OKLAHOMA CITY, June 25 /PRNewswire-FirstCall/ -- The Beard Company (OTC Bulletin Board: BRCO) ("Beard" or "the Company") today provided investors with the following operational update.
Dilworth Field. The Dilworth Field infrastructure, including nine production wells, three salt water disposal wells ("SWDWs"), all associated conveyance and manifold piping, free water knockouts, and a 30 gallon-per-minute ("gpm") Amine plant, is now complete with the exception of the final hookup of two horizontal pumping systems ("HPS's").
Four of the nine Arbuckle production wells are currently operating, including two that are functioning at minimal production levels. All nine wells have been fitted with submersible pumps ranging from approximately 400 horsepower ("hp") to 1,440 hp. These wells are currently operating at a total fluid recovery rate of approximately eighty thousand (80,000) barrels ("bbls") per day. Current oil production ranges from approximately 150 barrels to 200 barrels per day.
Phasing all wells on-line and becoming fully operational has been delayed due to various circumstances, including significant and recurring weather delays. The primary challenge has involved the low disposal capacity of the Johns 20-1 SWDW. A large acid frac was performed on this well in February but did little to improve its disposal capacity. In March, Beard Oil Company ("Beard Oil"), the operator, engaged a large engineering firm to perform a reservoir test to determine the capacity and related pressures necessary to achieve designed disposal targets for the John's SWDW.
The reservoir test resulted in the engineering design of a pumping system capable of disposing of 84,000 to 100,000 bbls of fluid per day in the John's SWDW at pressures not exceeding 1000 pounds per square inch ("psi"). Beard Oil evaluated various pumps from multiple manufacturers and ultimately selected a system design that includes a total of three HPS's, only two of which will initially be utilized. Two HPS's should allow for the disposal of about 96,000 bbls of fluid per day at a pressure of 850 psi. Considering the worst-case pressure scenario of 1000 psi, two HPS's should be able to dispose of approximately 80,000 bbls of fluid per day. In either case, in conjunction with the other two disposal wells, Beard Oil expects to achieve daily fluid disposal capacity exceeding 180,000 bbls. This should allow the operator to utilize the majority of the production wells to sustain a crest-wide drawdown and trigger the Type 3 Reservoir matrix production designed for the Dilworth Field.
Installation of the HPS's should be completed by June 30, 2010, following which Beard Oil will slowly phase in the remaining wells to bring them on line. This process is expected to be completed by July 10, 2010. Immediately after bringing the additional wells on line, oil and gas production should increase. Beard Oil anticipates that oil production should initially increase to approximately 600 bbls per day after the pumps are installed and the reservoir has sufficient time to respond. Thereafter, a gradual increase in the "oil cut" is expected once the crest-wide drawdown is achieved. "If we can get a break in the weather and everything goes as planned, we expect the Dilworth Field to make a healthy contribution to the Company's operating results during the second half of 2010, with increased benefits anticipated in 2011 and beyond as the Field continues to respond," stated Herb Mee, Jr., President of The Beard Company.
Beard Oil has also experienced ongoing problems with the Amine plant designed to strip the hydrogen sulfide (H2S) from the produced gas. After multiple meetings, the leasing company has identified and rectified the relevant issues, and the plant is now ready to commence operations. The Amine plant is scheduled to be tested this week, with plant startup likely by the end of June. Beard Oil anticipates that once all the wells are brought on line, gas production should quickly ramp up to more than 1,000 cubic feet ("mcf") per day.
"The most exciting recent development affecting our Oil & Gas Segment was the Company's purchase, announced on June 7, 2010, of an additional 7.535714280% working interest in the Field effective May 1, 2010," continued Mee. "As a result of the purchase, our working interest ownership in the Field has increased from 10% before payout ("BPO") and 14% after payout ("APO") to 17.5+% BPO and 17.0+% APO. This will significantly increase our revenues, net income and cash flow from the Field. We are currently working to secure the $750,000 necessary to complete the purchase and do not anticipate any problem in arranging the financing."
Geohedral LLC. The Board of Managers of Geohedral appointed an Executive Committee in February 2010. The Executive Committee reports directly to the Geohedral Board and is responsible for Operations, Budgeting, Marketing/Sales and Investor Communications. The Committee works closely with Marc Messner, Vice President of The Beard Company, who has assumed responsibility for Geohedral's day-to-day operations under the Committee's direction.
With the support of Geohedral's Board, the Executive Committee has identified a qualified firm to assist the company in its efforts to develop the Tanis Mesa and Black Sands properties. The Executive Committee selected Norwest Corporation, a geological and exploration consulting firm, to work with the company on both projects. The selection of Norwest was based on its outstanding reputation and familiarity with both properties.
Black Sands. Under Norwest's guidance, Geohedral has been submitting samples from the Black Sands area for analysis. This analysis involves the magnetic separation of the magnetite and ilmenite from the balance of the materials. The separation process is necessary in order to develop qualitative and quantitative estimates of the magnetite and ilmenite in the Black Sands area. The process also allows Black Sands material to be assayed for gold and silver. Geohedral expects to receive the results of these analyses later this summer.
Tanis Mesa. Efforts to verify the original assay results for the Tanis Mesa property have to date been unsuccessful. These activities have depleted the Tanis Mesa chain-of-custody sample inventory, requiring Geohedral to collect additional sample material. The company selected Norwest to perform an exploration program in order to collect additional material for analysis from Tanis Mesa, in accordance with chain-of-custody parameters. A team from Norwest is currently on location in the Yakutat Forelands. The Norwest exploration plan calls for two to three weeks of field work that will provide the information necessary to move forward at Tanis Mesa. Results from these exploration activities should be available later this summer.
Capital Call. Geohedral is currently in the midst of a $780,000 "cash call" from its partners, which is expected to increase the total capital contributed to the partnership to approximately $8.1 million. Funds will be used to cover the costs associated with (i) this summer's exploratory program and (ii) the delay rentals on Geohedral's 64,000 acres of Claims, which must be paid by September 1, 2010.
Coal Segment. As reported in its first quarter report, the Company elected on May 4, 2010 to discontinue its coal reclamation operations effective April 30, 2010, and to sell the remaining assets of Beard Technologies, Inc. ("BTI"). Negotiations are currently underway to sell most of the assets, and such sale may be concluded by the end of July. The Company expects to sell or otherwise dispose of all BTI assets and liabilities prior to year-end.
About The Beard Company
The Beard Company creates, acquires, and/or invests in businesses, all involving natural resources, that management believes have high growth and/or above-average profit potential and can enhance shareholder value. The Company is involved in oil and gas activities; and minerals exploration and development through its Geohedral investment.
The Company is headquartered in Oklahoma City and its common stock trades on the OTC Bulletin Board under the symbol "BRCO".
This document may include statements that constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "expect", "anticipate", or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the Company's ability to secure capital to fund current operations; future trends in commodities prices; financial, geological or mechanical difficulties affecting the Company's or Geohedral's planned geological work programs; uncertainties surrounding estimates of the Company's oil and gas reserves and mineralized material; and other risks associated with the Company's business. By making these forward-looking statements, Beard undertakes no obligation to update these statements for revisions or changes in the future.
SOURCE The Beard Company