Wolfcamp Development

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Palo Petroleum, Inc. Non-Op Drilling Opportunities
Reagan, Crocket, Irion and Glasscock Counties, West Texas & Lea County, New Mexico

Palo Petroleum, Inc. owns “deep” rights under several thousand acres in the Permian Basin of West Texas.  During the 1980s, Palo was one of the most active Spraberry-Dean developers in the Permian Basin.  As these properties were sold, Palo retained the “deep” rights below the Spraberry-Dean formation whenever possible.  Some of these “deep” rights, including the prolific Wolfcamp formation, are still held by production from Palo’s former wells.  The current multi-pay horizontal Wolfcamp development in the Permian Basin is one of the most active horizontal oil plays in the United States.  Palo has acreage in some of the prime areas of the Wolfcamp play in Reagan, Crockett, Irion and Glasscock Counties, Texas, where companies such as COG, Hunt Oil Company, Sable Permian Resources, Pioneer, EOG and RSP Permian are most active.  The great majority of our potential 100 plus locations can be classified as Proven Undeveloped.

We have sold some of our ownership to Devon (now owned by Sable Permian Resources) and others but retained a non-op working interest position (usually 12.5%) in this acreage.  As of August 2019, we have participated in over twenty-five (25) successful horizontal well locations operated by COG, EOG, Mewbourne Oil Company, Hunt Oil Company and Sable Permian Resources, all twenty-five (25) wells are either completed and producing or should be completed and producing by the end of 2019.  Additional wells and new drilling locations are being proposed at a faster pace than ever.  We are anticipating that as many as 30 additional horizontal Wolfcamp wells will be drilled on Palo’s acreage by year end 2020.

We expect our horizontal Wolfcamp development will last for many years to come.  Assuming all Wolfcamp productive zones are developed, we foresee that 100 or more additional wells will be drilled on Palo’s acreage over the ensuing years.  The AFEs are approximately $7-12 million per well, and expected per zone recoveries are projected to be in the 450,000 BO (5,000’ Lateral Locations) – 950,000 BO (>9,000’ Lateral Locations) range.