HNR Acquisition Corp Announces a Significant Increase in Potential Oil Recovery from the Grayburg-Jackson Field
- HNRA reveals the potential to recover 34 million additional barrels of oil from the Grayburg and San Andres zones.
- Current proven reserves include 15.4 million barrels of oil and 3.5 billion cubic feet of natural gas.
- Total original-oil-in-place estimated at approximately 956 million barrels, offering long-term revenue opportunities.
- Management focuses on increasing production from the Seven Rivers zone and optimizing recovery from the Grayburg and San Andres formations.
- The company's strategic approach aims to enhance shareholder value through increased revenue and earnings.
- Potential for significant revenue growth through increased drilling and recovery operations in key oil zones.
- None.
Insights
The announcement by HNRA about the potential to access an additional 34 million barrels of oil in the Grayburg and San Andres zones represents a significant development for the company and its stakeholders. The Grayburg and San Andres formations, located within the larger Permian Basin, are known for their rich hydrocarbon deposits. The ability to enhance production by adding perforations to existing wells is a cost-effective method compared to drilling new wells, which can be capital intensive. This strategy leverages existing infrastructure and minimizes additional environmental impact.
The potential increase in reserves by over 200% from the previously reported 15.4 million barrels to a combined 49.4 million barrels could substantially extend the company's production life and revenue stream. The slow decline rate mentioned suggests an efficient reservoir management that may lead to sustained cash flows over an extended period. This could be particularly attractive to investors seeking long-term value in the energy sector.
However, it is crucial to consider the volatility of oil prices and regulatory changes which can significantly impact the profitability of such projects. Furthermore, the execution risk associated with optimizing waterflood operations and the technical feasibility of infill drilling at the proposed well spacing must be monitored closely.
The disclosure of an additional 34 million barrels of oil reserves is a material event for HNRA, with direct implications for the company's financial health and stock valuation. The increase in reserves should be reflected in the company's balance sheet as an asset, potentially leading to an improved borrowing capacity and investment appeal. The projected longevity of the revenue stream, extending over two decades, provides a clearer picture of future earnings, which could lead to a re-rating of the company's stock by analysts.
Investors will be interested in the net present value (NPV) of the additional reserves, which takes into account the time value of money and the projected cash flows from oil production. This analysis will provide a better understanding of the intrinsic value added to the company by the newly discovered reserves. Additionally, the company's ability to increase daily production and achieve record levels of revenue and earnings, as mentioned by the Vice President of Operations, could lead to upward revisions in earnings forecasts and potentially higher dividend payouts in the future.
It is important to note that such projections are contingent upon successful extraction and market conditions. The cost of additional perforations, waterflood optimization and any other necessary capital expenditures to realize these reserves must be weighed against the anticipated revenue.
From a technical standpoint, the utilization of existing wells to access untapped reserves in the Grayburg and San Andres zones is a strategic move. The technique of adding perforations to existing wellbores is a tried-and-true method of enhancing oil recovery. This approach can increase the exposed surface area of the reservoir rock, allowing for more oil to flow into the wellbore. The mention of net pay mapping, which is the measurement of the thickness of the reservoir rock that contains hydrocarbons, indicates a thorough evaluation of the reservoir's potential.
Waterflooding, an enhanced oil recovery technique mentioned by the company, involves injecting water into the reservoir to increase pressure and displace oil towards the production wells. Optimizing this process can lead to improved recovery factors and increased production rates. The company's reference to uniform injection and infill drilling suggests a comprehensive strategy to maximize oil recovery, which could indeed transform the field's output and profitability.
The technical feasibility and economic viability of these operations are critical. Factors such as the reservoir's response to increased perforation and waterflooding, the potential for infill drilling to access bypassed oil and the integrity of the existing wells and facilities will all play a role in the success of the project. Investors should be aware of the technical challenges and risks associated with such operations, despite the promising outlook presented.
HOUSTON, TX / ACCESSWIRE / March 12, 2024 / HNR Acquisition Corp (NYSE American:HNRA) (the "Company" or "HNRA") is an independent oil and gas company focused on the acquisition, development, exploration and production of oil and gas properties in the Permian Basin. Today, the Company announces that the potential untapped oil in the prolific Grayburg and San Andres oil zones may be accessed in the near term.
After a series of management meetings with its independent petroleum consultants to review well log data and historical completion data, in addition to the previously announced proven reserves, there may be 34 million barrels of oil to be accessed in the prolific Grayburg and San Andres zones by simply adding perforations to existing wells in the Grayburg and San Andres formations in the Company's leasehold. Management has a dual path analysis underway where our VP of Operations is focused on maximizing short-term and long-term production in the Seven Rivers zone, and the Company's consulting geologist is assessing the best approach to recover oil from the Grayburg and San Andres zones.
The Grayburg-Jackson field is currently producing crude oil and natural gas from the waterflood operations primarily from the Seven Rivers zone. Cobb and Associates ("Cobb"), third-party engineers, have updated our reserve report for the end of 2023 which has proven reserves of approximately 15.4 million barrels of oil and 3.5 billion cubic feet of natural gas. Our Grayburg-Jackson field is located on 13,700 leasehold acres in Eddy County, New Mexico with oil and gas rights to the Seven Rivers, Queen, Grayburg and San Andres intervals. The mapped original-oil-in-place ("OOIP") is approximately 876 million barrels of oil in the Grayburg and San Andres intervals and 80 million barrels from the Seven Rivers interval for a total OOIP of approximately 956,000,000 barrels of oil.
The proven oil reserves of over 15 million barrels, combined with the potential 34 million additional barrels from the Grayburg and San Andres zones, will produce oil and a revenue stream for more than two decades at a slow decline rate.
"After reviewing all the current and historical data, the consultants estimate there are an additional 34 million barrels of oil left to recover under the leasehold from the Grayburg-San Andres formations," said Dante Caravaggio, President and CEO of HNRA. "Net Pay mapping results in estimates of original-oil-in-place on the property from the Grayburg-San Andres to be approximately 956 million barrels."
"We believe that based on historical perforations, only 44 percent of the Grayburg-San Andres had been tapped," said Jesse Allen, Vice President of Operations, HNRA. "With continued waterflood optimization, adequate uniform injection and infill drilling of 10-acre well spacing in the Seven Rivers, and now with increased drilling in the Grayburg-San Andres sands, HNRA could see a significant increase in daily production that will lead to record levels of revenue and earnings."
"When we acquired the Grayburg-Jackson field through the purchase of LH Operating, LLC, our team felt there was upside potential to increase the value of the property by increasing well spacing and by modernizing and enhancing maintenance of the field," said Joseph V. Salvucci, Sr., Chairman of the Board, HNRA. "After completing the analysis, we are exploring the recovery of so much additional potential oil to be achieved through our existing operations. The additional 34 million barrels of oil recovery is certainly a game changer, not only for the company but for the shareholders, as it will add significant value and will increase revenue and earnings for years to come."
About HNR Acquisition Corp
HNRA is an independent upstream energy company focused on maximizing total returns to its shareholders through the development of onshore oil and natural gas properties in the United States. HNRA's long-term goal is to maximize total shareholder value from a diversified portfolio of long-life oil and natural gas properties built through acquisition and through selective development, production enhancement, and other exploitation efforts on its oil and natural gas properties. On November 15, 2023, HNRA acquired its operating entity, LH Operating, LLC, whose assets include interests in the Grayburg-Jackson oil field in the prolific Permian Basin in Eddy County, New Mexico.
HNRA's Class A Common Stock trades on the NYSE American Stock Exchange (NYSE American:HNRA). For more information on HNRA, please visit the Company website: https://www.hnra-nyse.com/
Forward-Looking Statements
This press release includes "forward-looking statements" that involve risks and uncertainties that could cause actual results to differ materially from what is expected. Words such as "expects," "believes," "anticipates," "intends," "estimates," "seeks," "may," "might," "plan," "possible," "should" and variations and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Such forward-looking statements relate to future events or future results, based on currently available information and reflect the Company's management's current beliefs. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements. Important factors - including the availability of funds, the results of financing efforts and the risks relating to our business - that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time on EDGAR (see www.edgar-online.com) and with the Securities and Exchange Commission (see www.sec.gov). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Investor Relations
Michael J. Porter, President
PORTER, LEVAY & ROSE, INC.
mike@plrinvest.com
SOURCE: HNR Acquisition Corp
View the original press release on accesswire.com
FAQ
What is the ticker symbol for HNR Acquisition Corp?
How many additional barrels of oil are estimated to be recovered by HNRA in the Grayburg and San Andres zones?
Where is the Grayburg-Jackson field located?
What are the current proven reserves of HNRA?
Who is the President and CEO of HNR Acquisition Corp?
How much original-oil-in-place is estimated in the Grayburg and San Andres intervals?
