3D SEISMIC EXPLORATION IN LOUISIANA

Testing the Louisiana Prairie for Oil & Gas With Three-Dimensional Seismic

Pryme has executed a joint venture participation agreement to participate in a Louisiana partnership (the Louisiana Prairie Venture, or "LPV"), which was formed for the purpose of testing previously unexploited sandstones in the central part of Louisiana. The Company will have a right to a significant working interest in any wells drilled or acquired by the LPV. Exploration and development funds from the IPO Offer will be allocated to the initial evaluation phase of the LPV which will include the permitting and optioning of lease acreage in order to shoot 3D seismic to identify and test prospective oil & gas-bearing accumulations in the region.

This venture is composed of an aggregation of geological and geophysical talent with many years of experience in successfully exploring for oil and gas onshore, from the Mississippi state line to the east, to the border with Texas on the west.

John Dickinson, Justin Pettett and Ryan Messer (all Directors of Pryme) have been joint venture partners since 2001 in the Wilcox Basin of Louisiana with several of the principals of the LPV, drilling some 85 logged boreholes and successfully completing half of them, which is about double the historical success rate for the Wilcox Basin. The methodology used for the shallow to intermediate depth objectives (1,400 feet - 5,500 feet) in that recent activity has consisted primarily of the correlating and mapping of sandstones penetrated by previously drilled wells.

By contrast, the Louisiana Prairie has deeper objectives (4,000 feet - 16,000 feet), with significantly larger reserves based on the evaluation of production histories, but also grounded in the essential fact that deeper objectives contain larger accumulations in the billion cubic feet ("Bcf") range - or fractions thereof - for natural gas and millions of barrels of oil ("MMBO") - or fractions thereof - for oil. The only investigative difference between the Prairie and the Wilcox Basin is that fewer wells have been drilled in the Prairie, resulting in a lower number of oil and gas field discoveries. This is primarily because the economic limit of deeper wells was too low to justify drilling many of them, based on oil and gas prices that prevailed for decades in the $15 - $25/Bbl and $1.50 - $2.85/MMBtu range. An article about Supply and Demand within this website gives further information about the economics and why they have changed.

Modern 3D Seismic

The LPV will utilize new 3D seismic data to be gathered and processed, then correlated with available information from previously drilled wells and existing 2D data in order to determine what objectives should be drilled and where in the Prairie to drill them. The laws of physics that form the basis of this 3D seismic collection are not complicated once it is understood that sound waves travelling through the earth's crust are slowed down by hydrocarbon accumulations, especially natural gas and natural gas in solution with oil. Such sound impulses are not slowed down by rock, water or most other materials that comprise the earth's crust.

Therefore, it is possible to measure the extent to which the sound waves are impeded as they pass through the various forms of hydrocarbons and fix the subsurface points at which the sound is attenuated. The propagation of the sound waves begins on the surface, using either small explosive charges in 100 feet shot holes, or long wavelength vibrations of large magnitude, generated by truck-mounted vibrating equipment that is called "vibro-seis".

The below image is an example of an 11,000 feet Wilcox objective on trend with the Louisiana Prairie 3D regional objectives:

With older, "2D" seismic methodology that derived from a single line of shot holes, the surface propagation points are triangulated with the measured subsurface points where the waves have slowed. Thereafter, such calculations are integrated with the geological correlation of log analysis from previously drilled wells where possible.

With the advent of 3D seismic, shot hole patterns are laid out in concentric circles or, alternatively, concentric squares or rectangle patterns are used. When processed, this method provides a 3D picture of geological events at most depths from about 1,200 feet to 30,000 feet. With this relatively new methodology, it is not necessary to explore for oil and gas only in areas that had been drilled previously. The use of 3D seismic alone has resulted in success ratios better than 80% - 85% in locating oil and natural gas reservoirs.

With the concentric circles, rectangles or squares consisting of shot holes or vibro-seis locations in mind, one can imagine the complications and high cost of obtaining seismic data in areas that are populated. Therefore an ideal situation would be for lands with few inhabitants to be underlain by oil and gas deposits, making the shot hole placement relatively easy. The Louisiana Prairie is characterized by generally sparse population with random oil and gas fields of historically significant yields, thus providing the better fundamentals we look for in forming the Louisiana Prairie Venture.

Shown below is an example of a processed 3D seismic prospect in what is named the "Frio" formation or sand at a nominal depth of 4,000 feet. The Frio interval is natural gas-bearing sandstone with generally high permeability and gas saturation. You can see that the area of highest "acoustic impedance" is depicted in red by computer calculations. The shading of color away from the peak of red and into yellow defines the somewhat lenticular shape of the gas accumulation. It is thus a prime natural gas target for the LPV at intermediate depth.

Timeline of Events and Strategy

Securing the oil and gas rights prior to any shooting of seismic is paramount. This is achieved through the optioning of acreage (where possible) on a "first rights" basis for a period of time and paying the landowner a permitting fee in order to shoot seismic over their land. Should the LPV discover any sign of hydrocarbons below the surface through processing of the 3D seismic, the terms of any lease are pre-negotiated? This process usually takes three to four months on a project of this size. The LPV's relationship with landowners, landmen and lawyers is important and in the case of the LPV they are exceptionally strong in the project area.

After the permitting and optioning of the land has taken place, the 3D seismic is shot through a process that has been described above. This takes a further three to four months to complete.

The 3D data from the seismic shoot is then processed for the identification and mapping of hydrocarbons. This process can take around thirty days to complete at which time prospects are identified, lease options are exercised and then converted into drilling & production rights. By optioning the acreage first, then shooting the 3D seismic and processing it, hundreds of thousands of dollars can be saved on the land lease costs in a project of this size.

Once the acreage is leased, well permits are lodged and drilling contractors hired to drill the wells to target depth in order to test the 3D seismic leads. The evaluation phase is completed in six to eight months and the LPV begins the testing and development phase of the project with the aim of proving-up reserves.