From Gas Explorer to Gas Producer

This week American Petro Hunter went from gas explorer to gas producer on two of its oil wells in the North Oklahoma Project. The company, ticker symbol AAPH, will sell the product to Sunoco.

The company is now producing 130 barrels of oil per day. With a current market price hovering conservatively at $90 per barrel, Company President Robert McIntosh estimates American Petro Hunter should enjoy $4.2 million in cash flow.

On the news, American Petro-Hunter stock rose 7.84% to $0.55. The stock has a 52-week trading range of $0.24 to $0.70 a share.

The company's two wells, NOS122 and the horizontally drilled NOM1H, bring the company's total of producing wells to seven in Oklahoma and Kansas.

Once stable production rates are established in these newest producing wells, additional barrels of oil and possibly significant BOE (barrels of oil equivalent) natural gas could also be collected, McIntosh said. And as a fact, they upped the BOE to 155 this week as Natural Gas Sales commenced with a forecast of over $5mm in revenue.

With the addition of another well now being drilled – NOS227 – McIntosh said the company could expect even greater revenues. The company's goal is to produce 200 to 250 barrels per day by the year's end.

“I believe it's attainable with the prospects, the projects and the wells that we have,” said McIntosh.

The company isn't the only one enjoying success in the region. Many other large oil companies are returning to the Mississippi limestone formation located beneath the surface of northern Oklahoma and southern Kansas. Abandoned years ago, the region can now be drilled cost effectively with the use of new horizontal drilling technology, such as that in use at the NOM1H. American Petro-Hunter is leasing new acres from private landowners in the region near Ripley, Okla. The company has the potential to drill eight to 25 additional wells on this acreage.

A Calyx Energy well located just 1.25 miles from American Petro-Hunter's lease holdings has had rumored initial production rates of 1,000 barrels per day. The Mississippi formation in this area was described in the April 2011 edition of Oil and Gas Investor as a “hot, new horizontal oil play” where “legacy lease-holders are looking at 80-percent-plus returns.”

The wells in the area produce high-quality Oklahoma sweet crude, which commands a top market price.