The unrest in Cairo has sent oil back on the climb. Oil was trading near $85 per barrel last week until the news of the disarray hit the wires sending the "black gold" back up over $90 U.S. where it is currently holding steady above $91 U.S. It’s not a huge surprise that oil is back at these levels with many analysts expecting that crude will touch $100 per barrel in 2011. The revolution in Egypt just happened to be a catalyst for the moment.
Energy resource companies have been strong over the last year and it is looking as if that is going to remain true for the foreseeable future. Vancouver-based Enterprise Energy Resources Ltd. (TSX-Venture:EER) is looking to continue its upward trend in share price right along with the rest of the industry.
Enterprise has been a little "off the radar" recently as no projects are currently ongoing, but today issued a press release that their search to find a substantial opportunity within their organization has resulted in an agreement between its wholly-owned subsidiary, EERL Energy Limited Partnership and Chimney Sweep Oil and Gas L.L.L.P pursuant to which EERL will acquire a 50% interest in Chimney Sweep, subject to customary approvals and conditions.
Chimney Sweep currently holds approximately 1,600 net acres of oil and gas leases in North Dakota’s southern Williston Basin in an area which has produced more than 85 million barrels of light oil from multiple zones. New oil discoveries have recently been made in this area as a result of advances in seismic technology and a better understanding of the geology.
Over the last twenty years, many wells in the area have been highly prolific with some having initial production rates nearly 2,000 barrels of light oil per day and reserves of more than four million barrels of oil per well. One of the more recent discoveries, drilled in 2009, produced at a sustained rate of 400 barrels of light oil per day, with no water.
Chimney Sweep, who completely reprocessed the 3-D seismic of the area last year, owns approximately 110 square kilometres of 3-D seismic which covers the majority of its acreage and the main play fairway from which most of the light oil has been produced and intends to acquire additional acreage in the area and drill one or more wells during 2011.
Per the agreement, EERL will make an investment equal to $2,495,147 in addition to certain approved expenses of Chimney Sweep in order to earn the 50% interest. EERL has nearly two million in working capital, but, as a condition of the contract, must arrange financing for no less than $5 million with the proceeds being used to fund the investment in Chimney Sweep and the work program scheduled for the project this year.
Enterprise has clearly been low key for the last year or so, but this acquisition, if terms are completed, can bring them right back into the view of investors. The price per share indicates that Enterprise still has the interest of the investment community and with news like today, it may be one worthy of further due diligence.
