Mississippi:
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Wilkinson County, bordering Louisiana to the south and immediately adjacent to the Mississippi River to the west. Palmetto Point is approximately 150 miles southwest of Jackson, Mississippi and approximately 50 miles north/northwest of Baton Rouge, Louisiana. Project Details Lexaria has a 32% working interest in a 12-well program located at Palmetto Point, Mississippi. The prospect wells are targeting the Frio Geological formation. Frio wells typically enjoy low finding costs and have a high degree of success. The natural gas and oil targets occur at shallower depths, and have low completion costs. Palmetto Point is a 50-square mile (32,000 acres) 3-D seismic area that has generated a prolific number of shallow Frio targets. At this time many valid drilling targets remain. Our important Belmont Lake oil discovery is located within this Palmetto Point area. Drilling of the original ten wells commenced in May 2006 (2 other previously drilled wells were subsequently added to our interest) and all those 12 wells have now been drilled. In total, 10 wells encountered some natural gas and 3 of those wells also encountered some oil.
In addition, Lexaria participated in the first Belmont Lake development well (the PPF-12-3) in 2007, where we made the original discovery late in 2006 (the PPF-12). Lexaria owns a 32% working interest in the development drilling on this lease. Both these wells are currently producing oil. The complete development of the Belmont Lake oil field could involve anywhere from four to twelve wells and will represent a major accomplishment for the future plans of Lexaria Corp. Lexaria has a 45%-50% working interest in another 12 wells in Mississippi that were drilled between September 2006 and November 2007. These 12 wells were not located in Palmetto Point, but were located on other lands that together form part of the 50-well Area of Mutual Interest (AMI) wherein Lexaria and the other participants have an exclusive option from the top of the Frio formation to the bottom of the Wilcox formation, over a roughly 200,000 acre area. Although Palmetto Point is within the 200,000 acre AMI, seasonal flooding during the Winter/Spring of 2006/07 made it difficult to begin new drilling operations in that location at that time. Although several of the wells had geological success, only natural gas was found and these wells are not economic with natural gas prices under $4 per thousand. Lexaria has a 60% working interest in the balance of the Mississippi AMI. As of May 2009 there are 38 wells remaining to be drilled. With depressed natural gas prices there has been less incentive to drill shallow gas wells. Our exploration focus has centered on the idea of attempting to concentrate on the discovery of additional Frio Oil discoveries that might resemble our earlier Belmont Lake discovery. If successful we believe we can add significant shareholder value since there are a number of historic oil fields in our general area each in excess of 500,000 barrels or more, and in some cases significantly more. The Prospect Drilling operations are being conducted by Griffin & Griffin Exploration in its capacity as Operator. This consists of the drilling, logging, testing, completing and equipping for production (or if applicable, the plugging and abandonment) of the wells. Griffin anticipates drilling to a subsurface depth equal to such depth as is necessary to penetrate the sands of the Frio Formation identified as potentially productive of oil and/or gas. Griffin has drilled, owned or operated more than 100 Frio wells in the region. Griffin has utilized seismic "bright spot" technology, providing a tool to identify gas reservoirs and to delineate the reservoir geometry and limits. Taking advantage of these critical factors has improved reserve estimates and the geologic success ratio that has made the Frio an economical and predictable reservoir. View FF-36 well log results chart View surface scan of FF-36 well showing "bright spot" technology The Frio in the area of Southwest Mississippi and North-Central Louisiana is a very complex series of sand representing marine transgressions and regression and therefore the presence of varying depositional environments. Structurally, the Frio gas accumulations are a function of local structure and/or structural nose formed as a result of differential compaction features. However, stratigraphic termination (i.e. up dip shales outs of sands) also plays a role in most Frio accumulations. The stratigraphy is so complex that seismic HCL evaluations are the only viable exploratory tool for the Frio prospect. |
