Petrobank closes Saskatchewan oil play purchase
Petrobank Energy & Resources Ltd (C:PBG)
Shares Issued 76,432,949
Last Close 5/1/2007 $22.81
Tuesday May 01 2007 - News Release
Mr. John Wright reports
PETROBANK CLOSES SOUTHEAST SASKATCHEWAN ACQUISITION
Petrobank Energy and Resources Ltd. has closed the acquisition of land and reserves previously disclosed in the company's news in Stockwatch dated April 9, 2007, relating to the expansion of the company's asset base in the Bakken light oil resource play. Today, Petrobank acquired a 50-per-cent working interest in certain producing properties in the Viewfield/Stoughton area of southeast Saskatchewan, with extensive undeveloped acreage and a continuing farm-in with a third party, for $8.5-million.
The acquisition enhances the core of Petrobank's recently expanded position on the Bakken light oil play in southeast Saskatchewan. Under the original farm-in agreement related to the acquisition, the previous operator drilled four (two net) Bakken horizontal oil wells which are currently producing 80 (40 net) barrels of oil per day. The acquisition includes 9,426 (4,813 net) undeveloped acres and the company has the potential to earn a further 13,598 (6,799 net) acres with additional drilling. In a reserve report dated effective Dec. 31, 2006, McDaniel and Associates Consultants Ltd. assigned total proved reserves of 251,000 barrels, and total proved-plus-probable reserves of 730,000 barrels, to these acquired lands.
Petrobank plans to fracture stimulate the existing four producing wells and drill additional Bakken horizontal oil wells to earn the remainder of the lands. These lands are located within the core of the company's Bakken fairway, and are contiguous with its existing land position. Inclusive of the 41,800 acres acquired at the Saskatchewan Crown land sale in April, 2007, its acreage position on the Bakken fairway is now approximately 138,000 (114,000 net) acres.
The addition of these lands obtained through the acquisition further enhances the company's ability to build critical operating mass in the area, which allows it to optimize its facilities for production of oil and also the ultimate recovery of significant volumes of solution gas and natural gas liquids from its Bakken wells. Petrobank currently has two drilling rigs working its Bakken lands and the company plans to increase this to four rigs by the third quarter of this year.
All recently acquired lands are highly prospective for Bakken light oil and are expected to yield up to four horizontal wells per section (one section equals 640 acres). Currently, the company estimates its Bakken drilling inventory at 550 (500 net) wells. With these recent acquisitions, the Bakken light oil resource play is expected to be its Canadian business unit's primary focus area in 2007 and for years to come. The company's highly effective Bakken drilling and stimulation program, along with the expansion of its land base, has strategically positioned Petrobank to be a key Bakken light oil player.
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