Summary of the Acquisitions
Through the Acquisitions, Surge is acquiring 100 bbl/d (2010 exit rate) of high quality, high netback, light oil production, 6,000 net acres of highly prospective land in the Spearfish light oil resource play adding 205 gross (120 net) horizontal drilling locations and greater than 100,000 acres of additional, high working interest, undeveloped land for total consideration of $21.5 million in cash (subject to customary closing adjustments). The assets will be acquired by Surge Energy USA Inc., a wholly owned subsidiary of Surge Energy Inc. After closing both transactions, Surge will have approximately 329 gross (231 net) horizontal Spearfish drilling locations in Manitoba and North Dakota.
The 6,000 net acres of highly prospective Spearfish lands are located directly south of the Waskada and Goodlands Spearfish oil fields, immediately adjacent to the Canada/USA border. Based on existing vertical well producers and the proximity to Goodlands, Surge characterizes the acreage as being within the sweet spot of the Spearfish trend with internally estimated Discovered Petroleum Initially In Place (DPIIP) of 10 to 15 mmbbls of oil per section. Management believes the acreage can be effectively exploited by drilling 205 gross (120 net) horizontal wells resulting in internally estimated net oil reserves of 7.4 mmbbls (36 degree API). On portions of the same acreage, Surge has also identified additional light oil upside in the underlying Madison Formation (Mississippian) with internally estimated DPIIP of 1.5 to 4.5 mmbbls per section. This formation has traditionally been developed with vertical wells but may have the potential to be further exploited using conventional horizontal wells.
On the remaining undeveloped land, which consists of more than 100,000 net acres, management believes the Basal Spearfish has significant potential as a light oil resource play and could likely be exploited with vertical wells or conventional horizontal wells. Surge estimates the Total Petroleum Initially In Place (TPIIP) of the Basal Spearfish to range between 1.5 and 3 mmbbls of oil per section; and if tested successfully, the play could cover up to 20 percent of the undeveloped land base. The Madison Formation also has potential as a secondary target with similar TPIIP per section and could be exploited with verticals wells and conventional horizontal wells.
Ovat jostain syystä kokeneet tarpeelliseksi lisätä Legacyn maat karttaan.
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