Shares in Titan Energy have bounced on news the company has acquired a major holding in another Texas Gulf Coast salt dome oil field for US$600,000.
Titan has acquired 1,144 gross acres on the south-eastern flank of Markham Dome in Matagorda County, Texas, which comprises about one quarter of the entire field.
Markham Dome is located 90 miles southwest of Houston, Texas, and about 40 miles from the company’s Allen Dome and Boling Dome fields.
A comprehensive 2D and 3D seismic evaluation is also being acquired as part of the purchase.
Under the purchase and sale agreement (PSA), Titan intends to drill a test well in the newly acquired acreage before mid-June in order to hold a portion of the oil and gas leases.
Titan will initially pay US$300,000 for the interest in the field, with US$25,000 having been paid on signing of the PSA. On completion of the transaction, the company will pay US$75,000 cash and issue a total of 8 million fully paid Titan Energy worth $US200,000 to the seller, Markham Energy Partners.
In addition, Titan will also pay US$30,000 per drill site, comprised of US$15,000 cash and 600,000 Titan Energy shares for 10 drill sites after the initial test.
Commenting from the company’s Houston headquarters, Titan chairman Darren Levy said the purchase would increase its operating presence to three oil fields on the Texas Gulf Coast.
“While oil prices are down opportunities are presenting themselves that would not normally be available,” he said.
“We continue to build our inventory of developmental drilling locations for the US$75 million joint development project with Gulf South.
“We have proven at Allen Dome that with modern drilling rigs, seismic data and new thinking that we can crack open these historic fields and create tremendous value for our shareholders and we look forward to testing this exciting opportunity with the drill bit.”
The Markham Dome oilfield was originally discovered in 1908 and has since produced more than 18 million barrels of oil.
Major oil companies, led by Texaco, drilled the majority of wells in the field in the 1950’s and 1960’s.
Titan firmly believes the field has overlooked potential and that with the use of modern technology and new drilling procedures, a considerable amount of commercial oil remains to be recovered from depths ranging from 1,100 feet to 5,000 feet across the dome.
Shares in Titan gained 5.5 per cent on the news to 3.8 cents on the news.
The company’s shares have more than doubled on the ASX since a January year low of 1.8 cents. The run started when Titan inked a US$50 million funding agreement with United States-based funding partner Gulf South Holdings in February to accelerate the development of its Texas-based oil and gas projects.
Last month, Gulf South poured an additional US$25 million into the drilling funding package, indicating increased confidence in Titan’s Texas acreage.
Lauren Barrett can be reached at lbarrett@hartenergy.com
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