Oil company expands in Vernon County

Nevada Daily Mail

Blue Tip Missouri Energy Inc., with its affiliate BTM Heavy Oil, L.L.C., with operations from Deerfield to Bourbon County, Kan., is expanding its presence.

The announcement came in a press release on developments in the company's 1.6 billion barrel OOGIP assets located in the Bourbon Arch Basin, near Nevada that spans Vernon County and a portion of Bourbon County, Kan.

Blue Tip Energy recently closed on the purchase of the outstanding working interest and operatorship in their nearly 50,000 acres of long-term leasehold.

"Blue Tip Energy now controls a dominant land position in this basin where there has been 1 MMBO prior recovery from 240 acres using 1980s conventional steam flood technology," noted the press release.

"As operator, Blue Tip Energy is now finalizing plans to develop this significant resource by applying modern technology to re-establish field production and ramp up volumes."

Additionally, Blue Tip Energy announced it was entering into a joint venture with Palo Petroleum, Inc. covering a defined portion of this basin.

Palo is currently drilling on their acreage block in this field and Blue Tip Energy is participating in the well.

The parties also have formed an area of mutual interest to potentially jointly develop acreage within the immediate area of the current drilling.

According to land manager Tony Karns, who owns an independent company and is a contractor for Blue Tip, all of the acreage involved is located in Vernon County.

Karns said the expansion "could result in numerous job creations.

"Palo has already hired at least six local people just for their one horizontal well program on Highway 54. With our acreage position of actually about 60,000 acres in western Vernon County alone, we have numerous potential sites for steam operations.

"Any contractor in Nevada, whether he owns a bulldozer, hauls gravel or becomes a field and steam operator, will have the potential to go to work for us, not to mention the other people we would need to work at each well site.

"The effect of success on our projects here could substantially increase tax revenues, property values and employment in Vernon County. All of the drilling initially will occur here and around the Fort Scott area, where the company also has several thousand acres under long-term oil and gas leases.

"Since mid-2007, we have spent $8-10 million on purchasing oil and gas leases in Vernon County alone. The number gets larger if you include Barton, Bates and Bourbon counties.

"This is money that has gone straight into the farmer or landowner's hand for the consideration of them leasing their property to us.

"Vernon County is the epicenter of our heavy oil operations."

Karns said Vernon County was part of an area that was studied by the Oklahoma Geological Survey, the Kansas Geological Survey and the Missouri Department of Natural Resources that determined there were 1.4 billion barrels of heavy oil in Vernon County alone.

"That is a huge amount of petroleum.

"If you factor in enormous utility bills including rural water, natural gas and electricity, we have probably invested close to $10 million in Vernon County alone and that does not include service companies (that benefit from the operations) like rock hauling and dozers," said Karns.

Headquartered in Dallas, Texas, Palo is an established independent oil and gas energy company with production scattered throughout the U.S. They were founded in 1976.

Karns said that Palo has a sizable financial footprint in Vernon County as well, with two horizontal wells close to T Highway and Highway 54.

In addition to development and operating their own assets, Palo has managed large assets for several other companies including Amoco, Arco, Texaco and Boeing.

Blue Tip Missouri Energy, Inc. and BTM Heavy Oil, L.L.C. are subsidiaries of Blue Tip Energy Partners Fund I, LP a private equity fund with headquarters in Houston, Texas.

Blue Tip Energy's principles have extensive experience investing and operating oil and gas assets and managing large energy-based private equity portfolios.

Bruce Taylor, Blue Tip Energy's co-founding and managing partner, said he is "very pleased to consolidate and control their ownership and be Joint Venturing with Palo, an established and respected independent energy company, and is very excited to bring their own operating expertise and development capital to help further develop these valuable assets."

Jim Graham, president and CEO of Palo, added that he is "very excited to have Blue Tip Energy as a joint venture partner to add their expertise, financial strength and dominate land position to ours and work with us to help develop our heavy oil acreage."