As of December 31, 2012, Gasco’s leasehold interest in the San Joaquin Basin is approximately 41,716 gross acres (16,873 net) in Kern and San Luis Obispo Counties of Southern California. Leasehold rental payments and geological expenses are current in order to preserve the acreage positions. The Company is actively marketing these prospects to attract drilling partners for further exploration of the area. The project is in close proximity to the Midway-Sunset and Belgian Anticline oil fields which combined have cumulative production in excess of 2 billion barrels of oil.
Below is a description of the various projects in this area as of March 2013:
The exploratory well drilled in this area in 2012 tested non-commercial rates of oil in the Phacoides Formation and our partner moved up the well bore to test additional potential pay horizons. Two tests were made of the Monterey Shale in an off-structure position. While both zones indicated decent quality reservoir characteristics, both zones encountered non-commercial rates of hydrocarbons. Based upon all of the testing results, our partner made the decision to plug and abandon the well. While the Willow Springs well did not find commercial hydrocarbons, it did confirm our structural geologic model by finding oil within the Phacoides Formation and confirmed the existence of the Monterey Shale reservoir.
In order to complete the processing of the large Antelope Valley 3D seismic survey, our partner was granted a one-year extension in the spudding of the first test earning well at our Antelope Valley prospects. The first test well is expected to be spud before July 2013. In exchange for the drilling extension, our partner has agreed to pay for all lease rentals between July 1, 2012 and the spudding of the first exploratory well. Our partner has also committed to spudding a well on the Southwest Cymric prospect prior to December 31, 2013.
The operator of the Northwest McKittrick prospect recently reached total depth on the first of three earning wells on which we are carried for a 20% working interest. Well logs identified the presence of a structure which helps confirm our geologic model; however, the well penetrated the primary objective 300 feet down-dip from the targeted depth.
Our partner has notified us that they don’t intend to drill a second well. We are currently seeking a replacement partner for this project.
During January 2012, we entered into an arrangement with an exploration and production company which operates in California, pursuant to which we received a $750,000 prospect fee related to certain of our California acreage. The fee reimbursed costs that we have invested in the area and provides us with a potential carried interest of 20% in one well to be drilled on the acreage. Our arrangement with the operator requires them to spud this well prior to January 18, 2014 in order to earn their share of the prospect.