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 tied into a Bonivista pipeline at 1-20-81-12W6M, which is connected to a Chinook Compressor at 11-02-81-12W6M. The 11-02 natural gas moves into the Spectra Energy Midstream system for final processing. Produced oil is pipeline spec and is trucked to the Pembina Pipeline Terminal at Gordendale, 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 36 barrels of light oil and approximately 100,000 cubic feet per day of solution natural gas (30 barrels of oil equivalent per day 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 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). These four (4) horizontal wells are currently producing 296 bopd gross or 20 bopd net to Georox. A further 4 -5 horizonal wells, plus the construction of a drilling pad, will be drilled in the third quarter of 2013 at a gross cost of approximately $7,200,000 ($496,000 net to Georox).
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. Gross production for the ten wells during the month of April 2013 was 34 m3/d (212 bopd) and Georox's 15% interest share is = 5.1 m3/d (32 bopd).
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 2nd half of 2014. 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.
Coteau Lake, Saskatchewan
On May 9th, 2012 Georox Resources Inc. signed a participation agreement with respect to a farm in agreement on lands in the Coteau Lake area in southeastern Saskatchewan and northeast Montana.
The participation in the farm in plus additional land acquisitions includes four and three-quarter sections of land (3040 gross acres or 682 net acres) with the potential of high productivity light/medium (30 degree API) Mississippian oil. The contract depth of the initial earning well is approximately 1,975m.
On July 16th, 2012 Georox announced that the initial earning well on its Coteau Lake, Saskatchewan prospect (31.875% BPO, 21.25% APO) was completed and is currently suspended but capable of producing approximately 35 bopd gross (11 bopd net) @ 75% watercut. The water disposal costs for the 8-10 well are high so the well will remain suspended until a water disposal scheme is approved internally and an application is approved by the ERCB for the 7-10 well. After the 7-10 SWD well is activated it is planned to implement high volume lift production on the 8-10 well.
A second horizontal well was spudded on November 23rd and was completed and tested on February 13th, 2013. The well encountered high volumes of water, and operations have been suspended pending further geological and geophysical reviews.
Future activities include conversion of the 7-10-1-20 W2 to a Salt Water Disposal Well to reduce Water Trucking & 3rd party water disposal costs from the existing oil well at 8-10-1-20 W2. After the above mentioned geological and geophysical review is complete plans will be put forward to drill 1 -- 2 vertical wells on the south side of the geophysical play to further prove up the Ratcliffe zone. Success in the south part of the play could lead to a future horizontal well (s).
On June 16, 2010 the Company signed a farm-out agreement with a company in Alberta for $220,000. This will enable the company to earn a 25-per-cent working interest in the farm-out lands, which consist of 160 acres located in the Lloydminster area of Northern Alberta. The overall plan is to re-enter, recomplete/work over, equip and produce, via high-volume lift, up to five potential Sparky heavy oil wells. The potential is a gross incremental recovery of 800,000 barrels of oil. Georox's contribution will be used as a part of a $440,000 initial work program, committed to by the joint venture partners which includes the re-entering of two wells in phase 1 of the program.
In August, 2011, the well C11-18-50-2w4 was re-entered, re-completed and put on high volume lift. As of the end of October the well was pumped off as planned and tested at 20 bopd with a 4% oil cut. A second well at 13-18-50-2W4 was successfully reviewed for re-entry, re-completion and high volume lift to continue the program. The C11-18 well is temporarily shut-in until the rest of the development takes place to reduce operating costs.
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 has now 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.
Northern Alberta Farmouts
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. In addition Georox has 100% of 1440 acres in the Meekwap area which also has potential in the medium productivity light Devonian oil.
This brings Georox's total production to approximately 82 boepd.
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