In August 2012, Hallwood closed a transaction in the Cook Inlet of Alaska whereby our affiliate BlueCrest Energy Inc. acquired Proved + Probable reserves from Pioneer Natural Resources.
In 2013, the Cosmopolitan State #1 well was completed. The results delineated newly-discovered oil and gas pay zones over a 5,000-foot interval with more than 700 feet of net pay. Reserves are 79% oil, 21% gas.
An updated reserve report dated July 2016 prepared by independent engineers Ryder Scott with Brent oil pricing and assuming a lifetime non escalated average projected oil price of $58 per bbl. shows proved undeveloped (1P) reserves of 79 million bbl. with a PV10 value of $1.384 billion, proved and probable (2P) reserves of 123 million bbl. with a PV-10 value of $1.885 billion and proved, probable and possible (3P) reserves of 258 million bbl. with a PV-10 value of $3.409 billion.
The updated forecast includes our plan to hydraulically fracture each new well, although the expected total ultimate recovery per well was not increased for this analysis. Fracking requires greater cost and completion time per well, but it is expected to result in substantially higher initial production rates.
Hallwood Financial owns a fully diluted 17% beneficial interest in BlueCrest.