SK Oil & Gas Partners VI , LLC has over the last two and a half years assembled the over four thousand acres that comprise the New Waverly Field, which is in turn made up of property acquired from two hundred different mineral owners with whom we have negotiated individual leases. The process involved dozens of land men in the field to accomplish this task. Once the area had been leased, all the existing seismic information was purchased and then reprocessed with today's most advanced technical processes. This information along with the data from existing wells located in the field have allowed our geologists and engineers to map out our Wilcox Wells locations.
Our business strategy is to first develop the initial fault block drilled and tested by Cities Services. A total of three wells will need to be drilled to capture the estimated 18 billion cubic feet of gas (gross revenue - $72 million over life of the wells). The average Wilcox Wells in this area net around $400,000 per month per well. Cash flow from these initial wells will be used to develop the two additional fault blocks. Six to seven additional wells should drain most of the remaining reserves, which are estimated to be in excess of 30 billion cubic feet (gross revenue - $120 million).
SK VI has been set up as a limited partnership to develop this field, and is capitalized at $10 million. Seven million dollars has already been deployed, and the final three million in capital to close out he partnership is expected in January. Reinvestingthe lions share of the revenue from the initial wells allows us to develop the entire field with far less capital than would otherwise be needed, and without the requirement of additional capital calls from our partners. The reinvestment compounds the rate of return as well.
Distributions are made monthly at an initial rate of 1% per month. As cash flow increases to the point it exceeds the monthly drilling budget, those surplus funds are added to the monthly distributions. Those distributions continue to increase as morewells are drilled, while still generating enough cash flow to fund the development of the field with out additional outside capital.
Our financial goal is to return 100% of the capital invested in 36 months. Distributions to our limited partners are split 80/20 (limited partners receive 80% of all revenue distributed until 100% of their capital invested is returned). Thereafter revenues are split on a 50/50 basis.
If I could summarize what our company does, I would say that we manage oil and gas assets. Our number one criteria for investing in any field starts with existing production and proven reserves. We are not in the exploration business. We are in the business of developing and expanding an existing field where oil and gas has already been discovered. Developmental drilling offers very good returns with very low risk, and cash flows lasting twenty or even thirty years after the initial investment has been returned in full.