Latest news from Western Logic.Things just keep getting better.When will investors wake up!!!
Western Logic Resources Inc.
("Western Logic")
(VSE-"WLT") is pleased
to announce that its operated
well, Texalta
Western Logic
Queensdale 9-26T-6-2W2M, is drilling
ahead of
schedule at 2242
meters. The Winnipegous ( "Ratner")
Formation
is described by the
wellsite geologist as "dolomite,
light brown,
coarsely sucrosic,
good intercrystalline porosity and
excellent
rate of penetration
for 11 meters,....GOOD RESERVOIR
ROCK". The
proximal Richland
Northrock Kingsford 8-14-4FW2M well
initially
produced from this
formation at a rate of 698 barrels
of oil per
day and 6 barrels of
water per day. The well,
currently drilling
into the Ovdivician
Red River Formation, a prospective
zone, is
anticipated to reach
total depth of 2513 meters on
Thursday 08, July,1999
Their news releases could use some explanation to those who are not oil geologists.What they are saying is that they have hit a second oil reserve 11 metres thick which a nearby well, which encountered the same formation ,achieved 698 B/D of oil!This combined with the previously announced 12 metre zone already shows that this well is capable of producing over 1000B/D of oil.And they still have three more zones before reaching their target depth.Understand it will take a day to do their testing after reaching depth.The weekend to analyse and that possibly by early next week they could start casing .Within two weeks of casing could have oil flowing to nearby collection, cleaning plant.
We received some clarification of WLT's interest in this well which greatly enhances the value to WLT shareholders.Apparently the agreement with the limited partners has a clause which gives them 90% of the revenue of the well until payout or 12 months which ever is longer.WLT receives 10%.Assuming the well produces 1000B/D ,it would pay out in approx 4 months.Therefore the 12 month period would kick in.After 12 months WLT has a PUT which ,while complicated, gives them the right to buy the limited partners interest in the well by issuing WLT stock valued at the average traded price for previous 20days[from the 12 month date] and based on the average revenue achieved for 30 days from that same time frame.In other words WLT's interest would increase to 52% after one year.
As we have previously posted, WLT by drilling this first well has earned the right to 100% of all other wells drilled on this acreage less 40% to the vend -in partner.
Once this initial well is completed and the revenue is calculated for the first month of production we will be able to more accurately establish the value of this field to WLT, but at this time we feel WLT is grossly undervalued.Do your own arithmetic on the numbers with only 12.5 million shares outstanding.And assume 4 wells producing the same volumes of oil.Although they may do step out wells to access some zones by horizontal drilling.
And we still don't know what the lower zones will contribute to overall production.
Watch for news releases by Thursday or Friday re the final zones.Consult with Geologists or get your Broker to ask their consultants re the true value of this find.Noticed that Cannacord seems mostly on the buy side .Although to be frank, we are surprised there has not been more active trading.
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