In mid-2013 Citadel acquired approximately 2,700 acres from AERA Energy, LLC, a California joint venture of Exxon Mobil Corp (NYSE: XOM) and Royal Dutch Shell (NYSE: RDS). Located in close proximity to the Yowlumne oil field (which has produced more than 100 million barrels of oil),and just north of the Landslide field, discovered by Armen Nahabedian’s father which has produced some 20 million barrels since 1985.
This acreage has been mapped using a combination of both 2D and 3D seismic with extensive well control data. Under terms of the lease, Citadel became operator of an existing 12,000-foot well, the Yowlumne 2-26, which had previously been abandoned due to a lease-line dispute involving a prior operator. Citadel has cured the lease dispute and successfully produced from the well for testing and evaluation purposes. The company has executed a preliminary rehabilitation of the 2-26 and returned it to initial production rates of 20-25 barrels per day.
The Company also has two exploration prospects on the acreage, both of which have unrisked potential exceeded 25 million barrels. These fields are have similar seismic characteristics as the Landslide field to the South. Citadel anticipates that these two exploration prospects should be permitted by the end of 2015, with drilling to take place in 2016.