"Hz Multi-frac Wells: The Tight Oil Waterflood Enabler"

Surgelta:

Surge käynyt kalatiskillä

Surge Energy Inc. Announces Two Significant North Dakota Light Oil Asset Acquisitions, Operational Update and Pending Increase to Bank Line

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.

Seiväskalan punninta

Vähän pähkäilin tuota Legacyn parin viikon takaista Manitoban Spearfish-oston arvoa:

Lainaus tiedotteesta:

Based on the 62 wells drilled to date by Molopo, Legacy believes the Acquisition encompasses a large resource
play for light oil in the Spearfish formation. Existing well control has de‐risked approximately 24 gross sections of
land over 14 miles of the Spearfish fairway in the Pierson area. By capturing the opportunity, Legacy believes it
can continue to unlock the large resource potential through continued improvements in technology, including
potential secondary and tertiary recovery schemes. As with all resources plays, improvements in technology result
in continuous increases in production rates and reserves and decreases in costs over the long lifespan of these
types of developments. Legacy has successfully demonstrated these improvements in its existing light oil resource
play portfolio.
Currently producing wells were typically drilled horizontally with a combination of both long (1200+ m) and short
(600 m) single laterals and completed utilizing multi‐stage frac treatment. Long horizontal wells within the
productive Spearfish fairway are expected to have average 30 day initial rates of approximately 100 Bbl/d and 90
day average initial rates of 80 Bbl/d. Well costs are expected to be $1.5 million to drill, complete and tie‐in, with
proved plus probable recoveries expected to be approximately 102,000 Bbl/well. Wells are currently producing
through single well batteries; however equipment has been secured for a central oil battery which is expected to
be constructed and operational in 2011. It is anticipated that this facility will lead to lower operating costs through
the elimination of third party treating and salt water disposal and the reduction of infield fluid trucking.
Legacy has identified 329 gross (234.0 net) horizontal development drilling locations targeting light oil, of which
239 gross (166.8 net) or 71 percent are unbooked, as well as eight gross (6.0 net) standing horizontal wells
awaiting completion. The number of locations is based on the expectation that development of the Acquisition
will result in eight long lateral horizontal wells per section, or the equivalent of 16 short lateral horizontal wells per
section. Current well spacing in a large portion of the Waskada area has reached 24 short lateral horizontal wells
per section or the equivalent of 12 long lateral horizontal wells per section. Successful demonstration of
downspacing in the Pierson area to the well density seen in Waskada, could significantly increase Legacy’s
development drilling inventory. Furthermore, the South Pierson Unit No. 1 Spearfish pool has been successfully
waterflooded since 1993, demonstrating the secondary recovery potential associated with the Acquisition.

Jos ensimmäisen vuoden keskimääräinen tuotanto olisi n.50 tynnyriä per päivä ja toisen vuoden 25 tynnyriä niin kaivo maksaa itsensä 100% takaisin 2 vuodessa 50 dollarin netbackillä.

Penn West Waskada-kentän lukuja: kaivon hinta(DCET)(pitkä horisontaali) $1.4 miljoonaa ja reservit 115,000 tynnyriä.

Surge(SGE) poraa noita lyhyitä horisontaaleja Pierson ja Goodlands-kenttien pohjois-rajoilla ja sen mukaan tuollaisen reservit ovat keskim. 65,000 tynnyriä ja NPV(Dkonttaus@10%) ennen veroja $1.69 miljoonaa($25 per 2P-reservi tynnyri). SGEn luvut näyttävät melko optimistisilta sillä tuollaisen lyhyen hsontaalin ensimmäisen vuoden keskim. tuotanto olisi yli 70 tynnyriä per päivä ja pay-out aika alle vuosi. Ehkä geologia selitää eron, todennäköisemmin SGE liioittelee.

LEGin hankinta: 234 kaivoa ja NPV $2 miljoonaa per kaivo= $460 miljoonaa. Hinta oli $190 miljoonaa.

OOIP on tuolla Spearfish-kenttien(Waskada, Pierson, Goodlands) ytimissä ja läheisyydessä 7-15 miljoonaan tynnyriä per section mikä on selvästi enemmän kuin esim. Viewfieldin Bakkenissa(n.5 miljoonaa tynnyriä).Dodslandin Vikingissä öljyä on suurin piirtein saman verran kuin Spearfish-ytimessä. Legacyn hankkimista maista noin 20,000 eekkeriä(30 sectionia) on todistetusti runsas öljyistä ja OOIP arvio noille maille on 12 miljoonaa tynnyriä per section. Mahdollinen waterflood voisi nostaa talteenottoa noilta mailta 5 prosenttiyksikköä eli 18 miljoonaa tyynyriä. Paljon voi antaa arvoa mahdolliselle wf-resrvitynnyrille tänä päivänä? $5? $10? Sanotaan $5 eli yhteensä $90 miljoonaa.

($460MM +$90MM)/160MM osaketta= $3.43(osakkeiden määrässä mukana optioiden laimennus)

Tuo Spearfish exploration-operaatio Pohjois-Dakotassa näyttää varsin mielenkiintoiselta Manitoban lukujen valossa. Jos 20% maasta(11,000 eekkeriä/17 sectionia) olisi kaupallista niin tuolta voisi aueta yli 100 kaivon inventaario. Geologia on 100% varmuudella suurelta osin selvästi heikompaa kuin Spearfish-kenttien ympäristössä. 100 kaivoa(NPV á $1.5MM) meinaisi dollarin verran(6%) lisää arvoa osakkeelle.

Triviaa: Myyjä tässä Spearfish-kaupassa on australialainen Molopo, joka osti maat vuoden 2009 elokuussa 13 miljoonalla dollarilla. Maille on porattu tuon jälkeen 52 kaivoa, joiden yhteishinta on $78 miljoonaa. Varsin tuottoisa sijoitus Molopolle: noin $90 miljoonaa sisään ja $190 miljoonaa ulos 18 kuukaudessa.

Lähdelinkkejä:

PWE presentaatio elokuulta(SF-asiaa alkaen s.17)

Surgen presentaatio(SF-asiaa alkaen s.10)

Molopo pr. syyskuulta

LEGin tuorein pr.