CAVU Resources Sells Piece Of Oklahoma Leasehold

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
1MM
Description

Acquired 50% stake in 220 acres in Garvin County, OK., Bromide & Oil Creek formations.

CAVU Resources Inc., Tulsa, Okla., (Pink Sheets: CAVR) has closed the sale of a 50% stake in certain oil assets in Oklahoma to an undisclosed buyer for approximately $1.35 million.

The assets comprise 220 acres in Garvin County and include two producing wells and two wells nearing completion. Also included in the sale are six acres on which the buyer will set up an operational facility for FILO Quip Resources LLC, a subsidiary of CAVU Resources, which currently operates the wells.

Production from the two reentry wells is approximately 35 to 40 barrels of oil per day. The wells came online during the 1950s and were producing from the Bromide formation at roughly 3,000 feet. Later, the wells were deepened by 800 feet and are producing from the Oil Creek formation.

FILO expects to increase the field's storage capacity by 400% and has purchased seven storage tanks, tubing and high-volume submersible and disposable pumps to complete three additional wells. The operator has also analyzed the two producers and other wells contiguous to the lease and anticipates an average initial production rate between 30 to 50 barrels per day from approximately seven wells.

The company will pay the balance of its outstanding secured debt of $250,000 and will reimburse $1.1 million currently invested in the project. The private investment group will invest in future E&P activities on a 50-50 basis.

CAVU Resources president William Robinson says, "We are confident that we should hit our targets for the seven wells, which would put our combined production between 270 to 400 barrels per day…We have targeted additional lease opportunities in the surrounding area with the potential to rework existing wells along with potential new development and drilling programs that could quickly add to the existing project, duplicating our projected production."

CAVU Resources holds oil and gas properties in Oklahoma, Kansas, Colorado and Texas.