FormCap Corp. is an emerging junior company in the oil and gas sector. The company owns 4,900 acres – the Weber City Prospect – in the Permian Basin, an area well known for its hydrocarbon production. The Permian Basin has produced over 35 billion barrels of oil and 100 trillion cubic feet of gas. It is host to over 20 percent of all domestic oil and gas produced in the US.
The ’smart’ money is investing into Permian Basin assets. For example, ExxonMobil (NYSE: XOM) is buying XTO Energy for $31 billion – the largest US energy takeover since Conoco-Phillips acquired Burlington Resources. The takeover occurred in large part due to XTO Energy’s large land position in the Permian Basin. Exxon was not alone in its interest in the Permian Basin. Other large energy companies acquiring assets in the Permian Basin include Occidental Petroleum and SandRidge Energy.
This takeover indicated a real shift in Exxon’s strategy and validated the independent exploration and production business model of smaller companies, like FormCap, which focus on the development of the Permian Basin areas of western Texas and eastern New Mexico as a key source of energy. The latest drill logs show that interest in the region is on the rise and that the Permian Basin is a hotbed of activity. Recent permit applications show that many other energy companies – Anadarko, Apache, Devon, Chevron and Kinder Morgan – are becoming involved in the area.
It appears that FormCap is ideally situated with their acreage in the Permian Basin. Based on modeling of a look-alike existing producing field – the Anton Irish field – well recoveries are expected to range from 100,000 to over 500,000 barrels of oil per well. Prospect wells are anticipated to flow at initial rates averaging 300 barrels per day, free of formation water. With 40 acre spacing in this prospect, there is room for approximately 100 wells.
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