Grassy Trails is located in Emery County and Carbon County, Utah, the United States and is well situated on the split north plunge of a regional-scale anticlinal feature known as the San Rafael Swell that has a large catchment area from which to concentrate oil and gas from two rich petroleum systems. Grassy Trails encompasses a total of 6,268 acres and has yielded approximately 600,000 barrels of golden-colored, light, sweet crude oil since its discovery in 1962.
To date a total of 31 wells have been drilled at Grassy Trails to delineate the oil reservoir. The estimated total reserve of crude oil is about 1.0 million barrels, of which about 157,000 barrels are proved undeveloped and about 783,000 barrels are probable reserves. According to the internal geologist of the Group, Mr. Hou Xiu Chuan, Grassy Trails is likely to yield a substantially higher recoverable reserve if state-of-the-art drilling technique is adopted.
Mr Terence Kong, Executive Director, Genesis Energy remarked: "We plan to re-work 10 old wells with 2 laterals per well will be drilled to a horizontal extent of 1,500 ft each. Our analysis shows that additional drainage can easily be obtained from the extended reach wells. Based upon the technical success of horizontal drilling and upon the results of short laterals drilled in Grassy Trails the feasibility of draining the reserves is technically achievable and highly recommended. Bids have already been received for the drilling of horizontal kick-out at designated locations."
In the opinion of the technical advisor Sierra Pacific, LLC, there is a good geological and engineering understanding of Grassy Trails to indicate that the oil reserves in the field justify the additional development of the field in order to produce the reserves.
The Group expected a further injection of capital investment of US$1.4 million (approximately HK$10.9 million) for Grassy Trails in the coming 6-12 month period, and an additional US$5.5 million (approximately HK$42.8 million) for performing lateral drilling of existing wells in the next 7-24 month period. If the operational plan proceeds as scheduled, Genesis Petroleum will finance the capital expenditure by revenues generated from exploitation and/or internal resources.
A locally renowned operator, Integrated Energy LLC, has already been engaged to provide drilling, field operation, transportation and other technical services for Grassy Trails. The total revenue to be generated from Grassy Trails will be allocated as to 75% to the Group.
Mr Kong continued: "We are of the view that the global demand for oil and gas will continue to grow, and we are optimistic of the development prospects of the oil and gas exploitation and extraction business. The acquisition of Grassy Trails is a signature deal for the Group to transform itself into an up-stream player. We are committed to reviewing more up-stream oil and gas investment prospects in order to tap further into the potential brought by global energy shortage.
About Genesis Energy Issued by : Through :
Genesis Energy Holdings Limited (702) is an energy company with focus on oil and gas exploitation and operations. The company is currently finalizing a number of investments in existing oil and gas fields and greenfield projects in the United States and China. Downstream, the company is engaged in crude oil transportation and pipelined gas businesses.
Genesis Energy Holdings Limited
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