Market Overview

Forty Acres Energy Commences Development of West Eumont Unit Waterflood

Share:

Forty Acres Energy, LLC ("Forty Acres" or the "Company"), a private oil
and gas company based in Houston, Texas, is pleased to announce that it
has commenced development of the West Eumont Unit waterflood (the
"Unit") in the Permian Basin. Following the successful formation of the
7,977 acre unit effective June 1, 2018, Forty Acres operates the Unit
with a 95.6% working interest. Additionally, the Company has acquired
existing water handling infrastructure within the Unit and entered into
a third-party agreement to secure ample water supply for its injection
needs. In July 2018, Forty Acres began injection operations and
officially commenced development of the waterflood.

The West Eumont Unit is a Yates, Seven Rivers, and Queen ("Y-SR-Q")
waterflood unit located in Lea County, New Mexico. Based on primary
production and expected secondary recovery, the Unit is the largest
waterflood unit ever formed in southeastern New Mexico, a region where
the Y-SR-Q reservoirs have produced over 600 million barrels of oil to
date. Forty Acres will develop the Unit through a significant inventory
of low-risk primary and secondary waterflood projects. Based on the
consistently strong waterflood performance of the dozens of directly
analogous Y-SR-Q waterfloods along the western edge of the Central Basin
Platform, the Company estimates future recoverable reserves from the
Unit of 20-30 million barrels of oil in addition to its 10 million
barrels already produced, representing 25%-33% total recovery of the
Unit's estimated original-oil-in-place of 120 million barrels.

Forty Acres recently established development of its first waterflood
pilot area, consisting of several existing producers and five new drill
wells. The new drill wells consist of one producer and four injectors
drilled to a total depth of ~4,500' at an average cost of approximately
$500 thousand per well. The producer is expected to pay out in 8 months
and ultimately recover approximately 150,000 barrels of oil equivalent.
Each of the four injectors is injecting water at 400-500 barrels of
water per day. Forty Acres will develop several additional pilot areas
similarly in the near term. Full field development of the Unit will
consist of up to 400 wells and require approximately $100 million of
total capital, resulting in estimated peak production of 7,000-8,000
barrels of oil equivalent per day.

"Forty Acres has assembled a large, strategic waterflood unit along with
critical infrastructure in an area with significant primary and
secondary development opportunity," said Forty Acres Chief Executive
Officer Huxley Song. "We are excited to reach the important milestone of
commencing waterflood operations in our initial pilot area and look
forward to developing several more areas and growing production
meaningfully in the near term. We appreciate the continued financial and
strategic support of our financial sponsor, Sage Road Capital, and look
forward to the future growth of our partnership."

John Crum, Forty Acres' Non-Executive Chairman, said, "The West Eumont
Unit is located in one of the most prolific oil producing regions in the
world. I'm proud of the team's hard work in identifying and evaluating
the favorable technical and economic merits of the Unit, executing on
numerous acquisitions to achieve its current scale, and completing the
unitization process and commencement of waterflood operations in a
timely manner. I look forward to Forty Acres' continued success as it
embarks on the further development of its asset base."

About Forty Acres Energy, LLC

Forty Acres Energy is a Houston, Texas based exploration and production
company focused on the acquisition and development of conventional oil
reserves, including the implementation of enhanced-recovery techniques.
The Company was formed in 2015 by Huxley Song, John Crum, Chris Fling
and Sage Road Capital.

About Sage Road Capital

Sage Road Capital is a Houston, Texas based private equity investor in
the upstream oil and gas sector. Founded in 2012, Sage Road targets
lower middle-market investment opportunities in North America, with a
primary regional focus on Texas, Oklahoma and the surrounding states.
For more information, please visit www.sageroadcapital.com.

View Comments and Join the Discussion!