Sacgasco Limited (ASX: SGC) is an energy company based out in Perth, Australia. The company is engaged in appraising, developing and producing clean natural gas from the under-explored, recently over-looked, world-class gas opportunities. SGC’s prime focus is on exploration and production of gas in the Sacramento Basin, onshore California.
Today, the company has announced that it has completed the process of acquisition of the assets located in the prolific Rio Vista Gas Field based out in Sacramento Basin, California. The assets on the field will be used for the production and development of natural gas. The company has reported the acquisition of the gas field on 3 December 2018 with the effective date of acquisition on 1 December 2018.
The Rio Vista field is the largest field in the Sacramento Basin. It is also one of the top 15 largest fields in the USA. It has produced over 3.8 Tcf of natural gas till date. The field is spread over an area of 467 acres of oil and gas lease. The exploration is done at a depth ranging between 5,000 to 7,000 feet. The two very long terms wells over the field having a capacity of 300 Mcf/day has produced around 4Bcf of natural gas till date. These were earlier under the possession of Romara Energy Inc. The other well over the field has produced 1.6 Bcf of natural gas over a short term as it was shut down due to mechanical faults, but it is expected that this well might have great potential of undrained gas. Further, there are at least two other developing drilling sites having sandstone reservoir potential.
SGC has acquired the wells and other associated production facilities for no cost. The vendor has contributed US$100,000 cash as the future abandonment cost of the acquired wells. Although SGC has estimated the cost to abandon the wells to be around US$60,000 per well, the company has no plans to shut the wells, and it sees an excellent opportunity to explore more natural gas in the future.
As per the gas prices prevailing in the market in November 2018, the wells yield gross revenue of approx. US$60,000 per month before cost and net revenue interest over 85%. As per the 3 December 2018 report, the increasing gas prices provided additional cash flow to SGC as each Bcf of gas resulted in gross revenue of US$6.5 million at the rate of US$6.5 per Mcf.
As per the management, the acquisition is in line with its long-term strategy of acquiring under-developed assets having great upside potential. The company has now a portfolio of 30 wells in California with many new opportunities identified and is expected to come up with the results from these wells and opportunities in the very near term.
Over the past 1 year, the scrip price has declined by 67.5% going down from 8 cents on 3 January 2018 to 2.6 cents yesterday. But today, the price is up by 3.846%, and it is trading at 2.7 cents per share (as on 4 January 2019, 13:00 EST).
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