Strata-X Blue Spruce #1 Ready for Production
Finalist for Wildcatter of the Year
DENVER, COLORADO USA, BRISBANE, QUEENSLAND AUSTRALIA and VANCOUVER, BRITISH COLUMBIA CANADA - February 25, 2015 (Pacific Time - Canada)
- Production facilities nearly complete on Blue Spruce #1 well
- Anticipate first production by end of the week
- 12 additional target locations in the field of Blue Spruce #1 well
- Finalist for 2014 Wildcatter of the Year- Illinois Basin
Strata-X Energy Ltd. (“Strata-X” or the “Company”) (TSX-V:SXE) (ASX:SXA) is pleased to announce that production equipment has been installed and flow lines have been laid for the Blue Spruce #1 well in anticipation of first production later this week. The efforts to bring the well on production have been somewhat hampered by ground conditions and inclement weather.
The Blue Spruce # 1 well was drilled to a depth of 3,100 feet with 15 feet of interpreted pay in the Aux Vases Formation. As previously announced, following a successful stimulation of the Aux Vases formation, the well produced 10 barrels of fluid entry per hour with a 25% cut of light oil. Once long term production of the well commences later this week, the oil cut is expected to increase as the water pumped into the formation during the stimulation is recovered.
Many of the original wells in the mapped Blue Spruce #1 oil field area were drilled when oil prices were less than USD$2 per barrel and the economic threshold for production was much higher than is the case even at today's 'low' oil price environment. Additionally, few of the wells in the area were completed using the modern mini stimulation techniques Strata-X carried out on its well. For this reason, the Company interprets the bulk of the light oil resource potential in the area has yet to be produced. Strata-X's immediate plan is to place the Blue Spruce #1 on production this week and drill an offset well just east of the Blue Spruce #1 twining a well drilled in 1956 that has interpreted by-passed pay in the Aux Vases. This offset well is anticipated to have thicker primary reservoir development than the Blue Spruce #1.
Strata-X expects at least 12 follow-up locations in the Blue Spruce #1 area and anticipates between 40 and 80 BOPD IP from each well and is working with its reserve engineers to verify internal resources estimates which is forthcoming. 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. (1) 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$1 million in net present value at current oil prices (pre-tax, at a 10% discount, Best Estimate). With light sweet oil selling for approximately USD$55 per barrel, the Company’s netback is expected to be about $29 per barrel offering substantial economic potential to Strata-X. (1) 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.
Strata-X has identified a number of these bypassed oil fields within and adjacent to its current acreage in the Illinois basin. The Company is in the process of high grading its current and future land acquisitions to acquire or renew acreage with similar interpreted bypassed pay and oil fields thereby minimizing the up-front costs of future 'discoveries'. Using this approach, the Company anticipates sustained, predicable and profitable oil reserves and production growth even in the current oil price environment.
The Company is also pleased to report that Illinois Oil and Gas Association has nominated Strata-X for the 2014 Wildcatter of the Year award for its discovery in the Lingle Formation of the Company’s horizontal Burkett 5-34 well. The winner will be announced at the annual IOGA convention next week in Evansville, Indiana. Tim Hoops, Strata-X President, commented “it is an honor to be considered for this award despite our relatively short time in the Basin. We are excited about the opportunities that the Illinois Basin presents and look forward to a long and meaningful presence in the region.”
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 Illinois, North Dakota, Texas, California and Western Australia and production and development opportunities in California. Strata-X has 156,584,977 common shares outstanding and trades under the symbol “SXE” on the TSX-V and “SXA” on the ASX.
For Further information 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|