Strata-X Certifies Blue Spruce Oil Project Reserves
DENVER, COLORADO USA, BRISBANE, QUEENSLAND AUSTRALIA and VANCOUVER, BRITISH COLUMBIA CANADA - April 6, 2015 (Pacific Time - Canada)
- 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.
Strata-X Energy Limited is pleased to provide an update for the Blue Spruce project. Strata-X’s independent engineer, Chapman Petroleum Engineering Ltd (Chapman), has confirmed Proved plus Probable Reserves are 1.282 million barrels of light oil net to the Company. (1)
Strata-X currently has the rights to 720 net acres of the Blue Spruce project where it has identified 19 oil development locations.(1) In a reserves report dated April 1, 2015, Chapman calculated a before tax Net Present Value (BTNPV disc 10%) of the Blue Spruce project to the Company of USD$53.4 million (After Tax NPV of USD$38.3 million, unrisked). (1)
To increase oil recovery and oil flow rates, the Blue Spruce project will require water pressure maintenance involving waterflooding of the Aux Vases formation. It is estimated that the waterflood development will extract approximately 40% of the Petroleum Initially In Place (“PIIP" unrisked) resulting in a projected recovery of 1.28 million barrels of oil net to Strata-X. The Company’s first well in the oil field, Blue Spruce #1, has been successfully put on production and is expected to reach production rates of 40 BOPD once reservoir pressure has been restored in the field. (1)
Chapman estimates that once all wells are drilled, total oil production from the Blue Spruce waterflood development project will exceed 500 BOPD.(1) Drilling of the second Blue Spruce oil field development well is anticipated to commence in May 2015.
Past water flooding projects in the Aux Vases formation in areas immediately adjacent to the Company’s Blue Spruce Project have been successful. Previous yielded recoveries have been in excess of the forecasted 40% rate for Blue Spruce.(1) Following waterflooding, tertiary recovery methods may also be considered by the Company which could further increase the recovery of the PIIP and oil reserves from the Blue Spruce oil field.
Company President Tim Hoops stated “We are very excited about the results of the first well in our vertical bypassed oil field drilling program. In addition to the Blue Spruce oil field project, we have so far identified another eight analog projects where we have interpreted similar bypassed oil pay in historical wells. The Company has secured leases for most of these opportunities and is taking steps to ready these projects for drilling later this year.”
Burkett 5-34 well update
Strata-X also advises that the Burkett 5-34 well is currently shut-in while the salt water disposal (“SWD”) facility is upgraded. The Company anticipates that it will take approximately 6 weeks for the SWD facility upgrade to be operational. Prior to being shut-in, the Burkett 5-34 well was producing approximately 45 BOPD.
Following the upgrade, the Company anticipates performing a polymer squeeze on the Burkett 5-34 well in order to reduce the production of water from deeper formations. Water produced from these deeper formations is interpreted to inhibit oil production from the target Lingle Formation.
The Company is farming out its aggregate 50% working interest in the La Capilla Project (the “Project), located in Texas. The La Capilla Project originated from a 2005 participation agreement that just recently reached the exploration phase. The Company has determined that the Project is a non-core asset and instead plans to use available capital on advancing its core assets such as the Blue Spruce oil development and Burkett production.
The Company is entering into a number of farm-out agreements including two with Officers of the Company, being the Company’s Chief Executive Officer, Tim Hoops and its Chief Financial Officer, David Hettich. The Officers will collectively acquire the right to earn an aggregate 19% working interest of 8/8ths in the Project, with arm’s length third parties acquiring the balance available. As Mr. Hoops and Mr. Hettich as officers of the Company and are ‘related parties’ to the Company within the meaning of Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions (MI 61-101), the transaction, as it relates to Mssrs Hoops and Hettich is a ‘related party transaction’ within the meaning of MI 61-101.
The farmouts to Company officers were approved by the Strata-X board. The terms of the farm out agreements are identical and no consideration will accrue to the Company as a result of the farm-out. By farming out this non-core project to third parties, the Company will retain a 5.4% working interest after payout in the Project.
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, Illinois, California, Texas 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|