CALGARY, ALBERTA–(Marketwired – May 1, 2014) – High North Resources Ltd. (TSX VENTURE:HN) (the “Company” or “High North“) is pleased to provide an update and summary of the Company’s progress over the past few months.
Colin Soares, President, Chief Executive Officer and Director states, “We are encouraged to report record flowing production for March and look forward to exceeding additional milestones in the coming months.”
- The Company is pleased to report for the month of March, 2014 record flowing gross (before royalties) oil production of 11,200 barrels of Montney oil with a realized sale price of approximately CAD$86.00 per barrel, representing average daily production of 360 barrels of oil per day for its three 100% working interest wells.
- Field optimization is ongoing with pump jacks installed at each of the three producing oil wells at 09-02-076-21W5M, 16-02-076-21W5M and 9-26-075-21W5M Additional storage tanks are also expected to be installed at the Company’s three oil well locations as soon as surface conditions permit.
- The Company has received a flaring permit from the Alberta Energy Regulator for the 09-02 and 16-02 producing wells.
- The Company intends to use remaining funds from the previously announced debenture financing and cash flow to drill and complete two new Montney horizontal oil wells at 08-02-076-21W5M and 08-21-076-21W5M, The wells are currently expected to commence drilling in mid-May, 2014, subject to weather and road bans being lifted. The 08-02 location directly offsets a competitor’s well which has reported a 30-day initial production rate of 360 barrels of oil per day.
- As previously announced, the Company exercised an option to acquire a 100% interest in a total of seven sections of Crown petroleum and natural gas rights to form a contiguous block of 20.25 sections in the Company’s Girouxville property, currently producing from the Montney formation.
- The Company previously announced that GLJ Petroleum Consultants Ltd. (“GLJ“) had completed an initial report dated April 7, 2014, on the reserves attributed to the Company’s Girouxville property, effective March 31, 2014 using the GLJ January 1, 2014 price forecast (the “GLJ Report“). The GLJ Report indicates the Company’s total proved reserves for five wells including the three producers were valued at $14.39 million (before income tax, discounted at 10% annually, using forecast prices) and the Company’s total proved plus probable reserves for seven wells including the three producers were valued at $19.78 million (before income tax, discounted at 10% annually, using forecast prices). It should be noted that the total proved reserves assessment covered 1.25 sections while the total proved plus probable reserves assessment covered 1.75 sections out of the 20.25 contiguous section block. It should also be noted that the GLJ price forecast dated April 1, 2014 has a 2014 Q2 to Q4 oil price of CAD$102.78 per barrel compared to that used in the GLJ Report of CAD$92.76 per barrel. The GLJ price forecasts are available at www.gljpc.com.
- As previously announced, the Company made the initial payment of CAD$1.0 million on April 15, 2014 to reduce the overriding royalty on the farmout lands on Blocks A, B, C, D and H, effective July 1, 2014, from eight percent to five percent. A further cash consideration of CAD$4.0 million is to be paid by June 30, 2014.
“With the reduction of the overriding royalty, acquisition of additional lands and completion of the debenture financing, High North is well positioned to develop the Girouxville property into a strong Canadian oil and gas asset,” stated Colin Soares.
Certain statements in this news release may be deemed to be “forward-looking statements” or “forward-looking information” within the meaning of applicable securities legislation. Such forward-looking statements or information include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur or be achieved. This news release contains forward-looking statements, including, expectations regarding: the installation of storage tanks, anticipated expenditures and the use of proceeds from the debenture financing, drilling and completion activities, weather road and surface conditions and the payment of future consideration with respect to the royalty reduction. Statements regarding future production, capital expenditures and development plans are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes.
Although High North believes the expectations expressed in such forward-looking statements are reasonable based on information available to it on the dates such statements were made, no assurances can be given as to future results, levels of activity and achievements and such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements. Readers should not place undue importance or reliance on the forward-looking information and should not rely on the forward-looking information as of any date other than the date hereof. Further, statements including forward-looking information are made as of the date they are given and except as required by law, High North undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change. The forward-looking information and statements contained in this news release are expressly qualified by this cautionary statement.
High North’s reserves estimates have been prepared and evaluated in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook. Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. There is at least a 50% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable reserves.
It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves or resources. Future net revenue values, whether calculated without discount or using a discount rate, are estimated values only and do not represent fair market value. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The reserve estimates provided herein are estimates only and there is no assurance that the estimated reserves will be recovered. Actual oil reserves may be greater than or less than the estimates provided herein.
Neither the 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.
High North Resources Ltd.
Mr. Colin Soares
President, Chief Executive Officer, and Director
High North Resources Ltd.
Mr. Kyle Stevenson
Investor Relations and Director