Sacramento Basin Farmout Confirms AMI Value

Sacramento Basin‐focused conventional gas producer and developer, Sacgasco Limited (ASX: SGC) (“Sacgasco”) has taken a key step in unlocking the value of its conventional natural gas opportunities by farming out a working interest in its operated onshore California Area of Mutual Interest (the “AMI”) to private company Bombora Natural Energy Pty Ltd (“BNE”).  BNE  will  fund  additional  oil  and  gas  leases  over  highly  prospective  structures  in  the Northern Sacramento Basin (Refer to Fig 1 below).

BNE will earn a 20% Working Interest (“WI”) in up to nine (9) natural gas prospects that have already been mapped in the AMI by providing staged funding of up to A$400,000. 

                                Fig 1: Sacramento Basin showing location of AMI       

14% of the interest will be provided by Sacgasco, with the remaining 6% interest provide by AMI partner Xstate Resources Limited.

Funding  will  be  provided  in  two  stages  to  reflect  acreage  acquisition,  and  progress announcements  will  be  made  after  material  leases  have  been  secured.  Initial  funding  of

A$200,000 will focus on 3 Prospects in which Bombora will earn 20%.

Bombora will have the options to fund a further $200,000 of leasing to earn a 20% interest in an additional 6 prospects.

AMI Prospects

The  9  mapped  AMI  prospects  are  large  undrilled  anticlines  with  prospective  conventional sandstone reservoirs of the same age as the ready‐to‐drill Dempsey Prospect and Alvares Gas Discovery Appraisal Project (with a combined total 3.4 TCF* best estimate recoverable Prospective

Resource), in which Sacgasco holds respective 55% and 40% interests. 

Note * : Further details were included in SGC’s ASX release dated 4 September 2014.

Over the last three years Sacgasco has licenced and selectively reprocessed over 1,000 miles of regional  and  prospect  oriented  2D  seismic  data.  SGC’s  Technical  Director  Keith  Martens  has integrated the wireline log, mud log, core and drill stem testing and production information from over 1,000 key wells in the Northern Sacramento Basin.

Interpretation of this primary data, and integration of published technical papers on structural development, source, seals, reservoir outcrop information and depositional environments, has revealed a plethora of opportunities in the AMI.

The Working Interests in the AMI will be: 

                                                         Before   After
 
Sacgasco Limited (ASX: SGC)            70%      56%  (Operator)
Xstate Resources Limited (ASX: XST)  30 %     24%
BNE                                                   0%       20%

Dempsey Prospect and Alvares‐Gas‐Discovery Appraisal Project

Separately, Sacgasco was responsible for identifying and mapping the Dempsey Prospect (SGC– WI 55%), based on a 2D and 3D Seismic data, and recognising the “left behind” TCF‐scale  potential of the 1982 Alvares gas discovery (SGC – WI 40%), based on a key well and reprocessed 2D seismic.