Tengasco Inc. and Penn Virginia Oil & Gas Corp., a subsidiary of Penn Virginia Corp. reported last Wednesday that they have entered into a joint operating agreement to explore for, drill, and develop natural gas and oil reserves in a 57,300-acre area of mutual interest in eastern Tennessee and southern Virginia.
“We believe that this region is a new and exciting frontier for oil and gas exploration,” said Tengasco Chairman M. E. Ratliff. Production obtained in this venture will potentially add to the volumes transported through Tengasco’s existing pipeline system owned by Tengasco Pipeline Corp.
“With this joint venture we are continuing our aggressive exploration of all additional opportunities for discovery of fields that may even exceed our Swan Creek field, which state officials report has already more than doubled the entire production of natural gas in Tennessee,” he added.
Penn Virginia said it is immediately initiating seismic exploration on the tract of land and will commence drilling upon completion of the seismic. PennVirginia is listed as the operator under the joint operating agreement. The companies said they will share present and future lease acquisition costs, seismic exploration and analysis costs, and drilling and operating costs equally. They also will split the proceeds from production 50/50.
Tengasco also reported that it has drilled its 40th consecutive successful well in the more than 50,500 acres of Swan Creek field in the Eastern Overthrust belt in Hancock County, TN, and the field remains only about 15% developed. Tengasco also owns 190 oil wells and 54 gas wells located on approximately 32,000 acres of leases located in the heart of the Midcontinent area near Hays, KS.
Tengasco has said that geological studies indicate that the Swan Creek field may be one of the largest natural gas and oil discoveries in the Appalachian Basin. Proven reserves in the field are estimated at 54.6 Bcf of gas and 600,000 barrels of crude oil. Probable gas reserves were estimated at 117.1 Bcf.
In March, Tengasco completed construction of a $6 million, 65-mile pipeline connecting Tengasco’s Swan Creek field in Hancock County, TN, to Eastman Chemical Co. (see NGI, May 28). The new intrastate pipeline delivers a minimum of 10 MMcf/d to Eastman Chemical under a 20-year sales contract.
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