Strata-X First Oil Sales Illinois Basin Oil Project
DENVER, COLORADO and BRISBANE, QUEENSLAND and VANCOUVER, BRITISH
COLUMBIA--(Marketwired - Jun 5, 2014) - The directors and
management of Strata-X Energy Ltd. ("Strata-X" or the "Company")
(TSX-VENTURE:SXE)(ASX:SXA) are pleased to announce that Strata-X is
in the early stages of carrying out controlled long term production
tests on two horizontally drilled wells through two separate
Devonian aged light oil resource zones in the Illinois Basin, the
Lingle and Grand Tower formations. This week, the Company has sold
its first oil from the project's totaling 290 barrels of light
crude for an estimated price of $95.75 per barrel.
The target and
expectation of the production tests is commercial oil production
rates in both zones. It is anticipated that initial flow rates of
100 to 200 barrels of oil per day will be commercial depending on
the ultimate decline rates of the wells. Once commercial flow rates
are established and following an appraisal well program, infill
development drilling could commence in 2015.
The Company's
independent engineers have estimated the two resource zones
containing 338 million barrels PIIP (petroleum initially in place)
of light oil within Strata-X's 72,000 net acres. (1)(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.
Copper Mountain Oil
Project Update:
After installing
permanent water disposal facilities, Strata-X commenced a slow
controlled pump test of the horizontal Blessing 1-4H well late last
week. The well is currently averaging 436 barrels of fluid per day
consisting of 31 barrels of oil and 405 barrels of water. Over the
coming weeks, the water cuts are expected to reduce as the water is
drained from the stimulated zones and replaced with oil flowing
from the formation matrix.
Approximately 25% of
the lateral section of the Blessing 1-4H well has been modestly
stimulated and by the previous operator. Pending positive results
of this initial controlled pump test, the remainder of the
horizontal section of the well may be perforated and stimulated
exposing more reservoir to the horizontal wellbore.
The Blessing 1-4H
well is Illinois Basin's first horizontal test of the Devonian aged
Grand Tower formation. The Strata-X commissioned, independent third
party resource report, has estimated that the Copper Mountain Oil
Project has 128 million barrels of PIIP net to Strata-X.
In April 2014,
Strata-X purchased 23,595 net acres of production and exploration
assets in the Illinois Basin adjacent to its existing Vail Oil
Project. The acquisition, known as the Copper Mountain Oil Project,
is prospective for conventional and unconventional light oil
accumulations in shallow Mississippian age formations (from 700
metres depth) as well as the deeper Middle Devonian age formations
(~1200 to 1600 metres depth). Included in the Project acquisition
is the Blessing 1-4H horizontal well drilled by the prior operator
in mid-2013 (see above).
Vail Oil Project
Update:
As previously
announced by the Company in a news release dated May 22, 2014,
following the completion stimulation of the horizontal Burkett
5-34HOR well, the well flowed back oil, formation water and
stimulation fluid totaling 116 barrels of oil and 2,100 barrels of
the approximately 4,200 barrels of injected stimulation fluid
during a 30 hour flowback.
Following the
initial flowback test, the Company brought in a work over rig to
swab test the well to determine its potential productivity to help
design permanent downhole and surface production facilities. During
the swab test increasing gas flows were observed but it was
determined that the swabbing could not keep up with the excessive
water, oil and filtrate influx rates into the wellbore and the rig
was released. The large influx of fluid indicates the successful
multistage stimulation of the well was beyond projected
expectations.
Strata-X is in the
process of procuring and installing a high volume submersible pump
to accelerate the fluid draw from the well and to carry out a long
term production test to help determine oil and decline rates.
Electricity from nearby power lines to run the pump is currently
being procured and it is anticipated that it will take about 4
weeks to connect.
Similar to the
Blessing well, the initial expectation is that high water cuts
relative to oil should reduce in a few weeks as the water and
filtrate is drained from the induced fractures and is replaced by
light oil flowing from the formation matrix into the induced
fractures, to the pump, then to the surface production facilities.
The Company will dispose of any produced water on the Burkett
5-34HOR well into its own disposal well located approximately 1200
metres from the Burkett well. Water disposal costs are expected to
be less than $1 per barrel.
About Strata-X
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 139,785,415 common shares
outstanding and trades under the symbol "SXE" on the TSX-V and
"SXA" on the ASX.
(1) Resource
information cited in this News Release for the Copper Mountain Oil
Project are Prospective Resources, per an independent third party
report effective 1 April 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 in
this Presentation as it appears and information relating to the
Prospective Resource is based on, and fairly represents,
information and supporting documentation prepared 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 Petroleum Reserves to
it, further, all Petroleum Initially in Place figures relate to
undiscovered quantities. 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. The Report reviewed approximately 800 tenements/leases held
by the Company with individual owners covering 20,146 net acres
with each tenement/lease having a range of expiration dates,
royalties and other provisions. Prospective Resources 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, information from
relevant nearby wells or analogous reservoirs and the proposed
program for the project. Chapman estimated a Probability of
Commercial Success of 25% associated with the reported Prospective
Reserves with a 33% chance of discovery and calculated the net
capital exposure of this project to the Company of $5,625,000,
representing the cost of drilling, completing, testing and
abandoning three dry holes which exploration timing is not yet
known. 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.
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.
(2) This information
relates to Petroleum Reserves/Prospective Resources/Contingent
Resources that was prepared and published by AWT International
dated 18 December 2012 and published in Strata-X Energy Ltd's
"Prospectus 2013" (available online at www.strata-x.com) as part of
the Companies 2013 Australia Securities Exchange Initial Public
Offering and is based on, and fairly represents, information and
supporting documentation prepared by, or under the supervision of
Doug Barrenger ("JORC Competent Person"), employed by AWT
International and is independent of Strata-X Energy Ltd. At the
time of the Prospectus 2013 issuance, Doug Barrenger was an
employee of AWT International and a member of the Exploration
Society of Australia (PESA) amongst other professional petroleum
organisations. AWT International consents to the inclusion of this
information in this document. As of the issuance of this document
Strata-X Energy Ltd management is not aware of any material
information that would change the results of the AWT International
report as published in the Prospectus 2013.
This
announcement was made in Canada for the TSX.V and in Australia for
the ASX.
Public documents
for Strata-X Energy Ltd. can be found at SEDAR (Canada)
(www.sedar.com) and ASX.com.au (Australia).
By definition of
the COGE Handbook - "Undiscovered resources are those quantities of
oil and gas estimated on a given date to be contained in
accumulations yet to be discovered." The Handbook further states -
Caution (per NI 51-101/5.9(2)(v)(B)) - "There is no certainty that
any portion of the resources will be discovered. If discovered,
there is no certainty that it will be commercially viable to
produce any portion of the resources." In addition, per NI
51-101/5.6 "the estimated values disclosed do not represent fair
market value."
CAUTIONARY
STATEMENTS
This news
release contains forward-looking statements, which relate to future
events or future performance and reflect management's current
expectations and assumptions. The use of any of the words
"anticipate", "continue", "estimate", "expect", 'may", "will",
"project", "should", 'believe", and similar expressions is intended
to identify forward-looking statements. Such forward-looking
statements reflect management's current beliefs and are based on
assumptions made by and information currently available to the
Company. Readers are cautioned that these forward-looking
statements are neither promises nor guarantees, and are subject to
risks and uncertainties that may cause future results to differ
materially from those expected and the forward-looking statements
included in this news release should not be unduly relied upon. See
"Risks and Uncertainties" in the Company's Filing Statement dated
August 30, 2011 available on SEDAR at www.sedar.com. These
forward-looking statements are made as of the date hereof and the
Company does not assume any obligation to update or revise them to
reflect new events or circumstances save as required under
applicable securities legislation. This news release does not
constitute an offer to sell securities and the Company is not
soliciting an offer to buy securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such
jurisdiction.
Neither TSX
Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
Strata-X Energy Ltd.Tim Hoops (USA)President+1
855-463-2400info@strata-x.comStrata-X Energy Ltd.Colin Christensen
(Canada)Investor Relations+1 403-483-8363colin@strata-x.comStrata-X
Energy Ltd.Duncan Cornish (Australia)Corporate Secretary+61 7
3212-6299dcornish@strata-x.com
Strata X Energy (TSXV:SXE)
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Strata X Energy (TSXV:SXE)
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