2013-01-16 15:44:04 -
Calgary, Alberta CANADA, January 16, 2013 /FSC/ - Passport Energy Ltd. (PPO - TSX Venture), is pleased to provide an operations update on its drilling, completion and production results in the Hardy area of SE Saskatchewan.
Hardy North Area (SE Saskatchewan)
The Company's first development well in the Hardy Bakken pool, HARDY S HZ 1A4-16-4B4-09-004-21W2 ("4-16") has produced over 33,000 gross barrels of oil (bbls) from September 2011 to the end of December, 2012. The well continues to produce above Company expectations, averaging approximately 50 bopd gross and 12.5 bopd net (38.5 degree API oil) with an average oil cut of approximately 28% for the month December, 2012.
GLJ Petroleum Consultants ("GLJ") has updated the Company's reserves assessment
and evaluation report (effective September 30, 2012) and has assigned initial recoverable reserves (Total Proved plus Probable Producing category) of 119,000 gross bbls (29,750 net bbls) to the 4-16 well.
The GLJ assigned number of 119,000 barrels represents a 33% increase from GLJ's original reserve report (effective September 30, 2011) for the well.
Hardy South Area (SE Saskatchewan)
The Company completed and placed on production its first operated horizontal Bakken Oil well, PASSPORT MINTON HZ 1C11-32-3A-16-33-3-21W2M ("11-32") in August 2012. The Company has a 50% working interest in the well.
The rock quality of the Middle Bakken sandstone found in the 1,874m lateral of the horizontal 11-32 well was consistent with what was observed at the 4-16 well in Hardy North. Comprised of a porous (10-12%) and relatively high permeability sand with oil staining on samples and good gas response on the gas detector, the Middle Bakken in the 11-32 well continues to prove up the geological model for the area.
The well was completed utilizing a 32 stage multi fracture stimulation program which requires the use of specific downhole tools to perform fracing operations. During completion operations, one of these tools became lodged in the lateral section and the Company was unable to retrieve the tool. Conventional fishing operation methods were unsuccessful in retrieving the tool and the Company was forced to mill the tool which added considerable cost and delayed the planned start-up of the well. The tool was eventually milled and the lateral section cleaned out allowing completion operations to resume.
The well was placed on production in mid-August, 2012. After an initial clean up and optimization period, the 11-32 well produced an average gross daily rate of approximately 97 bbls/d (48.5 bbls/d net), of 38 degree API oil over an eight day period with a peak rate of 130 gross bbls/d (65 bbls/d net) of oil and an average oil cut of approximately 20%.
GLJ has assigned initial recoverable reserves (Total Proved plus Probable Producing category) of 70,000 gross bbls (35,000 net bbls) to the 11-32 well.
Well performance indicated that a potential clean out of the lateral section may be required to recover what was thought to be fragments and solids left over from the milling operation. The well was shut-in mid-September to facilitate the work over. During operations, the clean out of the lateral section recovered over 15 tonnes of frac sand along with fragments from the previous milling operation. The well was placed back on production in October, but again showed signs that another potential clean out of the horizontal section may be required.
The well remains on production and continues to produce at a stabilized rate, averaging over 36 gross bbls/d (18.0 bbls/d net) of oil with an average oil cut of approximately 20% for the month of December 2012.
The Company anticipates that if a second clean out is successful in recovering additional frac sand there is the potential for an increase in production.
2013 Hardy South Forecasted Operations
The Company plans to drill up to 3 additional horizontal Bakken wells in the Hardy South area in 2013, one of which has already been licensed and approved by the SEM (Saskatchewan Energy and Mines). Operations are expected to begin in the 2nd quarter, with all three wells planned to be on production before the end of the year.
Proved Reserves; are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Probable Reserves; are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
Developed Producing Reserves; are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production and the date of resumption of production must be known with reasonable certainty.
Undeveloped Reserves; are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned.
The Company is a junior natural resource exploration company focused on the acquisition, exploration, and development of economically viable natural resources, with a focus on Bakken oil projects.
The Company trades on the TSX Venture Exchange under the trading symbol "PPO".
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: the Company's plans to drill 3 horizontal wells.
The forward-looking statements and information are based on certain key expectations and assumptions made by Passport, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable credits, royalty rates and tax laws; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; completion of definitive documentation; receipt of all required regulatory approvals; and the availability and cost of labour and services and future operating costs. There are a number of assumptions associated with the development of the lands and resources by Passport in the Hardy Area, including the quality of the reservoir, continued performance from existing wells, future drilling programs and performance from new wells, the growth of infrastructure, well density per section, recovery factors and development. Although Passport believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Passport can give no assurance that they will prove to be correct.
Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating to test rates, reserves, resources, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations.
The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Passport are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Passport undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
For more information, please refer to the Company's public documents available on SEDAR (www.sedar.com).
For further information contact:
Bruce Murray Daniel Tiberio
President & CEO COO
Tel: 403-930-4061 Tel: 403-930-4070
Passport Energy Ltd. (PPO: TSX.V)
Shares Issued - 91,347,318
January 16, 2013 - News Release
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Source: Passport Energy Ltd. (PPO - TSX-V)
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