Oil is becoming not only harder to find but also much more costly to extract. That is why domestic, onshore oil fields like the Permian Basin – where cumulative production is over 35 billion barrels of oil and 100 trillion cubic feet of gas – are so vitally important and attractive to US producers. FormCap is a company well positioned to achieve exploration success with its sizable position in the Permian Basin.
To date, the company has acquired 4,800 acres of oil and gas 5-year term mineral leases – the Weber City Prospect – in a Permian Basin region of eastern New Mexico. FormCap offers more bang for the buck for investors, because in contrast to the company’s larger competitors who have much higher overhead costs, a greater percentage of the capital that FormCap deploys for exploration actually goes into the ground.
With 40 acre spacing, FormCap believes it can potentially drill up to 100 wells on the prospect. The company’s primary objective is to extract oil from the Cisco Formation, which is believed to be a ‘giant oil trap’ formed millions of years ago. Based on Gulf Oil’s success drilling a shallow well in the Cisco Formation in 1947 and a modeling of a look-alike existing producing field (the Anton Irish field), FormCap is confident that well recoveries within its acreage could range from 100,000 to over 500,000 barrels of oil per well. Project wells are anticipate to flow at initial rates averaging 300 barrels per day.
If FormCap experiences this type of drilling success, it means that the company’s Weber City Prospect could potentially contain over 220 million barrels of oil. This would mean tremendous upside in a stock selling at its current price. Adding to the company’s favorable exploration opportunity is a management team with a proven track record for successfully exploring and developing lucrative oil and gas projects.
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