West Ranch Prospect Overview

Gray Fox has a 100% Working Interest and an 82% Net Revenue Interest (5.5% overriding royalty to Seller; 12.5% to Federal) in the 32,723-acre West Ranch Prospect.

The prospect is comprised of 22 Federal leases in the Butte Valley Oil Play Region of north-central Nevada, in Elko and White Pine Counties, 50 miles north of Ely, NV.

The prospect is also located ~100 miles north of Railroad Valley's oilfields and ~60 miles east of Pine Valley's oilfields, which have produced a combined 50+ million barrels of oil (MMBO) in Nevada from structures and reservoir horizons similar to those under the West Ranch Prospect.1

A report on the project by Stewart A. Jackson, Ph.D, P.Geol, P.Geo (May 2013) concluded the West Ranch Prospect represents an excellent structural and stratigraphic combination for large scale oil and gas discovery.1

According to the report, the prospect offers potential for oil discovery over 2 large anticlinal structures within multiple prospective horizons. The two main targets are the Mississippian Diamond Peak sandstones and the deeper Devonian Guilmette dolomitic carbonates.

On the west flank of the anticlinal targets, and within the West Ranch Prospect, 2 test wells were previously drilled – the Marlin Fed #1-4 and the Marlin Fed #1-5 – both of which logged multiple oil shows without penetrating the deeper Guilmette potential horizon.1

According to a report on the 2 Marlin wells by Geologist William J. Ehni (Apr. 2012), the Permian section, which returned oil shows for both wells, has potential for commercial accumulations of oil and gas.3

The area is accessed via all-weather county roads and Bureau of Land Management (BLM) access roads that cross both prospective structures.

Read more about the test wells and regional analogues/geology in the Region Overview section.

Nearby Production

In 1982, Amoco Production Co. drilled and completed the Amoco Blackburn No. 3 well approximately 57 miles to the west of the West Ranch Prospect in Pine Valley, Eureka County.4

At year-end 2012, the Blackburn Field had 4 producing wells, and represented cumulative total production of 5.48 MMBO.

Roughly 9 miles north of Blackburn on the Elko-Eureka County border is the North Willow Creek Field, which began production in 1998, and produced a total of 51,142 barrels of oil.

Roughly 19 miles north of Blackburn is the Tomera Ranch Field, which began production in 1987. At year-end 2012, Tomera Ranch had 1 producing well, and represented cumulative total production of 44,471 barrels of oil.5

Nearby Exploration

Since the Blackburn Field discovery, exploration has expanded throughout Nevada. By the end of 1986, less than 50% of all wells drilled in Nevada to that point were in Railroad Valley.4

Today, Nevada is considered to be the latest US frontier area for oil and gas exploration,6 and exploration in the region of the West Ranch Prospect includes several active groups.

Noble Energy (NYSE:NBL | Market Cap: $86.9B) has acquired a 350,000-acre land position for exploration 50 miles north-northwest of the West Ranch Prospect, and has been shooting 3D seismic to select drill targets.1

Noble recently added to their position in Nevada by acquiring an additional 16 parcels totaling 16,491 acres in a competitive 2013 auction of oil and gas leases in Elko and Eureka Counties.7

In late 2012, Noble announced a $130 million exploration plan for Nevada that includes targeting an unconventional tight oil play through hydraulic fracturing ('fracking'), with 5 to 8 vertical wells planned for 2013 (6,000 to 12,000 feet), and production results in less than 12 months.

Noble also plans for a 3D seismic survey in 2013 to add to their 2 surveys already completed.

According to a Q1 2013 presentation Noble made to the BLM, they estimate Gross Unrisked Resource Potential at 190 MMBO to >1 BBO, and are targeting initial production in 2014, with potential production of up to 50,000 barrels per day by 2020.8

Plains Exploration and Production Company (acquired in 2013 for ~$16.3B by Freeport-McMoRan Copper & & Gold | NYSE:FCX | $38.6B),9 has leases extending 75 miles south of Ely, and has been preparing several drill sites.1

The privately held Petro Hunt LLC has leased a substantial acreage immediately west of the West Ranch Prospect,1 and had acquired 241,736 acres in Nevada by 2006.10

Other significant landholders in Nevada include EOG Resources Inc (NYSE:EOG | $49.0B) with 75,885 acres as of 2006; Cabot Oil & Gas Corporation (NYSE:COG | $14.7B) with 65,260 acres as of 2009; SM Energy Co. (NYSE:SM | $6.0B) with 197,634 acres as of 2011; and Newfield Exploration Co. (NYSE:NFX | $4.2B) with 91,000 acres as of 2008.10

Exploration Work Program

Based on an analysis of the potential reservoir rocks, source rocks, structural traps and reservoir sealant horizons, it is recommended to refine the prospect's structural parameters.1

In turn, Gray Fox has developed an 8-Phase Exploration Program for the West Ranch Prospect which is designed to identify new drilling targets on the 32,723-acre prospect.

While the exploration program has the potential to result in the discovery of additional structures, its main focus is to refine the structural parameters of the two anticlinal structures already identified, while simultaneously reaching the crest of both structures.

Read more about the 8-Phase Exploration Program in the Exploration Program Update section.

  1. West Ranch Oil & Gas Prospect Recommendation Report. Stewart A. Jackson, Ph.D, P.Geol, P.Geo, May 23, 2013.
  2. Wolverine Gas and Oil website, July 8, 2013.
  3. Cursory Geologic Well Summaries of Federal #1-4 & #1-5. Wm. J. Ehni, Geologist. Apr. 9, 2012.
  4. Nevada Bureau of Mines and Geology website, July 8, 2013.
  5. Nevada Commission on Mineral Resources, Division of Minerals. Oil Patch Report, Nov-Dec., 2012.
  6. The Motley Fool website, Oct. 16, 2012.
  7. Fox Reno website, Mar. 20, 2013.
  8. Noble Energy presentation to Bureau of Land Management, Elko, Nevada, Mar. 14, 2013.
  9. Daily Finance website, November 6, 2013.
  10. Hotcreekoil.com website, July 8, 2013.
The West Ranch Prospect overlies structures and reservoir horizons similar to those that have produced a combined 50+ million barrels of oil in Nevada to date.1