Red Cave Development

Overview – History and Background

In early 2017, Molori identified what it believes may be one of the best onshore exploration and development opportunities existing in the continental USA.

On June 6, 2016, Molori Energy Inc. closed on the purchase of a 25% working interest in the oil and gas production from certain leases located in primarily in Hutchinson County, Texas.

At the time of acquisition, these leases featured over 200 formerly-producing, but inoperative wells with approximately 40 BOEPD of production and just over USD $5.0M in gross reserves. Molori, along with its Texas-based operating partner, began a program of workovers or recompletions, and over the ensuing 12 months, increased production from 40 BOEPD gross to over 400 BOEPD gross, and reserves from USD $5.0M gross to over USD $31.0M gross (per April 1, 2017 NI 51-101 reserve report prepared for Molori by PeTech Engineering Inc.).

Associated with the acquisition of the Hutchinson County leases, Molori also acquired a 75% interest (see Molori press release dated ‘December 13, 2017’) in two leases, knows as the “Thompson Leases” in nearby Moore County, Texas. It is upon these leases that Molori as ‘operator’ in January of 2018, drilled and fracked a successful appraisal well into a formation know as the “Red Cave”.

The Red Cave, which sits at between 1900 and 2500 feet below surface, has not traditionally been well-understood. Despite clear showings of oil and gas, explorers failed to successfully produce from the Red Cave in the 1960’s and 1970’s. In the 1980’s, small scale fracs of between 10,000 and 15,000 lbs of sand were employed in an attempt to achieve production from the Red Cave. Due to the tightness of the formation, this effort to produce from the Red Cave also failed.

However, in just the past two years, a small private producer by the name of “Adams Affiliates” tested a hypothesis that by employing large scale fracs of 250,000 – 300,000 lbs, similar to the fracs used to the south in the Permian Basin, they could get the Red Cave to produce.

Adam’s theory was proven out over the past 24 months, and of the 50 more wells they have drilled into the Red Cave, virtually everyone has been an oil discovery with IP (Initial Production) rates of between 30* and 100 BOEPD, and typical EURs (“Estimated Ultimate Recovery”) of between 50,000* and 100,000 BOE (data assembled from Texas Railway Commission figures).