Petro One Milton wells produce 3,764 bbl May to January
2013-03-18 08:11 ET - News Release
Mr. Peter Bryant reports
PETRO ONE-Q1 UPDATE
Petro One Energy Corp. is providing a corporate update for the first three quarters of 2012 to 2013. From May 1, 2012, to Jan. 31, 2013, the company's Milton wells produced a total of 3,764.6 barrels of oil and returned $300,380 from oil sales. The principal contributors were 10A-15-30-27W3, with 2,151 barrels with 138 days of production (average 15.6 barrels of oil per day), and 11-15-30-27W3, with 1,262 barrels in 146 days of production (average 8.7 barrels of oil per day). Both wells were down for part of the third quarter due to weather conditions, operations and maintenance. However, both wells are now back in production. Since its first well was drilled, Petro One has received total revenues of $715,470 from the sale of 8,617 barrels of oil.
The Company's Bromhead farm-out discovery well had its first full month of production in January, 2013. Pursuant to the farm-out agreement announced in its news release dated Aug. 28, 2012, Petro One realized net proceeds of $29,844 for its 10-per-cent gross overriding royalty for the month of January, 2013, and an additional $4,182 for three days of initial production during December. Petro One retains the option to convert this gross overriding royalty to a 30-per-cent working interest after payout. Production continues at Bromhead, with proceeds for February expected at month-end. Additional strong horizontal development drilling locations are indicated west of the discovery well. Further development drilling by the farmee on the earned quarter-section will give Petro One the benefit of the same 10-per-cent gross overriding royalty or, if it has then exercised its conversion option, a 30-per-cent working interest. The Bromhead discovery well has significantly added to the company's cash flow and upgraded the potential of the remaining 560 acres containing several strong horizontal development drilling locations. Combined oil revenues from the Milton and Bromhead properties from May 1, 2012, to Jan. 31, 2013, totalled $334,316.
Milton development update
Petro One's 100-per-cent-controlled Milton property covers four sections. Current production is coming from the highly porous and permeable conglomerate layer at the base of the Viking that runs east-west through Section 15. This reservoir is typical of conventional Viking production in the area that is amenable to vertical drilling. In areas outside the conglomerate trend, recent horizontal drilling in nearby fields is yielding water-free oil from the thicker upper Viking sand, with three-month initial rates up to 117 barrels of oil per day. Drill core from both the 10A-15 and 15-15 wells confirmed that the upper Viking sand is very well developed on Petro One's property and contains oil throughout the layer, making it an excellent target for horizontal drilling. The next round of development drilling is therefore planned to focus on the upper Viking at Milton. An initial horizontal well is planned to be spudded on or before June 30, 2013, and at least 30 additional drilling locations have been identified. This development plan at Milton will be cost-effective and efficient due to the company's existing operations and infrastructure in the area.
Two shallow vertical wells with dual-zone potential are also planned at Milton to test a strong target within a closed structure in the Bakken, as well as a broad stratigraphic trap at the Jurassic/Mississippian unconformity that also produces oil in the immediate area. Both sites have been surveyed in preparation for drilling. The unconformity target is only 100 metres below the Viking, and the Middle Bakken sand is only 140 metres below the Viking in this area. There is a former Bakken oil producer on the property, and a well only 200 metres outside the property boundary formerly produced oil from the Success formation at the Jurassic/Mississippian unconformity. The prolific Hoosier Bakken oil field surrounds Petro One's property on the west, north and east sides, and the nearest active Bakken well is located 1.2 kilometres to the east. The Bakken on the J5 Milton property was initially credited with a National Instrument 51-101 prospective resource of 798,000 barrels (news release Nov. 14, 2011).
Bromhead update
On the Bromhead J10 property, seismic has indicated several more low-risk horizontal development drilling locations on the three-quarters of a section that remains 100 per cent owned by Petro One, close to the 107-barrel-of-oil-per-day farm-out discovery (Petro One news release dated Jan. 21, 2013). These horizontal drill locations should be amenable to cost-effective open-hole completions. The company is currently considering expressions of interest regarding this farm-out opportunity and looks forward to continuing to unlock the value of this property.
Other properties
South Reston, Manitoba
On the South Reston J4 property (2.25 sections), recent detailed seismic interpretation has clearly identified a large carbonate mound in the Lodgepole formation. This is a large reef-like structure 100 metres thick measuring 2.6 square kilometres in extent and has a strong resemblance to Waulsortian mounds that are highly productive oil producers in the Williston basin. A 1,000-metre vertical well has been proposed to test this large mound, which is a strong drill target with excellent upside potential.
Kirkella, Manitoba
On the Kirkella J3 property, a site has been surveyed for an 800-metre vertical well targeting seismically indicated porosity in an undrilled area up dip of the Kirkella Lodgepole oil field. Two of the nearest producers at the north end of the field had three-month initial production of 418 barrels of oil per day and 251 barrels of oil per day, respectively. Bakken production in the immediate area confirms that the 100-per-cent-owned J3 property has good dual-zone potential.
Minton, Saskatchewan
The company's 100-per-cent-owned Hardy-Minton properties total two sections. The recent discovery of Bakken oil has generated new activity in the Hardy South-Minton area. New horizontal wells are now targeting oil in the Bakken very close to Petro One's 100-per-cent-owned J11 and J19 properties, which are within 200 metres of the nearest and some of the most highly productive Red River wells in the Hardy South area. The best Bakken well drilled to date terminates only 250 metres from the J19 property and had a three-month initial production of 109 barrels of oil per day. Another horizontal Bakken well was recently licensed parallel to and only 150 metres from the west boundary of J19, further confirming the strong dual-zone potential of Petro One's properties in this area.
Rosebank, Saskatchewan
Petro One's initial drill hole at 11-29-4-23W1 on its 100-per-cent-owned J1 Rosebank property produced oil at a steady rate from the top of the Alida beds. The property is adjacent to strong, long-lived producers in the Rosebank oil field, but the target Frobisher beds above were tight at this location, and the well had to be shut in due to a consistently high water cut attributed to the Alida beds. The high water cut is understood to be due to the close proximity of the regional oil-water contact two metres below the lowest perforations in the Alida zone, and the high porosity and permeability of the reservoir. Recent re-evaluation of 3-D seismic has indicated several intersecting low-amplitude trends in the Frobisher that are structurally higher than the Alida beds and are interpreted as porous. These indicated porous trends start about 250 metres from the 11-29 wellbore and extend into the northwest, northeast and southwest parts of the property. They are far enough above the known oil-water contact to make very attractive targets for horizontal drilling. The Frobisher beds continue to be successfully developed with horizontal drilling in many parts of southeast Saskatchewan, including this area. A horizontal development well is recommended to target this zone, which is indicated to be porous and oil-bearing, and should be amenable to cost-effective open-hole completion.
The technical team continues to evaluate and compile data on Petro One's remaining properties in preparation for farm-outs, joint ventures and partnerships. Based on the discovery of oil at Milton, Bromhead and Rosebank, and strong supporting data continuing to come in from its other properties, the team is confident that its other assets will continue to provide additional oil discoveries.
"The company is very pleased with the excellent oil volumes produced by the Bromhead farm-out to date, which have substantially increased Petro One's cash flow and oil production, and will add significantly to the company's reserve base," said Petro One president Peter Bryant. "Seismic and geological evidence indicate that several additional horizontal development wells are justified, based on the results of the first well. In addition, we look forward to developing the upper Viking at Milton, where drill core has confirmed we have oil throughout the formation. This zone has the potential to deliver good volumes of water-free oil using the same horizontal drilling techniques that are working very successfully for other producers in the area. The company is in ongoing discussions with several interested parties on many of its parcels and looks forward to continued growth using the farm-out model and with its own drilling to unlock the full value of its 14 Saskatchewan and Manitoba properties that total 14.9 sections (9,536 acres -- 3,859 hectares). Petro One also looks forward to releasing three-month IP rates and [an] updated reserve status for Bromhead as soon as they become available."
Other matters
The company's unaudited financial statements and management's discussion and analysis for its third quarter ended Jan. 31, 2013, will be issued on or about March 28, 2013, and will be available for viewing under the company's profile at SEDAR.
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Guten Morgen! 
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