Update: Strat Petroleum Acquires Additional Oil Sludge Reservoirs in the Republic of Bashkorstan and Receives Gov't Approval to Process Acquisition Set to Bring Revenues to Company's Bottom Line
TORONTO, Apr 27, 2006 (MARKET WIRE via COMTEX) -- Strat Petroleum, Ltd. (OTC: SPRL), an emerging exploration and development company focusing on oil and gas properties in the Russian Federation, today announced that its joint venture entity in the Republic of Bashkorstan, Strat Nafta Ufa (SNU), has acquired three additional reservoirs totaling approximately 450,000 metric tons. Based on the official market value of approximately $80 per metric ton the value of the reserves acquired are approximately $36 million. SNU's total reserves now amount to approximately 750,000 metric tons, with an approximate value of $60 million. SNU continues its discussions with the various local refineries and an Agency of the Ministry of Environment to acquire an additional 1 to 2 million metric tons of reservoirs.
Along with the acquisitions, SNU has received the required Government approvals to construct its processing plants at the locations of the sludge reservoirs.
Samples from the reservoirs were tested by the Regional "Engineering and Innovation Association" Ecological Programs of the Republic of Bashkorstan in a report dated April 12, 2006, indicating that older reservoirs of sludge should result in 50% net processed product consisting of heating oil (50%), diesel fuel (20%), gasoline (20%) and bitumen (10%), based on certain available technology. In the future, with the purchase of fresh sludge, the raw material should produce 95% or greater net processed end product with similar breakdown. Based on current market prices in the Russian Federation, the total reserves acquired have the potential to generate over $125 million over the next three to five years.
The Republic of Bashkorstan is located in the Southern part of the Urals along the line of Europe and Asia. Its area is 143,600 square km. The capital is Ufa. The Republic of Bashkorstan is a sovereign state under the jurisdiction of the Russian Federation.
Bashkorstan annually produces around 130 million barrels of oil and possesses about 10 percent of Russia's refinery capacity. Russia started refining crude oil in Bashkorstan in the Ufa region initially. The Region has three major oil refineries and several chemical plants that generate oil sludge of approximately 10% of the annual amount of oil processed.
While major investment is being made by Russian refineries in equipment to improve the efficiency of their refineries, the sludge reservoirs remain undisturbed and are constantly being added to. Even with capital investment being made to upgrade the equipment in the antiquated refineries, efficiency may improve to 75% - 80% recovery at best. This still leaves about 20% - 25% unprocessed product that will again be disposed in oil sludge reservoirs as the refineries focus on refining crude oil which is their main line of business rather than on further refining sludge reservoirs.
Current more advanced technology allows the unrefined crude oil sludge to be further refined to 98% - 99% efficiency resulting in optimum recovery of oil or refined oil products. With rising oil prices it has become lucrative to recover previously unrefined crude oil that has been accumulated in sludge reservoirs. Furthermore, with environmental remediation concerns, further refining of oil sludge reservoirs becomes evidence of good corporate citizenship with the recovery of oil products found in the oil sludge reservoirs being a good financial byproduct.
The joint venture continues negotiations with several entities to establish a new joint venture for investment in processing equipment and should complete the agreements and financing within several weeks.
Management has been cautious in ensuring that the viability and probability of success of each project it has pursued is realizable, and for this reason after completing due diligence on projects it announced in the past found a number of undisclosed liabilities and other risks that it would not have been prudent to make the necessary investment.
About Strat Petroleum:
Strat Petroleum is an emerging exploration and development company focusing on investment in oil and gas properties and other related projects in the Russian Federation. For more information, please visit the company website at www.stratpetroleum.com. The company's new phone numbers are: 905-761-9169 (main), 416-628-8018 (fax) and 646-216-9751 (U.S.).
Investor Relations:
Mark Besner
905-761-9169 ext.222
SOURCE: Strat Petroleum, Ltd.
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