HOUSTON, Nov. 8, 2007 (PRIME NEWSWIRE) -- Baseline Oil & Gas Corporation ("Baseline" or the "Company") (OTCBB:BOGA) announced today that it has made excellent progress regarding development operations, since the closing of its acquisition of natural gas and oil properties located within the Blessing Field in Matagorda County, Texas on October 2, 2007. The acquisition and associated financing transformed Baseline, and provided the Company with better than $15 million of cash at closing. Since early October, Baseline has ramped up activity in both of its 100% owned producing Texas core assets. To date, the addition of 2 drilling rigs and 2 workover rigs have significantly accelerated development operations in both the Blessing Field, as well as the Eliasville Field, located in Stephens County. As regards Baseline's third core asset, a non-operated 17% WI in the New Albany Shale resource play located in southern Indiana, the Company is currently participating with its partners on the completion of an initial group of horizontal wells, and the installation of gathering and compression facilities in order to tie the wells into sales facilities.
During the third quarter, Baseline's average net production totaled 10 Mmcfe/d. Since early 2007, the Company has closed the two distinct Texas based acquisitions, both of which are 100% owned. Baseline has assumed the role of operator in these properties, established specific plans for future development, and recently moved in drilling and workover rigs to initiate its development program. Going forward, Baseline is focused on delivering strong organic growth via the drillbit from its three projects, each of which offers significant opportunity for production growth, proved reserve additions, and overall financial performance.
BLESSING FIELD-MATAGORDA COUNTY, TEXAS
In its recently acquired Blessing Field, Baseline has completed the drilling of its first of 14 planned 12,000 foot proved undeveloped (PUD) Frio wells. The East Blessing #3 well has been successfully drilled to 12,000 feet, with 9 apparently productive pay sands logged. Casing has been run, and Baseline is preparing to move to a completion rig to commence testing and subsequent completion of a lower Frio horizon. The Company anticipates the Blessing #3 to be placed on production during December.
In addition, the Company presently has a workover rig operating in the field. Initial efforts are aimed at increasing production from the 12 existing producing wells both by running tubing in the wellbores which were previously flowing up casing, and by identifying and testing more productive zones in select wells.
As of June 1, 2007, the Blessing Field had independently engineered proved reserves of 42.2 Bcfe, with an additional 38 Bcfe of probables. The Company has commenced a field-wide study of the Blessing Field utilizing advanced 3D seismic, log interpretation, and reservoir evaluation tools, in order to further delineate the multiple productive Frio sands which comprise the approximately 80 Bcfe of 2P reserves. The estimated present value (PV10) of Baseline's 2P reserves totals $240 million, based on NYMEX strip pricing as of August 29, 2007.
ELIASVILLE FIELD WATERFLOOD-STEPHENS COUNTY, TEXAS
Baseline recently drilled the first of 20 PUD infill locations that the Company expects to drill prior to the end of 2008. The Atkins #35 logged over 40 feet of clean limestone in the main payzone, which is currently being waterflooded over most of Baseline's acreage. The rig was then moved to the Atkins #38, the second of 5 wells to be drilled in the field during the fourth quarter of 2007.
Baseline is also completing an initial geological study of the field, which it has owned since April of 2007. The Company will use this analysis as a basis for planning future development, as well as the expansion of the waterflood across its entire 5,200 acre leasehold. Also as of June 1, 2007, based on independent third party engineering, Baseline has booked 4.3 Mmbbls of proved reserves (26 Bcfe), plus nearly 1.0 Mmbbls of probable (waterflood expansion) reserves. The estimated PV10 of Eliasville's 2P reserves totals $80 million, based on NYMEX strip pricing as of August 29, 2007.
In addition, in order to recover substantial incremental crude oil reserves, Baseline has initiated a study to evaluate the application of an Alkaline Surfactant Polymer (ASP) flood within the field. Management expects to commence a pilot ASP flood during the first half of 2008.
NEW ALBANY SHALE-SOUTHERN INDIANA
During 2007, Baseline participated in the drilling of 6 New Albany Shale (NAS) horizontal wells in Greene and Knox counties. All six of these wells tested natural gas. Presently, Baseline is working with its partners in defining optimal completion and stimulation techniques, as well as preparing to install gas gathering, treatment and compression facilities required to place the wells online. Management anticipates selling gas during 2008, as well as drilling and completing up to 20 wells. Baseline currently has no proved reserves associated with its 171,000 NAS gross acres.
RECENT FINANCING
On October 1, 2007, Baseline issued $115 million of 12.5% Senior Secured Notes due 2012, at a purchase price of $110.9 million, and $50 million of 14% Senior Subordinated Convertible Secured Notes due 2013 (convertible at $0.72 per common share) at a purchase price of $49.5 million. In addition, the Company put into place a $20 million revolving credit facility. At closing, Baseline had more than $15 million of cash on hand plus its undrawn $20 million credit facility in order to implement its development plan.
Thomas Kaetzer, Baseline's Chairman and CEO, stated, "Baseline now boasts three core oil and gas assets, each with its own significant development opportunities. We fully expect that the Company has the financial flexibility to fund an ongoing aggressive organic development plan over the next several years, without the need for additional capital."
FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning estimates of expected drilling and development wells and associated costs, statements relating to estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of Baseline Oil & Gas Corp.'s projects and other statements which are not historical facts. When used in this document, the words such as "could," "plan," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements. Although Baseline Oil & Gas Corp. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that the Company's projects will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, changes in product prices and other risks disclosed in Baseline's Annual report on Form 10-KSB filed with the U.S. Securities and Exchange Commission.