CAVIAR 1, 3, 4 & 5 PROJECTS

Geological Discussion

The Caviar 3-D Package is a multi-well, amplitude supported exploration project located in the shallow inland waters of Plaquemines Parish, Louisiana.  The four 3-D prospects, which are located within 5 miles of each other, are normal pressured, Middle Miocene  (Cib-Carst, Tex-W) tests with objectives between 9,000’ and 11,000’.  Numerous prolific fields in the immediate area, such as Pointe a la Hache (175 BCF and 15 MMBO), Delacroix Island (230 BCF and 24 MMBO), and Black Bay (169 BCF and 164 MMBO) produce from this sand section.  Reserve potential for the entire project is 4.7 MMBOE.  East prospect is discussed in detail below.

Caviar 1

The Caviar 1 Prospect is an 11,000’ slightly deviated hole designed to test five amplitude anomalies on a downthrown four-way roll-over closure.  The five amplitudes area associated with the BF-7 Sand at 9,700’, the BF-8 Sand at 9,900’, the K Sand at 10,170’, the K-1 Sand at 10,330’ and the 10,520’ Sand at 10,520’.  The reserve potential for this prospect at 1.4 MMBOE only includes 3 of the 5 amplitude sands.

The strength of the two shallower amplitudes and the quality four-way structure they are associated with distinguish Caviar 1 as the best of the five 3-D prospects.  Both the BF-7 and BF-8 amplitude anomalies are anomalously “hot” and fit the structure very well with the highest amplitude being at the very top of the structure.  These characteristics are a good indication of a hydrocarbon accumulation.  While the BF-7 anomaly is brighter and larger, it quite likely is affecting the BF-8 which is immediately underneath it.  The affect is so great that pronounced sag occurs in the middle of the BF-8 anomaly which again is quite likely a hydrocarbon effect.

The four-way closure and associated structural growth of the Caviar 1 Prospect are well defined by the 3-D data.  The four dip directions are easily demonstrated with the critical north-eat dip occurring just above the BF-7.  The presence of the BF-7 and BF-8 amplitude anomalies at the first possible level of hydrocarbon entrapment, just below the depth where the structure closes off, give additional credibility to these amplitudes.

The amount of structural closure continues to increase throughout the deeper section to a depth of 11,000’.  At a depth of 10,520’ the deepest amplitude anomaly, the 10,520’ Sand, is observed.  While this anomaly is not as bright as the BF-7 and BF-8, it does fit the structure fairly well and is therefore a quality third objective.  In addition to the five primary objectives and their associated amplitudes discussed above, there are three non-amplitude associated objective sands for the Caviar 1 prospect.  These sands will be penetrated on the structure by the test well between 9,500’ and 10,800’.  It is a common occurrence, in this and most other parts of South Louisiana, to find hydrocarbon bearing sands that do not “light-up”.  These are usually thinner pay sands and or sands masked by shallower pays that do have associated amplitudes.  These additional objectives provide significant upside to the prospect.

Caviar 3

The Caviar 3 3-D Prospect is a 10,600’ slightly deviated hole designed to test three amplitude anomalies on a downthrown four-way roll-over closure.  The three amplitudes are associated with the BF-8 Sand at 9,470’, the K-1 Sand at 10,220’ and the 10,800’ Sand at 10,480’.  Reserve potential for the prospect at 1.6 MMBOE only includes the BF-8 and K-1 amplitude sands.

The two amplitude anomalies to be tested on this prospect are of outstanding quality, with the BF-8 anomaly being slightly better.  This anomaly has the same high amplitude trough/peak geophysical signature seen in other hydrocarbon bearing sands across the area. The amplitude fits structure quite well, with the “hottest” part of the amplitude being present at the highest part of the structure. The deeper K-1 amplitude is smaller than, and not as bright as the BF-8, but fits the structure very well. The 10,800’ amplitude is of lesser quality, but fits the structure and is a quality third objective.

There is definite up-side for the Caviar 3 prospect in all other non-amplitude sands between 9,000’ and 10,600’. This is the section over which there is structural closure capable of hydrocarbon entrapment. As mentioned above, thinner pay sands without associated amplitude anomalies frequently occur in properly timed South Louisiana structures adding significant reserves to the field total.

Caviar 4

The Caviar 4 3-D Prospect is a 10,200’ straight hole designed to test amplitude anomalies associated with the BF-7 Sand and BF-8 Sand at the depths of 9,400’ and 9,700’ respectively. In addition two amplitudes of lesser quality, the BF-9 at 9,860’ and the K-1 at 10,130’ will be tested. The structural trap for this prospect is a faulted anticlinal closure. This prospect is located on 3,400’ from Caviar 1 with nearly identical BF-7 and BF-8 amplitude anomalies making it extremely low risk if Caviar 1 is successful. Reserve potential for this prospect is 1.2 MMBOE using only the BF-7 and Bf-8 Sands.

Caviar 5

The Caviar 5 3-D Prospect involves drilling a straight hole to a depth of 9,700’ to offset the Pel-Tex #1 SL 6476 well which produced 73,000 BBLS from the BF-7 Sand at 9,140’. The production from this sand was clearly supported by a water drive. There is a high quality amplitude anomaly associated with the BF-7 Sand beginning 100’ west of the Pel-Tex well. The anomaly progressively gains amplitude strength to the west. At a point 2,100’ west of the Pel-Tex well is the proposed location where the amplitude is hottest. At this point 20’ to 40’ of structural advantage above the Pel-Tex well is expected.

The structural configuration of the Caviar 5 prospect is a downthrown four-way roll-over closure. As with the previously discussed prospects, all sands tested where this closure is present are prospective. For the Caviar 5 prospect this is the interval between 8,000’ and 9,140’. Reserve potential for this prospect is 509 MMBOE.

Stratigraphy – Caviar 1, 3, 4 and 5

With a few exceptions all objective sands for the Caviar 1 through 5 prospects are regionally consistent blanket sands. This is the case for the BF-7, BF-8, BF-9, K-1 and UL-5 Sands. The K, 10,520’ and 10,800’ Sands display some regional variation. As for the other non-amplitude objectives between 8,000’ and 10,600’ they are also, for the most part, regionally consistent sands.

Avo Analysis – Caviar 1, 3, 4 and 5

Each previously discussed amplitude anomaly on the four prospects has undergone AVO analysis. Without exception, each of these amplitudes displays an AVO anomaly. There is some variation in the quality of the anomalies ranging from fair to excellent, but each anomaly bears an AVO signature similar to established pay sands within the data set.

Summary

The Caviar 3-D project is an opportunity to drill four well defined structural closures with multiple amplitude anomalies in an established prolific trend. The amplitude anomalies have the characteristics necessary to classify them as exceptional including high amplitude, structural fit, regional productive analogs and AVO. Each prospect has multiple regionally consistent sandstone objectives which combine to provide significant reserve upside.

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(**)            detailed analysis performed and provided by Yuma Exploration and Production Company, Inc.