Somont Oil Company, Inc.
419 Ferdig Rd , Oilmont, Montana, United States

Somont Oil Co., Inc. is a small family owned company operating primarily in Toole County, Montana. Our roots go back to the 1920s with the discovery of oil in Toole Countys Kevin-Sunburst Oil Field and we have operated continuously since that time. Prior to about 1985 we were exclusively involved with oil production but over the past 20+ years we have also gotten involved with all phases of natural gas from the well up to entry into the interstate pipeline system.  Somonts business is to drill and operate stripper oil wells and gas wells and to operate natural gas gathering and processing facilities. At the present time we operate about 400 oil wells and 75 gas wells from which we produce about 300 barrels of oil per day and 2 mmscfd of gas. Most of the oil wells are under 2000 deep and most of the gas wells are under 3000 deep. We also operate two natural gas processing facilities and their associated gathering systems.  Somonts primary and secondary oil production is from a mature field with nearly all wells produced using sucker rod pumps. We operate one waterflood and also operate several electric submersible pumps for high water volume wells.  We currently operate one sweet gas processing facility and one sour gas processing facility along with over 100 miles of gathering lines. The sweet gas processing facility has been in operation for over 20 years and its product is marketed into the interstate pipeline system. This plant sells about 1.5 mmscfd. The sour gas processing facility has been in operation for several years and is in the process of being upgraded so that it can handle more feedstock. It currently is capable of processing about .5 mmscfd that is marketed into the interstate pipeline system.  We operate and self maintain all of our oil and gas wells and our gas plants and gathering systems with very little outside contracting. We have approximately forty employees engaged in all facets of the business including engineering, office specialists, well service crews, electricians, mechanics, gas plant operators, pipeline welders, industrial coating applicators, oil and gas well pumpers, roustabouts, and heavy equipment operators of all sorts.

BUSINESS PHILOSOPHY

Our business philosophy has evolved over the years to be quite simple. We confine our business activities to the geographic area of north central Montana and try to avoid becoming involved with any projects in which we are not the operator. We also avoid doing things with partners insofar as possible and work very hard not to borrow money. Any profits we make from our operation are reinvested in the business in order to continue building a broader base of operations. If our cash flow cannot support a proposed project, we will defer it until we can pay for it. Key employees are given the opportunity to participate in projects as they become available.  We have also chosen to avoid areas in which we do not have expertise which is why we are not currently interested in being directly involved in the deeper exploration activities and may not pursue future enhanced recovery projects without appropriate technical expertise. In such instances, we will negotiate farm outs, which will give us a reasonable share of the profits of successful ventures but will not give us financial exposure to any failed efforts.

FUTURE ACTIVITIES

We decided a long time ago that we do not intend to branch out geographically to any degree and so the business opportunities we seek are all close to our base of operations in north central Montana. What this means to our employees is that they nearly always sleep in their beds in their homes at night as our operations are generally confined to an area about 25 miles wide and 20 miles high.  In the years to come our primary activities will be to maintain our existing operations and gradually add additional oil and gas wells as our time and financial resources permit. We have approximately 200 idle oil well bores to evaluate and return to production along with many hundreds of infill locations (mostly oil but some gas) that can be drilled as time and financial resources permit. Virtually all of our acreage is held by production and so there will be little drilling necessary to earn leases.  All of our production is classified as “shallow”. There is a good deal of interest in the exploration of the underlying deeper horizons in the area. Most mineral estates and leases that we own are without depth restriction and so we will be considering farming out our deeper horizons in years to come to larger companies who want to look for deeper pays. At the present time it is not our intention to directly participate in such deeper exploration work but, rather, to back in to a minority working interest if such deep exploration work should be successful. We believe ourselves to have the largest acreage position in the area and so are well situated for any future deep exploration work.  We also have several candidates for potential waterfloods and, possibly, CO2 floods that will be considered in years to come depending on the human and financial resources that we have available. We may do some of these projects ourselves if we have the appropriate technical expertise in-house or may farm them out to third parties similarly to the deep exploration if we dont feel we have appropriate capabilities in house.  We continue as a company to look for other producing oil and gas leases in the area similar to ours to incorporate into our business using the economy of scale.

At Somont Oil, We believe in participating in our community by:

• Sponsoring scholarships to the Cut Bank, Shelby, and Sunburst high schools going back about 20 years.
• Being a sponsor of the big flag project put up several years ago in Shelby.
• Contribution to the local charities
• Contribution to the Sunburst High School science fund

OIL PRODUCTION

Most of the oil we produce is sour crude from the Madison Limestone which is a fractured dolomite. The mayority of the production is from the matrix which makes the production small but long lived.  These wells normally have 2 3/8" tubing and 5/8" rods with either 1 25/32" T&S valves or insert pumps. As appropriate, the wells are on a schedule for chemical and acid treatment that has been established for many years and continues to be refined as appropriate.  Most of our pumping units are API 16s and 25s but we do have units up to 320s.  We have five very high volume wells producing from Madison fractures that are pumped with submersible pumps and produce as much as 5000 barrels of water per day along with nominal amounts of oil and/or natural gas.  Our waterflood produces sweet crude from a Swift sandstone located above the Madison and we use treated Madison water as feedstock for the waterflood.  The oil properties we operate have multiple wells which are piped to a common tank battery via underground (7 feets deep) flowlines where water separation occurs in a gunbarrel. All pumping equipment is electrified.  Since the quality of the produced water is equal to or greater than all water zones above it, we are allowed to use evaporation pits for the disposal of produced water.  This water is useable for local livestock and wildlife.  In a couple of places where it is not practical to use evaporation pits, we do have water disposal wells in the Madison formation.  Our Crude Oil Purchaser in the area has been Farmers Union Central Exchange Coop (CENEX) for the past 20+ years and they haul crude from our tanks by transport to their LACT Unit about 30 miles away where it is sent to their refinery in Laurel, Mt (near Billings).  We operate some Federal  and State leases and have a good relationship with the Federal and State officials. But we do not operate any Indian leases.

GAS PRODUCTION, GATHERING, AND PROCESSING

We own and operate about 75 natural gas producing wells. We have partners going back over 20 years in many of the gas wells that we operate and to date have never had a cross word with any of them.  We own and operate a sweet gas processing facility - The Ferdig Plant - which has been in operation for over 20 years. We gather sweet gas from over 90 wells in the area and compress it, take out the liquids, and sell it into the interstate pipeline system.  We operate about 70 of the wells feeding the Ferdig Plant and have an ownership interest in all of the wells that we operate. This gas area is in the west end of our operations and we sell about 1500 dkt/day from this area. Most of our gas wells are stripper wells but we do have several that produce over 100 mcfd.  We also own and operate a sour gas processing facility (an amine unit) - the Morton Plant - which was put into operation several years ago and continues to be expanded and upgraded at the present time. This facility is located about 20 miles east of the Ferdig Plant near the dome of the Kevin-Sunburst field and much of the gas processed in the Morton Plant is associated gas from the Madison formation. The incoming gas stream is compressed, sweetened, has its liquids removed, and is sold into the interstate pipeline system.  The Morton Plant is relatively sophisticated because we have not only traditional sour gas to treat (H2S) but also have very large quantities of CO2 (up to 35%) which must be removed. We are in the process of upgrading the system to include a membrane unit to preferentially remove CO2 before the gas stream enters the amine unit. The end result of this upgrade should be that we will be able to deliver in the ballpark of 700 mcfd of pipeline quality gas from this plant.