Warren Resources, Inc. announced that it entered into a definitive Purchase, Sale and Exploration Agreement to acquire an undivided 62.5% working interest in the Leroy Pine Project area consisting of various oil and gas leases covering approximately 1,610 acres of land. The Leroy Pine Project is located within the Santa Maria Valley oil field in Santa Barbara County, California. This area was developed by Unocal between 1937 and 1994. Unocal drilled 24 wells that produced a total of 6 million barrels of oil before exiting the project.
Warren anticipates drilling 19 producing wells targeting the oil zones of the Monterey formation and 2 disposal wells. The Company's estimated net acquisition, drilling and development costs are approximately $16 million. Warren expects to commence drilling operations in October 2013 and begin production operations in January 2014. Warren will be the operator of the Leroy Pine Project.
The Leroy Pine Project represents Warren's entry into the Monterey oil formation in California. By U. S. Energy Department estimates, the Monterey oil shale formation accounts for approximately two-thirds of the oil shale reserves in the United States.
Philip A. Epstein, Chairman and Chief Executive Officer of Warren, commented: "Leroy Pine is a project that allows Warren to leverage its skill set in the reactivation and future development of California oil projects. Our drill and learn approach in Leroy Pine will be a stepping stone to the Company's development of additional projects in the Monterey oil formation and other opportunities within California."
The closing of the sale is expected to occur on or before August 30, 2013, and is subject to normal closing conditions.