Strata-X to Commence Illinois Basin Drilling
DENVER, COLORADO USA, BRISBANE, QUEENSLAND AUSTRALIA and VANCOUVER, BRITISH COLUMBIA CANADA - November 18, 2014 (Pacific Time - Canada)
- Initial five shallow vertical wells starting early next month.
- The wells are designed to demonstrate commercial production in direct offsets to historical productive wells with interpreted bypassed oil pay intervals.
- Targeted oil is high margin light sweet crude (36 to 38 degree API).
- Approximate total vertical depths of ~3,800ft (~1,160 metres).
- Permits to drill the first three vertical wells have been received.
- Webster Drilling, Inc. rig contracted.
Strata-X Energy Ltd. (“Strata-X” or the “Company”) (TSX-V:SXE) (ASX:SXA) is pleased to provide an update to the Company’s vertical well exploration program which will test multiple shallow Mississippian-aged reservoirs with interpreted oil pay in its 100%-owned Illinois Basin project. The Company has to-date received regulatory approvals to drill three ~3,800-foot (1,160 metre) wells: the Blue Spruce #1, the White Fir #1 and the Douglas Fir #1. Strata-X has signed a multi-well drilling contract with Webster Drilling, Inc. to drill multiple vertical wells starting in early December 2014 with the Blue Spruce #1 well. Assuming success of the initial vertical well program, the Company anticipates implementing a self-sustaining, continuous, low-risk development program which offers the potential for it to have a predictable and substantial production growth profile over the next 12 months and beyond.
Strata-X holds a 100% interest in approximately 67,000 net acres in Illinois. These properties sit on top of, and adjacent to, several giant oil fields that have collectively produced in excess of 1.5 billion barrels of oil(1). The locations of the proposed wells in this drilling campaign are within the giant Clay City Consolidated Oil Field that has produced in excess of 450 million barrels of oil to date(1). The Company’s evaluation of these fields indicates that significant opportunity exists in direct offsets to historical wells with interpreted bypassed light oil (36 to 38 degree API) pay intervals.
Given the historical production and projected high margins offering superior well economics (see below), the Company has embarked on a detailed evaluation of the shallow opportunities on its existing leasehold. The exploration team has so far identified over 65 potential drilling locations, and expects to identify additional locations as its evaluation proceeds.
The Company has evaluated historic (3rd party) production 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 costs of approximately USD$300,000 per well, each well represents a Prospective Resource of approximately USD$2 million in net present value (pre-tax, at a 10% discount, Best Estimate). With light sweet oil selling for approximately USD$75 per barrel, the Company’s netback is expected to be about $45 per barrel offering outstanding economic potential to Strata-X(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 initial five well exploration program’s objective is to demonstrate commercial production in direct offsets to historical wells with interpreted bypassed light sweet oil pay intervals. Assuming success, and with over 65 similar locations identified so far, the Company anticipates implementing a self-sustaining, 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.
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|