133 metres) that are completed with multi-stage fracture stimulations.

These produce oil at initial rates of 1000 barrels per day or more with lower than expected decline rates, adding to the commercial potential of the Eaglebine/Woodbine play.

Average cost of drilling, fraccing and bringing these wells into production is about US$5 million (A$4.8 million) to US$6 million each.

Majors such as Gastar Exploration (NYSE: GST), Encana Corporation (NYSE: ECA) and Chesapeake Energy (NYSE: CHJK) have also acquired leases in the play.

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