Illinois Basin Project - Vertical
Vertical Well Program Highlights:
- 1.28 million barrels of oil - Proved + Probable, net after royalties (2P) to Blue Spruce Project.(1)
- Net Present Value of US $53.4 million (Before Tax 2P) to Blue Spruce Project. (1)
- Strata-X Energy’s first well in the Blue Spruce oil field has been successfully put on production.
The Company has submitted a vertical drilling application to the Illinois Department of Natural Resources for a proposed 3,800 foot vertical well, named the Douglas Fir #1. The well will target the prolific shallow Mississippian formations of the Illinois Basin. The exploration team has commenced an ongoing detailed mapping and evaluation of the shallow oil zones that are extremely prolific in the immediate area having produced in excess of 1.5 billion barrels (2) of oil within a 32 kilometer radius of the project. Most of the historical wells were drilled when oil prices were significantly lower and without the benefit of modern drilling and completion practices.
The Company’s evaluation of these areas indicates that significant opportunity exists in direct offsets to historical wells and potential recompletions in bypassed pay intervals. The Company only recently embarked on this evaluation and has already identified over 65 potential drilling locations and expects to identify many more in the coming months.
Assuming success, the Company anticipates implementing a continuous low risk development program, which offers the potential for Strata-X to have a predictable and substantial production growth profile over the next 12 months and beyond.
(1) Reserve information cited in this News Release for the Blue Spruce Project are P2 reserves, per an independent third party report effective 1 April 2015 (“Report”) from Chapman Petroleum Engineering Ltd. (“Chapman”) who's author, Charles Moore, a registered Professional Engineer in the Province of Alberta, Canada, consents to the inclusion of this resource information in this News Release as it appears and information relating to the Reserves is based on, and fairly represents, information and supporting documentation prepared by Charles Moore et al. The Report reviewed only P1 + P2 reserves, unrisked. All Petroleum Initially in Place figures relate to discovered quantities. Figures shown reflect Strata-X’s economic interest as Operator (US Dollars) net of ~14.68% royalty or other burdens and were generated, using the deterministic method. Forecasted figures were derived using forward commodity strip pricing minus ~USD$3.50, regional drilling, completion and production expenditures, 20% of PIIP primary recovery factor, 20% of PIIP secondary recovery factor, and applicable production taxes. Strata-X is the title holder of the tenement/leases held covering the Blue Spruce Project which were subject to the Report. The Report reviewed approximately 35 net tenements/leases held by the Company with individual owners covering 720 net acres with each tenement/lease having a range of expiration dates, royalties and other provisions. Reserves were determined in the Report after Chapman completed an analysis of the available technical data including the geological and geophysical interpretation presented to them by Strata-X, publically available information, information from relevant nearby wells or analogous reservoirs and the proposed program for the project. Chapman calculated the net capital exposure of this project to the Company of USD$4,303,000, representing the cost of drilling, completing, testing and abandoning nineteen wells which development timing is outline in the Report. Strata-X is the operator of the Project and holds a 100% WI in most of the land and a 75% interest in 160 gross acres. The report stated 29MSTB of developed reserves from existing facilities with 1,253 MSTB of undeveloped reserves requiring additional investment of USD$4,303,000. Strata-X expects to develop the undeveloped portion of the Blue Spruce Project between 2015 and 2017. Hydrocarbon marketing and infrastructure related thereto are commonplace in the area and available to the Company; at this time the Company does not expect the development of this project will require burdensome environmental permits. In establishing the Probability of Success, Chapman gave consideration to both geological and commerciality factors. The geological factors include the four main geological components of a petroleum system needed for commercial production, source rocks available to generate hydrocarbons, reservoir rocks to accumulate hydrocarbons, a stratigraphic or structural trapping mechanism with a seal to hold hydrocarbons and a mechanism and proper geological timing allowing for hydrocarbons to migrate into the trap.
(2) Prospective Resource information cited herein are Prospective Resources, per an independent third party report effective 2 October 2014 (“Report”) from Chapman Petroleum Engineering Ltd. (“Chapman”) who's author, Charles Moore, a registered Professional Engineer in the Province of Alberta, Canada, consents to the inclusion of this resource information as it appears and information relating to the Prospective Resource is based on, and fairly represents, information and supporting documentation prepared by Strata-X and reviewed by Charles Moore.
(3) I.H.S Production data, Enerdeq, www.ihs.com, assessed 10/1/2014.