No photo available

Details

Denver-based operator is seeking an investor to put up $8.4 million for the development of 35 wells in a shallow gas play in southwest Kansas called the Falcon Project. Cash flow from these wells are expected to fund the drilling of an additional 40 wells to make a total of 75 producing wells. The plan is to let the wells produce for several years, then sell the asset with several hundred development locations for a large profit.

The analog for the Falcon Project is the giant Hugoton Field in southwest Kansas that has Estimated Ultimate Recovery of 35 TCF. The Falcon Project is a large stratigraphic gas trap located on gentle regional dip that appears to be productive from the same Permian Chase reservoirs as the Hugoton Field. If successful, the Falcon Prospect could have recoverable reserves of greater than one TCF of gas potential worth over $1 billion. It will take less than $1 million to prove it up.

The development plan for the Falcon Project envisions acquiring 15,000 acres of prospective leasehold, drilling, completing and testing an initial proof-of-concept well to 2,900 feet, confirming the size of the accumulation with two more producers, installing a pipeline and gathering infrastructure, then developing 72 additional producers.

Total budget for the Falcon Project through proof-of-concept and resource definition is $2.2 million. Total budget through the development of 75 producing wells is $53.1 million. By reinvesting cash flow, the out-of-pocket investment is reduced to $8.4 million. During the development phase, Ponderosa anticipate acquiring up to 200,000 acres in the productive area of the trap. Ponderosa estimates that over 400 producing wells with reserves of 3-9 BCF per well could ultimately be developed in the productive area of the trap.

Projected economics for the initial program are excellent. The $8.4 million out-of-pocket investment is expected to pay out in less than two years and projected to generate cumulative net cash flow of $377.1 million over the first five years. If the project is sold at 3x annual cashflow in the fifth year, the total return would be $609.4 million, which is 72 times the original investment.

Learn More

Sign up for a free membership. Get instant access to thousands of listings. Learn about our membership plans.

Disclaimer: DealStream has not independently verified any of the information in this listing and makes no warranty as to its accuracy or completeness. This listing does not constitute an offer to sell, solicit or make an offer to buy an investment interest. Offers to sell, or the solicitation of offers to buy, any security can only be made through official offering documents, such as a subscription agreement and private placement memorandum.