Doxa Energy (V.DXA) soars 100% after announcing participation in three new Texas projects

Stockhouse Editorial
0 Comments| January 28, 2014

Doxa Energy Ltd. (TSX: V.DXA, Stock Forum) recently entered into definitive agreements providing for its participation in three new conventional oil and gas exploration projects in southern Texas. 

Two of the projects are focused on the Queen City formation at depths above 6,000' subsurface in areas which historically produce oil, and the third project will be targeting gas/condensate production from the expanded Yegua formation on the Gulf Coast. 

According to the Doxa Energy press release, operations for drilling and evaluating initial test wells on two of the projects commenced in the fourth quarter 2013 and are ongoing. Each of the new projects offer potential for development wells.

Additional details of all three projects will be released in the near future upon completion of ongoing operations and leasing efforts. Doxa's level of participation in the two Queen City projects vary from 15 to 20%, and is set at 4.5% in the Yegua formation test, subject to certain terms and conditions set forth in the respective agreements.

Furthermore, Doxa reports that in late 2013 it closed the sale of various leases within its Mississippian Lime Play project, northern Oklahoma, including approximately 700 net acres out of its 3,600 net acre original lease block. Included in the sales were three wells then in the process of being drilled, completed and/or had recently commenced producing. 

The company received total proceeds of approximately US$1.2 million as a result of these sales, which it used to reduce debt and fund ongoing operations, including the new projects. As previously reported, Doxa's average cost of acquisition per acre in the Mississippian Play totals about $760 per acre, while the calculated average price received for the noted sales of leasehold is $1,454 per acre. The company also received reimbursement of out-of-pocket costs associated with the included wells. 

For the third quarter of 2013, Doxa's oil and gas revenues averaged $205,000 per month, consisting of $89,000 attributable to its interests in the Mississippian Play and $116,000 derived from conventional and other projects. At that time, oil sales accounted for 62% of the revenue stream, and natural gas sales accounted for 38%.

Doxa reports as of this date, it has participated in 29 new horizontal wells in the Mississippian Lime Play primarily with either SandRidge Exploration and Production, LLC or Chesapeake Operating, Inc., both of Oklahoma City, Oklahoma as project operator. Also, as of this date, the company has another Mississippian well in the process of being drilled and/or completed, in addition to the two conventional wells described above. 

Acquisition of the above mentioned new projects, together with the recent sale of certain Mississippian project leases reflect Doxa management's decision to refocus significant effort from the Mississippian Play, where the company's net interests are relatively small in relation to average barrels per day of oil (equivalent) per well to much larger participation in oil prone conventional projects that have the potential to add substantially greater value to Doxa's asset base. Doxa however still remains committed to continued participation in additional wells within its remaining acreage in the Mississippian Play, subject to lease terms and continued individual prospect evaluation.

Doxa develops and maintains a portfolio of producing and developing conventional and unconventional assets, including the Mississippian Lime Play in northern Oklahoma, Frio, Wilcox and Eagle Ford Shale trends in South Texas.

On Tuesday, Doxa soared 100% and was trading at $0.06 a share. The company had a market cap of $2.0 million, based on 34 million shares outstanding.

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