September 24, 2018 - 9:20 AM EDT
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Point Loma Resources Announces Entrance into Leduc Area Rex Oil Play and Provides Drilling and Operational Update




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



Calgary, Alberta (FSCwire) - 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.

 

About Point Loma

 

Point Loma is a public oil and gas exploration and development company focused on conventional and unconventional oil and gas reservoirs in west central Alberta. The Company controls over 160,000 net acres (250 net sections) and has a deep inventory of oil opportunities in the Mannville (Upper and Lower), Banff, Nordegg, and Duvernay Shale formations. Point Loma's business plan is to utilize its experience to drill, develop and acquire accretive assets with potential for horizontal multi-stage frac technology and exploit opportunities for secondary recovery. For more information, please visit Point Loma's website at www.pointloma.ca or Point Loma's profile on the System for Electronic Document Analysis and Retrieval website at www.sedar.com.

 

For further information, please contact:

 

Terry Meek
President and CEO
Telephone: (403) 705-5051 ext. 444
[email protected]

 

Kevin Angus
Vice President, New Ventures
Telephone: (403) 705-5051 ext. 440
[email protected]

 

Randall Boyd
Vice President Finance and CFO
Telephone: (403) 705-5051 ext. 443
[email protected]

 

A Note Regarding Forward-Looking Information

 

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws, including without limitation, statements pertaining to the Corporation’s anticipated drilling program, opportunities and locations; the anticipated results of the Corporation’s drilling program; the Corporation’s expectations and interpretations of analogous information; the Corporation’s expectations regarding potential waterflood implementation and other advanced completion techniques; the anticipated type curves and expected results and economics from anticipated drilling opportunities; the characteristics of the Corporation’s properties and associated reservoirs; the potential for joint ventures, farm-out, swaps or sales of certain of the Corporation’s properties, including the Corporation’s Duvernay shale properties; the Corporation’s anticipated inventory of drilling locations and opportunities; the potential for additional production to be brought back on-stream; the Corporation’s anticipated addition of treatment and injection facilities and anticipated reductions in operating costs and improvement in well economics; the anticipated longevity and development program from the Corporation’s Paddle River Lower Manville pool and other development plans; expectations regarding production decline rates and the ability to tie-in potential production into deep cut gas facilities; potential future land acquisitions and rationalizations as well as dispositions; expected well depths and capital costs for drilling activities in east Central Alberta; Point Loma’s expectations as to future prices of oil and natural gas; and the focus of Point Loma’s management team and go-forward strategy.

 

The use of any of the words “will”, “expects”, “believe”, “plans”, “potential” and similar expressions are intended to identify forward-looking statements or information. Although Point Loma believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Point Loma cannot give assurance that they will prove to be correct.

 

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to risks that the conditions to closing of the Acquisition are not satisfied, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the inability of Point Loma to bring additional production on stream or in the anticipated quantities disclosed herein; the uncertainty of estimates and projections relating to reserves, resources, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to tax laws, royalties and environmental regulations, actual production from the acquired assets may be greater or less than estimates. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide security holders with a more complete perspective on Point Loma’s future operations and such information may not be appropriate for other purposes.

 

The forward-looking statements and information contained in this press release are made as of the date hereof and Point Loma does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

 

Oil and Gas Information

 

“BOEs” may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.







Source: Point Loma Resources Ltd. (TSX Venture:PLX)

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