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CAVU Resources Purchases 49 Miles of Pipeline with Oil and Gas Leases
CAVU Resources Inc. has expanded its presence in northeastern Oklahoma. The company acquired 49 miles of pipeline and 1,700 acres of oil and gas leases in Rogers County, Okla.
Located just north of Claremore, Okla., which is about 40 minutes by car northeast of Tulsa, the pipeline intersects with the recently acquired, existing pipeline infrastructure near Nowata, Okla. By connecting the two lines, CAVU can develop the 1,700 acres and also purchase gas from multiple producers that have scores of shut-in wells in the area that are not currently able to bring their production to market.
"One of our core strategies is to be independent so that we are not forced to rely on other companies for services, transportation of our product or drilling of our wells," says William C. Robinson, president of CAVU. "In this particular case, we felt that having the opportunity to connect 60 to 70 miles of pipeline provides us with two things. First, it gives us ample capacity to develop thousands of acres of oil and gas leases. Secondly, it provides us with the ability to purchase enough third party gas that we could eventually fund a majority of the development of our own acreage from that cash flow.”
This 49-mile segment of line is part of an existing 10-in. steel petroleum pipeline that used to transport oil from Bartlesville and other oil fields in northeast Oklahoma to refineries on the outskirts of Tulsa. The original petroleum pipeline was sold off in segments to companies during various downturns in the oil industry over the years. As part of CAVU's acquisition, it will obtain the geological, engineering and field development plans that cover 1,700 acres of leases along parts of the pipeline.
"We think that while the pipeline itself is obviously incredibly valuable one of the intangibles that you cannot book, but still represents enormous value are the perpetual right of ways we get," Robinson says. "Obtaining right of ways in some of the developed areas where this line runs are of incredible value to telecommunications, utility, and other companies needing to lay various types of lines. While our strategy will be to develop oil and gas, we believe we may be able to sell rights to use the right of ways for significant amounts of capital."
Before any new wells are drilled, CAVU first plans to connect this segment of line to its existing infrastructure in the Hogshooter Project so that gas can be sold through its existing tap outside of Nowata. Nevertheless, CAVU is already beginning the process of assessing the geological and engineering reports on the acquired 1,700 acres to determine if the recommended drilling locations are where the company would want to begin drilling.
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