Sefton Expects Improved Flow Rates at Tapia, Charges Ahead in Ks.

Sefton Expects Improved Flow Rates at Tapia, Charges Ahead in Ks.

Wednesday, April 06, 2011

Sefton Resources Inc.

Sefton updated on trading for its oil production assets in California and gas infrastructure assets in Kansas.

 

California

Sefton's 100% owned subsidiary TEG Oil & Gas USA, Inc ("TEG USA") is the operator of its operations in California at Tapia and Eureka Canyon.

As was announced on March 1, 2011, TEG USA commenced its pilot steam flood operations at the Hartje #10 well in March and is currently injecting steam at about 35% capacity which will be increased to approximately 75% to 80% capacity (normal operating levels) over the coming weeks. At that point, approximately 700 to 780 bbl of steam will be injected per day into the center of the oilfield.

TEG USA averaged approximately 123 bbl per day during March, which is regarded as the baseline primary oil production level and it is anticipated with the injection of steam into the Hartje #10 well this will rise as it did for the pilot cyclic steam program last year.
Local California oil is currently posting at a 4% premium to NYMEX futures, rather than the more typical 7%-9% deficit. This spread has averaged a positive $4.20, for a posting of just over $107/bbl average for the month of March.

The preparatory work for the steam flood sensitivity geologic modeling will be completed in early April ready for Dr. Farouk Ali to commence his steam flood modeling work, which will last several weeks and is expected to be completed in May 2011.

 

Kansas

Sefton's Assets in Kansas are in Leavenworth County, including the Vanguard pipeline and the recently acquired LAGGS pipeline, and Anderson County, being the Waverly facility. Additional assets along the LAGGS pipeline are currently undergoing due diligence and are expected to close by 30 April 2011.

 

Leavenworth County

Repairs to all of the 8" and the bulk of the 6" and 4" segments of the Vanguard Pipeline system have been completed and tested. Strategically, the 8" portion of the system is the most critical segment of the system and this segment will see the first volumes in 2011 with initial revenue from the Company's 100% owned subsidiary, TEG Midcontinent Inc and a third party expected to accelerate during the coming year
Testing and activation of the LAGGS pipeline have begun. Three areas for repair have been identified. The repairs will be made in the order of their operational importance.

It is anticipated that later in 2011 the two systems, Vanguard and LAGGS, will be connected together and, as a result, it will be possible to move gas to market at two separate points and to two separate markets. This will give Sefton the possibility of moving gas to the higher return market from month to month.

 

Anderson County

The Waverly facility consists of over 10 miles of pipeline, fifteen well bores, two salt water disposal wells and a dehydration facility capable of processing 10 million cubic feet of gas per day. The Waverly facility has an inactive tap with Post Rock (an interstate pipeline company) at the dehydration facility. Reactivation of the tap is expected to take place in early 2012.

Jim Ellerton, Acting Chairman and CEO of Sefton Resources said, "The Company is progressing well - we expect improved flow rates at Tapia and the prospect of still further increases once we can implement the recommendations of Dr. Farouk Ali's report. At the same time, we have continued to make progress in Kansas and this will continue further in the coming months so that we can activate the assets as soon as is possible. We are cash generative, profitable and actively increasing our investor profile and believe this will position us well for the future."