Doxa Energy Ltd., Vancouver, (TSX: DXA)(OTCBB: DXAF) has exercised its option to acquire a 20% leasehold interest in an existing project situated in the emerging Mississippian Oil Play in Oklahoma. Under the terms of a previously announced Letter of Intent with Dynamic Production Inc., as amended, the company was granted the right to acquire up to 20% interest in existing leases, as well as an ongoing lease acquisition program primarily in Alfalfa, Garfield, Grant and Kay Counties, Oklahoma. Dynamic Production Inc. is managing the project and has a stated goal of acquiring approximately 18,000 acres within the play. The play is led by Chesapeake Energy Corporation, SandRidge Energy Inc. and Eagle Energy of Oklahoma LLC. Doxa estimates that it will ultimately acquire 3,600 net acres in this round of leasing, at a cost of approximately US$2,200,000.
"The Mississippian Oil Play is an emerging horizontal play that has the potential to become one of the most profitable domestic onshore oil plays today, and as such has the potential of providing significant growth for Doxa as well as exceptional value for our shareholders," says John D. Harvison, president and CEO of Doxa.
According to recent public disclosures by these leading companies, this play exhibits excellent economics with single well estimated ultimate recovery projected at 300-500 MBOE and with drilling and completion costs estimated at US$3.0mil per well. In recent presentations to various professional associations over the past months, SandRidge has reiterated that it expects to achieve over 100% (i)ROR, and a net present value per well of approximately US$5.9mil, based on recent Nymex strip pricing. Based on current knowledge of well spacing disclosures from area operators, Doxa anticipates that up to 72 gross wells may ultimately be drilled on the acreage block, or 14 wells net to Doxa, based on its 20% participation level. The company plans to release additional information on the proposed acquisition once details are finalized.
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