Point Loma Resources Announces Entrance Into Leduc Area Rex Oil Play and Provides Drilling and Operational Update

Source Press Release
Company Point Loma Resources Ltd.Whitebark Energy Ltd 
Tags Asset Deals, Deals, Upstream Activities
Date September 24, 2018

Point Loma Resources Ltd. (TSX VENTURE: PLX) (the “Corporation” or “Point Loma”) announces the acquisition of lands providing entrance into the Rex (Upper Mannville) oil play in the Leduc area of Alberta and provides an operational update across its core focus areas.  With the addition of these properties and a large land position in excess of 160,000 net acres (over 250 net sections) targeting the Mannville (Upper and Lower), Banff and Duvernay oil opportunities and commencement of drilling activity, the Corporation is strategically positioned to unlock significant upside value across its assets.

Fall and Winter Drilling Program –  Drilling to Commence in Q4 2018

Point Loma is preparing to kick-off a high impact drilling program starting in Q4 2018 focused on unlocking the Corporation’s Banff oil exposure, a Rex (Upper Mannville) oil play that was recently captured and a new Lower Mannville oil prospect.

The Corporation believes that its two Banff pools are analogous to offsetting pools in the Cherhill and St. Anne regions that have original oil in place of up to 90 million barrels and recoveries of up to 40%.

In addition, Point Loma has secured lands on a new Rex (Upper Mannville) oil opportunity analogous to a large oil discovery currently being successfully developed by other operators in the Leduc area. The type wells anticipated in the analogous pool have strong economics in today’s price environment.

Further, Point Loma has identified a new Lower Mannville oil pool south of the Corporation’s existing Paddle River oil development, targeting a thicker pay column than the existing development. 

Each of these Banff, Rex and Lower Mannville oil plays have significant upside potential alongside the Corporation’s strategic land position in the Duvernay shale.

“With the Rex (Upper Mannville) oil play, Banff oil targets, Lower Mannville assets and Duvernay Shale exposure, Point Loma has captured multiple high impact oil plays that can be sizable to the Corporation. We are excited to gear up drilling activities in Q4 2018 aimed at unlocking significant shareholder value”  said Terry Meek, President and CEO of Point Loma.  “The Corporation has no bank debt and looks forward to strengthening its netbacks and lowering operating costs as we execute on our strategic plan over the coming months.” 

Banff Oil PLX 80% WI) – Two New Pool Opportunities

Based on new 3D seismic interpreted in the first quarter of 2018, Point Loma has identified two Banff oil opportunities in the West Cove area located to the east of Paddle River. As interpreted, each of these pools are analogous to developments in the offsetting Cherhill and St. Anne areas, which have accumulations of 20 to 90 million barrels of original oil in place. Recoveries can be up to 40% with waterflood implementation. The Corporation would look 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 100-800 boepd.  Point Loma anticipates that the application of modern day drilling and completion technology would significantly improve these results.

Rex Oil (PLX 80% WI) – Newly Captured Lands in an Area of High Industry Activity

Point Loma and joint venture partner Salt Bush have recently secured control of a new noteworthy Rex (Upper Mannville) oil opportunity in the Leduc area. Internal mapping indicates a potential accumulation of approximately 40-60 million barrels of oil in place. Analogous wells in the area have had initial rates of 250-300 boepd (80% oil and NGL’s) demonstrating excellent economics in the current pricing environment. The entry into this new oil play could lead to a sizeable inventory of follow up opportunities. The play continues to attract the attention of other key industry operators and would have waterflood potential beyond estimated primary recoveries of 10%.

Duvernay Oil (PLX 80% WI) – Unconventional Shale Play Continues to Evolve

The West Basin Duvernay oil play continues to advance in the region of Point Loma’s lands. In the past 18 months, land has sold in the area for upwards of $1,000 per hectare with total land bonuses paid of approximately $172 million in aggregate.

Including both the West and East Duvernay Shale basins, the industry to date has drilled an estimated 150 horizontal Duvernay shale oil wells within this emerging oil play which continues to attract increasing industry activity.  A significant farm-in deal was also announced recently pointing to increased value in the play as development widens. 

Point Loma has reviewed technical data in the area that indicates similar reservoir properties to the East Duvernay shale basin where an estimated 10 to 15 million barrels per section of original oil in place is prospective. Point Loma’s analysis shows that the West Duvernay has a thickness of approximately 10 to 15 metres, with porosities ranging from 3 to 10% and TOC’s in the range of 2% to 10% which are parameters comparable to offsetting East and West basin Duvernay oil development.

Point Loma continues to evaluate options to unlock shareholder value from its Duvernay shale holdings, which could include a strategic joint venture, farmout, land swap or outright sale.  

Mannville Oil (PLX 80% WI) – Expanding North and South from Existing Oil Development

The Corporation’s current production is approximately 950 boepd (29% oil and NGL’s) which represents an increase of 90% in oil and NGL’s from first quarter.

Point Loma and Salt Bush now control 100% of the lands associated with the Lower Mannville oil development at Paddle River. The Corporation intends to add treating and injection facilities to reduce operating costs and improve the economics of future development wells. Point Loma has 4 proven undeveloped and 2 probable locations booked to the reserves in the pool. In addition to booked reserves, the Company has identified 12 additional development opportunities. The Paddle River Lower Mannville oil pool will remain a meaningful oil development project for Point Loma for years to come.

Point Loma has licensed a Lower Mannville horizontal oil well south of Paddle River. Internal analysis of existing well penetrations indicates greater pay thickness than the Corporation’s Paddle River oil development. This opportunity has pipeline connection to a deep cut gas facility in the area which will accelerate on-stream timing and future development. The potential development of this pool could be up to an additional 6-10 wells as currently mapped.

Point Loma has also identified a Glauconitic (Upper Mannville) oil prospect north of Paddle River. Internal analysis indicates an accumulation that would result in 8-12 million barrels per section of oil in place over 5-8 sections. The bypass pay opportunity has pipeline connection to a deep cut gas facility in the area which will accelerate on-stream timing and future development. The potential development of this pool could be up to an additional 20-30 wells as currently mapped.

Acquisitions Update: Gilby Acquisition and East Central acquisition

With the recent sale of a secondary non-core property, the Corporation’s Gilby area property acquisition completed in Q2-2018 has already achieved payout. The property consists of low decline oil and gas production with low operating costs that will contribute to Point Loma’s bottom line. Geological work continues to identify additional opportunities, predominantly in the Mannville formation. Land acquisitions and rationalizations will continue as the Corporation focuses attention on this area.

The Corporate acquisition of Sanford Petroleum in late June 2018 was Point Loma’s first step into east central Alberta. In addition to strong operating income, the acquisition also included several Viking and Upper Mannville oil opportunities. This further expands the Corporation’s drilling opportunity portfolio and provides a foothold into this low cost region for the Corporation. Wells here are typically 700-1,000m in depth, which also keep capital costs on new drilling modest.

Point Loma is also continuing to review and finalize additional divestiture opportunities to monetize non-core assets and improve the Corporation’s overall operational efficiency.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd