Strata-X expands vertical program to 6 wells to test multiple zones
Receives Approval for Douglas Fir #1
DENVER, COLORADO USA, BRISBANE, QUEENSLAND AUSTRALIA and VANCOUVER, BRITISH COLUMBIA CANADA - October 2, 2014 (Pacific Time - Canada)
Strata-X plans to test numerous low risk light oil drilling opportunities
- 65 low risk drilling locations in a small portion of current leasehold have been identified to date.
- Historical wells averaged 50,000 barrels of light oil(3).
- Each successful USD$300,000 well has an estimated NPVs (10%) in excess of USD$2 million(2).
- Douglas Fir #1 well is a direct offset to a well that flowed over 300 BOPD(1).
- Additional bypassed pay has been interpreted in the well offsetting the Douglas Fir #1.
- Modern extraction techniques provide new tools to unlock bypassed oil potential.
- Up to 6 vertical wells are planned over the next several months targeting bypassed light oil pay or direct offsets.
The directors and management of Strata-X Energy Ltd. (“Strata-X” or the “Company”) (TSX-V:SXE) (ASX:SXA) are pleased to announce that the Company has received approval to drill the 3,800-foot, Douglas Fir #1 well, which will test multiple shallow Mississippian formations of the Illinois Basin. A drilling contractor is currently being sourced for anticipated drilling in November 2014
Strata-X holds approximately 70,000 net acres in Illinois which sit on top of and adjacent to several giant oil fields. These oil fields have produced more than 1.5 billion barrels of oil from the same shallow reservoirs Strata-X is targeting(3). Most of this oil was produced when oil prices were less than $2 per barrel so economical oil flow thresholds were much higher. The chart below shows that more than 80% of the oil in the Illinois Basin was produced long before oil prices began their rise over $2 per barrel in 1972. Most of Illinois’ oil was produced without the benefit of modern drilling and completion techniques. Modern drilling and completion techniques increase the amount of reservoirs that can now be commercially developed
Dr. Ira Pasternack, Vice President of Exploration, has led Strata-X’s ongoing detailed mapping and evaluation of the prolific shallow oil zones identifying numerous vertical well drilling opportunities. 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 a multiple of that in the coming months. Strata-X anticipates carrying out a 6 well drilling campaign over the next several months with the first wells beginning in November 2014.
Vertical Wells Offer Very Favorable Economics
The Company has evaluated historic production (3rd party) in the area of the Strata-X leasehold and has determined that the average production per well was approximately 50,000 barrels of light gravity oil(3).The Company’s independent third party resource engineers at Chapman Petroleum Engineering Ltd., have concluded that with finding and development cost of approximately USD$300,000 per well, each well represents a Prospective Resource of approximately USD$2 million in net present value (at a 10% discount, Best Estimate). With light sweet oil selling for approximately USD$90 per barrel, the Company netback is expected to be over $60 per barrel(2). ASX disclosure note - 5.28.2 - The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.
The Company’s President, Tim Hoops commented, “The Illinois Basin has been largely over-looked by the mainstream oil and gas industry as they chase after shale resource plays that offer modest returns. We view Illinois as an area that offers low risk shallow drilling targets with the potential for better returns from much lower capital requirements. This shallow drilling program will supplement our other large light oil play in the Illinois Basin which has been significantly de-risked with the drilling and completion of the Burkett 5-34 well.”
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.
For more information on the Company and its Project’s, please visit our website at www.strata-x.com.
Strata-X is a Denver, Colorado (USA) based company and is engaged in the business of oil and gas exploration and development with a variety of exploration opportunities in North Dakota, California, Texas, Illinois and Western Australia and production and development opportunities in California. Strata-X has 146,288,969 common shares outstanding and trades under the symbol "SXE" on the TSX-V and "SXA" on the ASX.
For further information please contact:
|Tim Hoops (USA)||or||Colin Christensen (Canada)||or||Julia Maguire (Australia)
|President||Investor Relations||Investor Relations|
|+1 855-463-2400||+1 403-483-8363||+61 419 815 386|
- Illinois State Geological Survey, Illinois Oil and Gas Database, accessed 10/1/2014,www.isgs.illinois.edu.
- Prospective Resource information cited in this News Release for the Copper Mountain Oil Project are Prospective Resources, per an independent third party report effective (“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. There is no certainty that stated resources will be commercially viable to produce any portion of the resources. The Report reviewed only Prospective Resources as the project is not sufficiently developed to assign Contingent Resources or additional Petroleum Reserves to it. Figures shown reflect Strata-X’s economic interest (US Dollars) net of royalty or other burdens and were generated, using the deterministic method. Forecasted figures were derived using forward commodity strip pricing, regional drilling, completion and production expenditures and applicable production taxes. Strata-X is the title holder of the tenement/leases held covering the Copper Mountain Oil Project which were subject to the Report.
- I.H.S Production data, Enerdeq, www.ihs.com, assessed 10/1/2014.
This announcement was made in Canada for the TSX.V and in Australia for the ASX.