HOUSTON, March 2, 2011 /PRNewswire/ -- Blast Energy Services, Inc. ("Blast")(OTC Bulletin Board :BESV ) announced today that drilling at the Solimar Energy 76-3 well in the Guijarral Hills Field Area located in Fresno County, California has already reached a depth of 5,700 feet and should be penetrating the first of four targeted pay sands at approximately 7,000 feet within the next week.
"Thus far the drilling on this well has progressed better than expected and we are looking forward to some favorable indications as we approach the first targeted pay sand," stated Michael Peterson, acting President and Chief Executive Officer of Blast.
This initial well in the Guijarral Hills Exploitation Project, operated by Solimar Energy LLC, is expected to penetrate at least four sandstone oil reservoirs at depths between 7,000 feet and its planned total depth of 10,500 feet. These objective sands include the Temblor reservoirs: Smith, Allison and Leda Sands; and the deeper Avenal/Gatchell reservoir. If all goes as planned, the well is expected to penetrate all four objective sands and reach total depth within thirty days.
Historically, oil fields in the area have had wells that have produced from each of these four objective oil reservoirs with initial daily production rates of over 500 barrels of oil per day (bopd). Solimar is targeting an estimated 400 bopd initial flow rate from this initial well.
Under the terms of the farmout agreement with Solimar, Blast will participate in the Guijarral Hills project on a promoted basis of one-third for a quarter, or 66-2/3 percent (%) of the costs to drill and complete the initial well. After competition of the initial well, Blast will have earned a net revenue interest of 38% and a 50% working interest in the entire project's acreage position, subject to certain interests granted in connection with Blast's recent debt funding.
Located in the oil rich northwestern San Joaquin basin, the Guijarral Hills Field was originally discovered in 1948 and has produced over 50 million barrels of light oil with some natural gas over its lifetime. While the original field is largely abandoned today, Solimar has acquired an interest over three sections covering 2,543 acres. One of the sections, where the initial well is located, is an under developed area located between two previously highly productive fields and is within 2,000 feet of the Guijarral Hills Field. As the initial drilling location is considered "in-field" the environmental and surface use requirements have already been cleared and drilling has commenced. The balance of the acreage is primarily to the west and south of the existing field in areas that Solimar believes have been under developed.
Initial technical work previously conducted by Solimar has focused on identifying those parts of the field extension likely to have been less efficiently exploited by the original drilling program where it is hoped that commercial flow rates and good recovery of the remaining in place oil can be re-established. Solimar has completed further geological and reservoir engineering studies on the project and the results have been very positive for the potential recovery of light oil.
Solimar is a wholly-owned subsidiary of Solimar Energy Limited (SGY.AX), a publicly-traded company on the Australia Stock Exchange based in Melbourne, Australia.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in this release. Such factors may include risk factors including but not limited to: the likelihood that the customer lawsuits result in meaningful proceeds, the ability to raise necessary capital to fund growth, adequate liquidity to manage operations and debt obligations, the introduction of new services, commercial acceptance and viability of new services, fluctuations in customer demand and commitments, pricing and competition, reliance upon lenders, contractors and vendors, the ability of Blast's customers to pay for our services, together with such other risk factors as may be included in the Company's filings on its periodic filings on Form 10-K, 10-Q, and other current reports. Blast takes no obligation to update or correct forward-looking statements, and also takes no obligation to update or correct information prepared by third parties that are not paid for by Blast.
SOURCE Blast Energy Services, Inc.