
West Newport Oil Field City of Newport Beach
Executive Summary • The City of Newport Beach, California, as operator of the West Newport Oil Field, is exploring options to maximize the value of the City’s oil and gas assets. • The City is approaching several oil and gas companies which have a strong financial base and have demonstrated expertise in operating oil properties in an urban environment in California. • The City is seeking investment proposals from these selected companies to redevelop the existing reservoirs as well as develop any additional potential within the City’s mineral holdings. • This document provides an overview of the oil field assets. Further details will be provided to interested parties after initial meetings.
LA Basin Oil Fields West Newport Field
Asset Highlights • Current Production – 65 BOPD, 40 MCFPD • 12 active producers, 1 injector, and 3 shut in wells • Two drill sites -- 1.5 acres and 2.5 acres • Production Facilities – capable of handling 2000 BPD oil, 400-500 MCFPD gas, 5,000 BPD produced water. Water treatment facilities capable of handling 5,000 BPD of injection water.
West Newport Oil Field Well Sites and Facilities
West Newport Field History • Discovered in 1953 • Seventeen wells drilled from 1953 to 1958 • Peak Production in 1955 at 1050 BOPD • Cumulative Production 5.7 MMBO and 2.0 BCFG
Reserves • Proved Developed Producing – 295 MBO • Probable -- 209 MBO • Gas Reserves (40 MCFPDconsumed by Hoag Hospital)
Summary of Mineral Ownership • State of California granted title to tide and submerged lands to the City in 1919. Subject to SLC oversight. The City owns 100% working interest • The City holds exclusive mineral rights within the City limits, and note the City’s jurisdictional authority extends 3 miles out to sea. City Charter Section 1401 – limits the “location” of the drilling • Drillsite A contains Wells 1 thru 12 and 14 • Surface lease • Royalty Paid to Surface owner • Minerals belong to Armstrong Petroleum • Drillsite B contains Wells 13, 15, and 16 • Federal Assignment • Held by Production • Royalty Paid to Surface Owner • Minerals belong to Armstrong Petroleum • Pass Thru Rights – covers area between drillsites and tidelands – royalty paid to surface owners
Potential Surface Redevelopment(Banning Ranch EIR) • Oil Production Sites set aside in Open Spaces • Well Drilling is allowed with noise conditions • Three Production Facility Sites included in plan • Two Sites for City of Newport Beach • One 17-acre Site for West Newport Oil Company
Development Potential • Re-drilling of Existing wells • Horizontal Drilling in Known Reservoirs to Maximize Recovery • Enhanced Oil Recovery – the field has never had a full-scale waterflood or other EOR process • Deeper Sandstone Reservoir Potential • Deeper Producing Horizons in Underlying Shale Formations • Consolidation of Surrounding Operations • Undrilled Fault Blocks
Deal Structure Alternatives(see next two slides) • Production Sharing Agreement – new investor provides new development capital and after receiving a specified return on investment to offset capital cost then provides City with royalty or working interest. • New Investor guarantees the base production which the City currently owns and pursues development of additional production. City participates at increasing levels depending on success of new production – either working interest or royalty interest. • Payment to City for future base production with ORR on future development. (City must stay in base ownership position) • Open to other suggestions
Deal Structure - Key Criteria • City stays in base ownership position • City owns mineral rights • All required permits/approvals must be obtained • All new drilling work would require extensive community outreach
Deal Structure – Current Operations(existing well production) • City expects current operations including maintenance of all facilities to be maintained at current or better standards. • New investor guarantees the base production, which the City currently owns and pursues improvement for additional production. • City would participate in share of increased production – as mentioned previously.
Project Timetable • March and April -- initial contacts with potential investors • April 30th – City looking to receive notice of interest • May – data available for more detailed review by potential partners. • Mid-June – City to receive formal non-binding proposals from interested companies. • July/August – City reviews proposals and clarifies. City narrows field of potential partners and begins detailed negotiations • Second Half 2013 – City makes decision
Contact List • David B. Kilpatrick – oil and gas advisor to City Cell Phone -- 661 703-7198 • Rob Houston – Assistant to the City Manager – Office Phone – 949 644-3033 • John Kappeler – Department of Public Works – Office – 949 644-3218 • City Address – City of Newport Beach, 3300 Newport Blvd, California 92663
Proposal Expectations • Company Profile & Balance Sheet • References • Statement of experience working in urban/sensitive settings