sorry about the formatting on the above - just couldn't be bothered to go through the whole thing sorting it out!

Good results today more wells planned increased profits and a possible share buy back a bit slower than we all thought but that's Sefton onward and upwards

SER's Web Site updated all is going well very positive.


Latest Announcement
TAPIA FIELD
Cyclic Steaming Pilot

Results of the steaming of the Yule #7 well were mixed, however, the results form the Yule #10 well are extremely encouraging. Yule #7 showed a moderate increase in production and this rate held up for three months. The Yule # 10 well responded to steam stimulation greater than pre-steaming expectations yielding an increase in oil production greater than 100% from the well. The steam volume injected into Yule #10 was 63% of that injected into Yule #7. Soak periods for both wells was three weeks time. We believe that differences in reservoir and drainage conditions in the subsurface are responsible for the observed variance between the wells response. Nonetheless, we are extremely excited about applying the cyclic-steam stimulation to both old and new wells field-wide.

TEG will be working on the two gas wells Yule #8 and Snow #1 in the coming weeks. If mechanical issues in either of these wells can be solved such that gas can be supplied from them to the steam generator at an appropriate rate and pressure, the systematic steaming of other wells in the field will begin accordingly.
Tapia Drilling Plans

TEG USA has budgeted funds for the drilling of three new wells on the Yule Lease during the Fourth Quarter of 2008. Should the gas supply well mechanical repairs prove ineffective, one of the new wells to be drilled will be a new gas supply well, designed and completed for gas production. The remaining two will be oil producers. TEG has initiated permitting of five additional new wells on the other Tapia leases which should be completed in the coming months. The first of these are tentatively scheduled to begin in March, 2009.
EUREKA CANYON FIELD

TEG USA conducted a successful well clean-out and pump replacement operation in Eureka Canyon during the month of June. The monthly production at Eureka averaged 230 BOPM for the three months prior to this work. As a result of this work, the reported production at Eureka for the month of July was 410 bbls. of oil.

Geochemical Survey Planning Work with W.L.Gore, Inc. is continuing and TEG USA is on schedule to begin field work for the follow-up reconnaissance geochemical survey in September. We are now in the process of refining our sampling grid over the prospective are identified in the initial survey.

Oilbarrel
05.09.2008


As Its Revenues From Heavy Oil In California Double, Sefton Resources Prepares To Embark On CBM Exploration In Kansas


Its amazing what a difference a little money can make. After years of plugging away with its heavy oilfields in California, Sefton Resources is, at last, ready to take the business to the next level by diversifying into coal bed methane exploration in Kansas. The company, which is enjoying the benefits of increased production and sharply higher commodity prices, is now ready to embark on the development of the previously dormant Kansas assets.

AIM-quoted Sefton has posted a strong set of interim results for the first six months of the year, with revenues doubling to US$2.6 million and profits increasing five-fold to US$904,000. This growth is largely due to increased investment - to the tune of US$2.9 million compared to US$488,380 in the same period 2007 - on its Tapia Canyon and Eureka oilfields. This investment paid for new production facilities, new wells and the steaming of existing wells to flush more heavy oil out of the Tapia Canyon reservoir. The increased production has helped the bottomline in two ways, by boosting revenues and, importantly, by enabling the company to increase its credit facility with the Bank of the West to US$15 million. This gives the company the financial firepower to continue pressing ahead with the development of its heavy oilfields and embark on CBM drilling in Kansas.

The companys main asset is the Tapia heavy oilfield, which was discovered back in 1957 and has been producing for 50 years despite many decades of neglect and underinvestment. Production had been limping along at around 120 bpd until late last year when an injection of new capital in 2007 - via a much-needed credit agreement with Bank of the West - got new drilling work started and gave the company the means to initiate a pilot steam programme.

That steam test is now starting to have an impact, with production now running at between 180 to 190 bpd. The wells that have been steamed, the Yule -7 and Yule-10 wells, have seen production increase from 35-30 bpd to 55-60 bpd, a two to three fold increase. This has encouraged the company to start planning for the steaming of additional wells on the field, probably starting with the Snow lease wells due to their proximity to the Snow-1 gas well, which provides gas for the steaming programme. First, however, the company needs to resolve some mechanical issues with the gas wells, which it hopes to do in the coming weeks.

In addition to rolling out the steaming of the wells, Sefton plans to drill three new wells in Q4, two of which will be oil producers and one a possible new gas supply well (to help steam the wells). The company has also initiated permitting for five new wells on the field, which it hopes to drill in 2009. These wells can be drilled in less than a week for US$600,000, brought online within 30 days and pay back within a year.

The company has also invested in the Eureka Canyon field, some 20 miles away. This field has been producing a dribble of heavy oil since its discovery in 1893 but Sefton sees potential to increase this, by cleaning up existing wells and targeting new areas of the field. A successful clean-out and pump replacement operation in June lifted monthly production on the field from 230 barrels to 410 barrels in July. A geochemical survey and field work on the eastern portion of the Eureka property is planned for this month.

Having now moved into profitable production, the AIM company is turning its attention to coal bed methane exploration in the Forest City Basin of Eastern Kansas, where it holds rights to some 40,000 acres. Sefton plans to spend US$1.6 million on five pilot wells, hoping that each well will yield around 0.08 bcf of gas. The key to success here - and, as CEO Jim Ellerton pointed out at oilbarrel.coms May conference, the Forest City Basin has had its share of its success and failure - is to avoid multi-zone completions, which can lead to lots of water production. The company has been learning from the successes and mistakes of other operators in the basin and plans to isolate one of the coals, test it for a few months, and then move up the hole to test another coal, and so on. The company also plans to use a multi-phase compression system to move its low pressure gas into the local high pressure pipelines. All this is for the future, however: first the company must successfully drill those five pilot wells, which should provide some welcome newsflow for investors in the coming months.

Thanks driver
Moving along quite nicely, still got them tucked away in the bottom drawer

kkeith
You should move them up a draw theres a lot going on the rest of this year and next back to 10p+ very soon.

PR machine rolling into gear:

Hardman Update

moonshine
Cheers

Management is very comfortable with progress, and the company is looking to commence exploration activities in Kansas. This is a step change for the company, starting in a new operational area.

Our new core value for the Californian assets is USD$ 28.7m (11.8p/share) with an upside with enhanced recovery to USD$ 81.8m (33.6p/share). Sefton is now profitable and on our newly revised estimates should generate revenues of over $USD 6m this financial year, leading to a profit of around $USD 2.3m

It has set out plans to drill four new wells, and re-enter a fifth, to test coal bed methane potential on its 40,000+ acres of leases in the Forest City Basin.

Bloomfield Corporate Finance Ltd has been appointed as NOMAD, with Religare Hichens Harrison plc as broker

"Should the gas supply well mechanical repairs prove ineffective, one of the new wells to be drilled will be designed and completed as new gas supply well, but we doubt this will be necessary."

"Going forward, the first new set of producer wells will be drilled on the productive Yule Lease in November 2008. This gives us the confidence to anticipate continually increasing production rates from here on in with the cyclic steaming planned to be rolled-out field wide."

(33.6p/share). With out CBM.

Our new valuation takes into account recent production (to mid year) but also ups the price bench used, assuming a flat forward wellhead price of $USD85, which is consistent with the pricing we have assumed for our P&L forecasts beyond the present. These changes give us a new core value for the Californian assets of USD$ 28.7m (11.8p/share) with an upside with enhanced recovery to USD$ 81.8m (33.6p/share).

It is too early to put a meaningful value on the Kansas assets, but with the drilling program set to begin, once data is forthcoming this will change. In California, the values placed on Tapia Field should increase significantly when higher recoveries from steaming are factored into new engineering data. Enhanced recovery may well yield closer to 80% of oil in place rather than the 50% or so currently accounted for, so its a bit of a case of watch this space until the next major engineering review.

Excellent report, and conservative and realistic too.
So what do we get?

Mark down on a 300 sell of course!

Hope we can stay in the recent uptrend.

All oil producers sp's falling as oil price heads down to US$100 but as SER is a low cost producer with last reported lifting costs at US$15 per barrel then shareholders should still see sizeable profits compared to the present market cap.

also hardman worked out values on $85 dollars a barrel,so their valuations account for a fall in prices to this level,i also watched the 159th opec meeting today on opecs website live streaming,you should watch it will be recorded, because i watched the one from march/april also.all opec members say they will try to defend $90/100 dollars oil in the short term,they are just waiting to see what happens with demand up to december due to the looming downturn,if demand falls off a lot they will cut production to defend $100 but up until then prices may drop a bit lower, but they wont let them drop to below $85 i dont think. A word frequently mentioned in the opec meeting was "higher costs of production" and that is why they need $100 a barrel to keep producers happy.

Halifax you say the uplifting cost is $15 dollars a barrel, do you know seftons breakeven oil price value,with taxes factored in as well, if not what is included in the uplifting value,is this cost of machinary ,labour,energy,freight,depletion e.t.c?

The figure of ~$15/barrel (which will be lower from H2 onwards according to a previous update) includes all variable costs associated with each barrel of oil. Sefton's costs are relatively very low due to location, proximity to market, infrastructure etc (20 miles N of Los Angeles just outside the town of Castaic), and should be even lower due to improvements they have made to the field.
Break-even oil price taking into account fixed costs of approximately $1.5m-$2m equates to something around $45/barrel.

July production figures are out.....

They're pretty good.

Have a look at Yule 10 as well!

Hello, 400% rise in production for Yule 10 as a result of steaming!!

Thanks martinl2, do you by any chance have the total production figures for July at hand
Keith

6,104 barrels, best since 2005.

Looks like the steaming is having an effect also with new wells planed later this year a good chance of increased production
Thanks Keith

The new production figures put SER on target for 2.2m a year profit that is with out any new wells or even further steaming still to come on the snow wells all this is inline with the latest Hardman update. 11p-31p cant be far of.