General Update on Activities - September 14, 2016
Red Earth, Alberta
On May 9th, 2014 Georox Resources Inc. completed an acquisition of oil and gas interests located in the Red Earth area, approximately 106 kms north of lesser Slave Lake (320 kms northwest of Edmonton) in northwest Alberta, from a company at arm's length. The purchase price of the assets was approximately $6,100,000 with an effective date of April 1st, 2014.
The properties subject to the Transaction consist of working interests in a total of 11.38 sections of land comprised of 2.125 sections in Red Earth that has eight producing oil wells and one standing oil well in which Georox acquired a 100% working interest. In addition, Georox acquired the well bores to three abandoned wells in which it will hold a 100% working interest in one and a 50% working interest in the two others.
The wells are currently producing approximately 78 barrels of light oil and approximately 20,000 cubic feet per day of solution natural gas (81 barrels of oil equivalent per day net to the corporation) from the Granite Wash & Slave Point formations.
Georox is the operator for all wells except two of the abandoned wells.
Georox believes that there is an opportunity to drill two to three additional wells at Red Earth and potential beyond primary recovery through the implementation of water flood/pressure support to significantly extend the life and recoverable reserves from the Red Earth properties. Georox is currently reviewing and assessing the Red Earth properties in detail to identify opportunities to enhance production before initiating new operations.
Georox is reviewing and assessing the Red Earth properties to identify opportunities to enhance production in the short term by initiating a New Wax Dispersant program in the third quarter of 2016. A Batch Treatment versus Continuous application of a new wax dispersant is being implemented on most of the wells plus a Wax Dispersant Squeeze directly into the producing perforations of three wells is currently taking place. One of the three wells is being reactivated from Suspended status as we anticipate increased oil production. Success on this program will lead to frac opportunities on 2 or 3 wells.
As oil prices continue to improve Georox is looking at drilling two vertical locations in the Granite Wash formation and one horizontal location to drill in the Slave Point location in 2017. There also is potential beyond primary recovery through the implementation of water flood/pressure support to significantly extend the life and recoverable reserves from the Red Earth properties.
Pouce Coupe, Alberta
On June 1st, 2013 Georox Resources Inc. completed an acquisition of oil and gas interests located in the Pouce Coupe area, northwest Alberta, from a company at arm's length. The purchase price of the assets is approximately $2 million with an effective date of May 1st, 2013.
The assets consist of a majority interest in 1.5 sections of land (960 gross acres and 576 net acres) with three current producing wells, a 52.42% working interest in one section, 50 per cent in one- quarter section and 100 per cent in a final one-quarter section. Two wells are operated by Georox and one well is operated by an industry third party.
Both operated oil wells are tied into a central oil Battery @ 15-17-81-12W6M. Natural gas is flared. Produced oil is pipeline spec and is trucked to the Pembina Pipeline Terminal at Gordondale, Alberta (280 miles NW of Edmonton, Alberta).
The Company's non-operated producing oil well is equipped as a single well battery. Natural gas is conserved through a Bonivista pipeline system.
The wells are currently producing approximately 20 barrels of light oil equivalent net to the Corporation from the Boundary Lake formation.
The company believes there is potential to drill additional infill development or horizontal well(s) on the acquired lands.
GP Channel Project
On September 25, 2009 the Company signed a farm-out agreement with a Company in Alberta at the cost of $650,000. This enabled the Company to earn a 15-per-cent interest on farm-out lands consisting of 1,040 acres located in Saskatchewan. The farm-out lands have both 2-D and 3-D seismic support as well as a geological cross-section analysis which verifies the Mannville channel play. Three-dimensional seismic confirms the presence of an undeveloped, deep-cut oil-bearing Mannville channel. Based on analogous wells drilled into similar Mannville channels, reserves in excess of 100,000 barrels per well are potential. The joint venture partners have identified a total of approximately 13 horizontal oil wells in this play. The pooling of the lands with an adjacent producer (Husky Energy) to form a larger area of common interest has been completed. The 3D Seismic program, interpretation and Pooling was completed with an adjacent partner (Husky, the designated Operator) which will yield a pooled working interest of 6.9% to Georox. The drilling of the first four (4) horizontal wells was commenced in the fourth quarter of 2011 at a gross cost of $4,700,000 ($350,000 net to Georox). Through its joint venture partner and operator, Georox has successfully drilled and completed four additional horizontal wells of the originally planned five wells in its Silverdale GP Channel Project in the 3rd week of January 2014. Georox' interest share is 6.9% in 8 horizontal wells and 8.45% before payout and 6.9% after payout in the 15-1 Vertical well. The gross cost is approximately $7,200,000 ($496,000 net to Georox). These nine wells are currently producing 21 bbls per day net.
In addition a High Volume Lift program will be started on the well A2 H27B7-12-4D10-11-48-28W3 in the third quarter, 2016 to determine its' production capability. From this test the entire field capability can be extrapolated to justify a complete expansion of the project. The facility is currently projected to be built by the 4th quarter of 2016.
Sparky Non Channel Project
Through its Joint Venture Partner (Northern Blizzard Inc. of Calgary, Alberta), the Company has drilled, cased, and equipped ten wells in the initial drilling program. The Company has earned its 15% interest on the farm-out lands consisting of 1040 acres at a cost of $600,000 following the completion of the wells. Typical recoveries are in the order of 100,000 bbls per well.
Tentatively, discussions are taking place to potentially budget the drilling of 1 or 2 more Sparky wells. In addition the setting up of 2 water injection wells for 2 waterflood patterns are in preliminary plans for further pressure maintenance and oil recovery.
Lloydminster (Lashburn) Property
On July 7, 2010 the Company purchased 240 acres in the Lloydminster area of Alberta for $200,000. Georox has also entered into a letter of intent with a company in Alberta which provides for a joint venture to develop the lands. As of October 31st the Joint Venture partner has paid $200,000 toward the drilling and completion of an initial well on the lands. Georox was assigned a 50-per-cent interest in the lands to its joint venture partner . The overall plan is to verify the Waseca channel sand presence by acquiring additional seismic in the area followed by drilling one to two vertical wells.
The existing Seismic was reviewed and the first vertical well was identified at 2C-4-51-01W4. The well was drilled in December 2010 and it was verified that the Waseca channel did not run through 3-7 of Section 4-51-1W4. This well currently stands as a future water disposal well.
Swan Hills and Virginia Hills
Georox currently has a land inventory of 100% of 640 acres in Swan Hills and 96% of 640 acres in Virginia Hills with potential of high productivity light Devonian oil.
Meekwap Nisku Project, NW Alberta
Georox has acquired 100 % of 3 and ¼ sections (2,080 acres) in this project area to date which has prospective potential in the medium productivity light Devonian oil. 3D Seismic, approximately 16.5 km2, has been recently acquired through the acquisition of a 4.538% working interest owner(s) for $44,625. This seismic data is currently being reprocessed to better define the well locations.
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