CALGARY, AB / ACCESSWIRE / May 30, 2019 / Point Loma Resources Ltd. (TSX VENTURE: PLX) (the “Corporation” or “Point Loma“) is pleased to announce a farm-out on the Corporation’s evolving Wizard Lake Rex oil discovery and provides an operational update.
- Point Loma’s current 30% working interest partner, Salt Bush Energy Ltd. (“Salt Bush”), has agreed to a two well farm-in transaction with Point Loma at Wizard Lake whereby Salt Bush will incur 100% of the costs to drill, complete and equip up to two wells.
- The current plan for the two earning wells would be to drill from existing pad locations to reduce time and cost to bring the wells on stream.
- A test well and an option well are planned on Point Loma’s Wizard Lake property as follow-up to the successful Rex oil discovery well 16-17-48-27W4M HZ drilled in Q4-2018.
- Both the test well and option well will be horizontally drilled with respective targeted lateral minimum lengths of 1400 meters and 1800 meters and will utilize multi-stage frac completions.
- The test well is to spud by August 15, 2019 and Point Loma will retain a 25% working interest before payout (“BPO”) and 60% after payout (“APO”).
- The option well, upon Salt Bush’s election to proceed, is to be drilled by December 31, 2019 and Point Loma will retain a 25% working interest BPO and 50% APO.
- Once earning is complete in both wells, Point Loma and Salt Bush will be 50/50 working interest partners in the Wizard Lake Rex oil development and Point Loma will retain operatorship.
- The Wizard Lake discovery well 16-17-48-27W4 HZ is expected to commence production in early June 2019 upon completion of facilities construction.
Wizard Lake Rex Oil (70% WI) – Commencing First Oil Production Early June and Horizontal Drilling Update
A successful fully completed 2 well farm-out would result in three producing oil wells. Point Loma would be the operator with a 50% working interest in the Rex oil discovery well, a 25% BPO / 50% APO working interest in both the test well and the earning well and a 50% working interest in the remaining lands. A total of approximately $5 million of gross capital would be spent on the two well farm-out to delineate the pool at no cost to Point Loma.
Point Loma commenced construction of production facilities at its recently drilled and tested Rex oil discovery well in Q2-2019. Production is currently expected to commence in early June 2019. As disclosed in the press release of January 21, 2019 the 16-17-48-27W4 well tested at rates in excess of 300 bpd of oil with increasing oil cuts through the end of the testing period which has led to substantial reserve bookings for the pool net to Point Loma. Also of note, after the flow test, actual oil sales were 55% above field measured amounts (actual oil sales of 2,849 bbls vs field measurements of 1,847 bbls).
In addition to proved plus probable non-producing reserves of 150 mbbl (105 mbbl working interest) the Corporation received three additional proven undeveloped and one additional probable locations booked to the pool. In total the net proven and probable reserves booked were 525 mbbl of oil with a net present value discounted at 10% of $8.8 million.
This property represents a key oil discovery for Point Loma and could increase the oil production weighting for the Corporation significantly. At tested rates this would represent a corporate shift of oil and ngl product weighting from approximately 30% to approximately 40-45% of the Corporation’s total net production. Follow-up drilling could further move the production split to an even higher oil weighting.
The farm-out with Salt Bush will delineate the pool with a 1400m horizontal and a 1800m horizontal wells to be completed with multi-stage fracs. This is expected to assist in confirmation of pool size and also oil productivity and will test the application of extended reach wells for further development of the pool. With success on the two farm-out wells Point Loma will not only receive additional revenues but should be able to demonstrate the economics of full field development.
Upper Mannville Oil (PLX 80% Working Interest) – Expansion Opportunity to the North of Existing Oil Development
Point Loma has internally identified and captured a Mannville pool target north of the Corporation’s Paddle River Lower Mannville oil producing property. The target is analogous to the Rex oil discovery at Wizard lake that is operated by Point Loma. This could result in 15-20 follow-up opportunities with success. This opportunity has pipeline connection to a deep cut gas facility in the area which could accelerate on-stream timing and future development.
Lower Mannville Oil (PLX 80% Working Interest) – Expansion Opportunity to the South of Existing Oil Development
Point Loma has also internally identified and captured a Mannville pool target south of the Corporation’s analogous Paddle River Lower Mannville oil producing property. The target zone is thicker and has similar reservoir quality to the existing Paddle River oil development that is operated by Point Loma. This could result in 10 to 12 follow-up opportunities with success. This opportunity has pipeline connection to a deep cut gas facility in the area which could accelerate on-stream timing and future development.
Banff Oil Exposure (PLX 80% Working Interest) – Two High Impact Targets
Based on proprietary 3D seismic shot by the Corporation, Point Loma has internally identified two Banff oil targets in the West Cove area located to the east of Paddle River. As interpreted, these pools are analogous to developments in the offsetting Cherhill and St. Anne areas which have accumulations of up to 90 MMbbls of original oil in place. The Corporation is looking to utilize horizontal multi-stage completions to develop these pools upon success. The only previous horizontal wells drilled in the region utilized dated technology and were completed as open holes yet achieved initial production rates ranging from 200 to 800 barrels of oil per day. Point Loma anticipates that the application of current drilling and completion technology could significantly improve these results.
About Point Loma
Point Loma is a public oil and gas exploration and development company focused on conventional and unconventional oil and gas reservoirs in west-central Alberta. The Company controls over 150,000 net acres (230 net sections) and has a deep inventory of oil opportunities in the Mannville (Upper and Lower), Banff and Duvernay Shale formations. Point Loma’s business plan is to utilize its experience to drill, develop and acquire accretive assets with potential for horizontal multi-stage frac technology and exploit opportunities for secondary recovery. For more information, please visit Point Loma’s website at www.pointloma.ca or Point Loma’s profile on the System for Electronic Document Analysis and Retrieval website at www.sedar.com.