Terrace Energy Corp. holds working interests ranging from 15% to 33% in approximately 18,914 gross acres for a total of 3,875 net acres located in McMullen and LaSalle Counties, Texas. The project is a southwesterly extension of the prolific AWP Field which has produced 50 MMBO & 500 BCF from the Olmos Sandstone since its discovery in the early 1980’s. The Company has drilled 19 horizontal wells and one vertical in the STS Olmos Project and has identified approximately 122 gross total drilling locations on this acreage in the Olmos Formation.
During 2014 Terrace participated in the drilling of a well northwest of the AWP Field in McMullen County, Texas and earned a 33.34% interest in certain leases covering 199 gross acres.
During 2015, Terrace Energy Corp. and BlackBrush O&G, LLC formalized an Area of Mutual Interest (AMI) encompassing the extent of the STS Olmos Play area, as seen in the attached map. This AMI consists of approximately 240,000 acres, extending from the AWP Olmos Field through our current area of operations, to the south and west.
Terrace Energy Corp. is evaluating multiple Olmos Sandstone acreage acquisition opportunities in the area. During 2015 Terrace Energy Corp. added approximately 8800 acres of expansion acreage to the southeast of the current leasehold, at a working interest of 50% for an additional approximate 4400 net acres. This expansion leasehold lies in very attractive location with respect to the ongoing development of the STS Olmos Project.
The Upper Cretaceous Escondido and Olmos Formations of the Rio Grande Embayment area are comprised of shales, silts and sands that are primarily gas charged throughout Webb, Dimmit, LaSalle, and McMullen Counties of southwest Texas. These productive sands were deposited primarily in the near-shore environment of the Ancient Cretaceous sea which ran from the present day Gulf Coast through the center of what is now the North American continent. Most of the best reservoir facies indicate delta and near-shore bar deposition and are located down dip of the ancient Edwards and Sligo reef trend, which extends west-southwest from east Texas to near the Webb-Dimmit-LaSalle area. From there the reef line turns south-southwest and extends down through Webb County into Mexico. The sands in these reservoirs generally exhibit low to moderate permeability (0.01 to .5 md) and porosity (6–16%). Production in the Olmos and Escondido was very spotty until the advent of better hydraulic fracturing technologies in the mid-’90s. Significant well control from wells drilled in from the 1960s forward delineated many significant reservoirs, but production was generally very marginal. Even with the appearance of better hydraulic fracturing methods, many reservoirs saw limited infill drilling until the ’90s because of the suppressed log characteristics from significant clay content. Fortunately, several areas in the trend have significant sand development in both the Olmos and Escondido Formations. Application of modern high-resolution logs and, eventually, horizontal drilling and large-scale slick-water fracturing has resulted in exceptional well performance within these reservoirs.