California resource plays, specifically light-oil resource plays, are the focus of a new firm. Zodiac Exploration Corp. is a Calgary-based junior that holds approximately 80,000 net acres in its Jaguar prospect in the oil-rich San Joaquin Basin. The firm recently went public on the Toronto Stock Exchange.

"We target an array of light-oil resource targets in a part of the San Joaquin Basin that has been overlooked," says Murray Rodgers, president, chief executive and director.

Rodgers has considerable experience in unconventional reservoirs—he was most recently president and chief executive of Trident Exploration, a pioneer in Alberta's Horseshoe Canyon and Mannville coalbed-methane plays and an earlier player in British Columbia's Montney shale-gas play. Several members of his top management team hail from Trident as well, including Louisa DeCarlo, chief operating officer, and Randy Neely, chief financial officer.

When Zodiac principals launched the company as a private entity in 2008, they wanted to work in unconventionals but deliberately steered away from shale gas. "We tend to not follow the herd," says Rogers.

"We were looking for basins where there was a gap in understanding of the geology, or dogma around it, or other variables that deterred other companies." In its search for its diamond in the rough, Zodiac was introduced to California by a Denver group that had worked the Golden State for years.

"We were stunned at how attractive the San Joaquin was. It was such a prolific basin, but little had been done on development of new play types," he says. There was no 3-D seismic, no horizontal drilling, no deep drilling, and no modern stimulations. The array of resource-extraction technologies being routinely applied elsewhere was absent.

Zodiac and its Denver partners focused on an area that offered three light-oil resource targets. "Our primary target is the Vaqueros, and we also have potential for Monterey and Kreyenhagen shales on our lands. A number of conventional play types have also been identified."

The Vaqueros is a clastic, tight-oil hybrid reservoir that reaches 800 feet in thickness. The Jaguar prospect targets Vaqueros in the active oil-generation window, which means the reservoir should be overpressured and also fractured. A handful of vertical wells drilled in the area in the 1970s and 1980s produced moderate volumes of 30- to 40-degree-gravity API oil, good evidence that the objective has productive potential.

Certainly, the interbedded sands, silts and shales in the Vaqueros are loaded with hydrocarbons: a recent independent assessment by Sproule Associates Ltd. of Zodiac's Jaguar prospect estimated original oil in place per section at 75 million barrels equivalent. The Monterey and Kreyenhagen shales layer on additional oil potential.

Conventional zones could also produce. "There are stacked targets in our project area," he says. "We have the ability to test conventional ideas as we go after the unconventional component. There's been no deep drilling of any significance in the past 30 years in this area."

The new firm has formed a joint venture with a major California E&P on Jaguar, which encompasses 68 sections of land. In late 2009, Zodiac acquired 52 square miles of 3-D seismic across the leases.

The company plans to drill its first deep Vaqueros test, the 15,000-foot #4-9 Kettleman City, in December 2010. Additionally, Zodiac plans to core the Monterey and Kreyenhagen shales in its initial test.

The wildcat is in Kings County in the western San Joaquin, between Kettleman North Dome and Tulare Lake fields. The well will be vertical; if successful, development could proceed into horizontal wells. "We are bringing today's drilling and completion practices to this reservoir," says Rodgers.

Zodiac is taking a cautious approach with its inaugural well, because of the reservoir types and pressure environments. "This is a very important data-gathering well," he notes.

Financially, the new firm is in good shape: Zodiac recently completed a $50-million financing that will support its drilling program and associated capital expenditures through 2012. Its majority shareholders include some of North America's most respected energy funds.