Xstate Resources (ASX: XST) shares have steadily advanced to its current $0.018, up 125% since its 7 August 2013 close of $0.008.
This follows its 8 August announcement of the acquisition of a 10% interest in seven producing gas wells and associated land leases and production and pipeline access equipment in the Sacramento Basin, California, for US$37,500.
These wells produce about 740,000 cubic feet of gas per day from conventional sandstone reservoirs providing the company with a source of modest cash flow.
More importantly, the acquisition provides access to exploration opportunities consistent with the company’s current focus on conventional onshore California opportunities.
Over 375 square kilometres of 3D seismic over the assets have resulted in the identification of a number of attractive drillable prospects which the joint venture intends to pursue.
Existing gross gas reserves are internally estimated to be in the order of 1.5 billion cubic feet and a number of well rejuvenation opportunities that may significantly enhance production have been identified.
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