Oil and Gas

Coleman County, Texas – J.E. Richey lease 

The Company acquired a 206.5-acre lease (J.E. Richey) located in the northern part of Coleman County, Texas with four existing wells in September 2014. Three of the four wells were fully equipped with down hole pumps, rods, tubing, pump jacks, well head and surface equipment including tank battery, meter run and gas gathering pipelines. NMEX holds a 25% working interest in the three wells and 100% working interest in the remainder of the lease acreage. The lease is located in a multiple pay area originally discovered by ARCO in the early 1980’s. This lease area is known to have 6 oil and gas productive formations.

In 2015/6 one of the wells on the lease, the Concho Richey #1, was brought back into production. This well is located due west 660’ from the Olympia Hale #1 well (adjoining lease) that has produced more than 71,000 Barrels of oil and over 190 Million cubic feet (“MMCFG”) of gas since 1986 and is still producing. The Concho Richey is producing from the same Gray Sand formation at (3,860’) as the Olympia Hale #1. The Grey is a clean sand with sections having 34% porosity and good permeability. Initial flush production when the well was brought back into production was up to 65 barrels of oil per day. Production from the Concho Richey #1 well has now stabilized, as all wells due after their initial flush production.

Further work is planned on the J.E Richey #3 to determine its productive capability as well as other potential drilling locations the lease.

Olson Lease, Jones County, Texas:
We have a 100% interest in the 160-acre oil and gas Olsen lease located in the north central part of Jones County, Texas. The principal target formation is the Palo Pinto Reef. The Palo Pinto Reef is a known productive formation in the area with a high yield of cumulative oil production. An example in the area is the Strand Oil Field which is a Palo Pinto Reef Oil Field. The field discovered in 1940, consists of only 8 wells on approximately 160 acres produced a total of 1,700,000 barrels of oil, an average of 212,500 barrels of oil per oil well. The 160 Olson Lease lies approximately 1.5 miles southeast of the Strand Palo Pinto Reef Oil Field. We hold 100% of the working interest in this lease. At present, we are working to attract funding through farming out an interest in the lease to fund drilling of a well on the lease.

Guy Ranch Lease, Shackleford County, Texas
We hold a 100% working interest in the 430-acre Guy Ranch Lease in Shackelford County. Recently we entered into a farm-out agreement with a third party whereby the third party has the right to earn a 75% working interest in 20 acres of the 430-acre lease. The third party is to pay 100% of the costs to drill and complete a well on the 20 acres to earn a 75% working interest. We are carried for 25%. We expect that the drilling of the new well by the third party will commence in the 4th quarter of 2017.
The principle target formations of interest on the lease are the Patio (aka Palo Pinto Sand), Morris and Gardner Sands. These three pay zones are all prominent producers in the immediate area. The Patio Sand is the main producer to the west, on an adjoining lease and generally averages between 25,000 and 75,000 barrels oil per well. The Morris Sand in the area is a known natural gas producer, with associated high gas production flow rates. Cumulative natural gas production is known produce up to 1.4 Billion cubic feet (“BCF”) of gas from a well.