MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, NOVEMBER 24, 1997 (4)
DRILLING ACTIVITIES - UPDATES (con't)
Berkley Petroleum
As reported in their nine month report. At Midale in SE Saskatchewan, waterflood approval and GPP were obtained for the Red River A pool in August. The company decided not to increase production volumes until reservoir voidage could be maintained through the waterflood, which is now the situation with the two A pool injection wells, drilled in the third quarter. The three unit horizontal producers have been drilled and are currently being brought on production. Only one of the three horizontals is currently producing, the 15-3-7-11W2 well is producing 1125 BOPD with no water. The Company expects net production in excess of 5000 bopd from the Midale complex by year-end. A new pool discovery in the Devonian Duperow formation was made in September, with the Berkley et al Midale 13-2-7-11W2 flowing clean 45 degree API oil at approximately 425 bpd. Several Duperow follow-up locations exist. Berkley Petroleum and partners have entered into an agreement to acquire the interests of Cavell Energy Corp. in the Midale area for $7.3 million, complementing Berkley's existing production base and opportunity inventory. Berkley Petroleum and partners Paramount Resources and Westminster Resources have also entered into an asset exchange agreement with Upton Resources Ltd. whereby Berkley Petroleum and partners will acquire all of Upton's interests below the Mississippian Frobisher-Alida beds at Midale-Weyburn. A December closing is anticipated, Berkley has a 50 percent interest in both the Cavell and Upton transactions. The acquisitions will add 750 BOPD to Berkley's 1997 exit volumes and provide considerable development opportunity for 1998.
At Carstairs, working interest owners have agreed to an interim unitization arrangement for the Carstairs Elkton G pool, operated by Berkley. Contingent upon AEUB approval, a December 1 production start-up date under GPP is currently anticipated. The BPC et al Crossfield E 6-5-30-1W5 horizontal well in the Elkton G oil pool tested oil from the Elkton at rates of 4025 bopd, with a GOR of 127m3/m3 and less than 5 percent drawdown. A second horizontal, BPC et al Crossfield 8-5-30-1W5 is currently drilling. At Crossfield, the BPC et al Crossfield 9-1-28-2W5 new pool Elkton discovery, made in August, will be brought on production at 10 MMCFPDE in late November. A successful follow-up has been drilled at 4-5-28-1W5 and a third well, BPC et al Crossfield 13-6-28-1W5, is currently drilling. 3D seismic and further drilling at Crossfield are anticipated in the first quarter of 1998.
The 1997 exploration program has exceeded expectations thus far with significant discoveries in each of the four targeted major reserve growth areas; The NWT, western Alberta deep Devonian, the Alberta Foothills and extensions of the regional S.E. Saskatchewandeep oil play.
In the second half of 1997, Berkley Petroleum has been successful in extending the Ordovician light oil play beyond the original Midale discovery. With new pool discoveries at Harthaven, Clairlaw and Froude, a significant regional scope has been demonstrated by Berkley. The Berkley-Founders 7B-2-10-9W2 Harthaven well flowed 600 BOPD of 41 degree API oil on original production test. A 15 square mile 3D seismic survey was subsequently shot and a follow-up well is currently being tested. The Berkley-Richland Clairlaw 4-35-7-5W2 well tested clean 38 degree API oil at rates of 150 bopd. The company is currently defining follow-up locationswith a new 3D survey. At Froude, the Berkley et al Froude 2-32-8-10W2 is currently producing 42 degree API oil at rates of 1875 BOPD from the Ordovician. The step-out, Berkley et al Froude 4B2-32 is a successful Ordovician horizontal oil well with GPP. This well will be brought on production during the next several days. Berkley has a net 50 percent working interest in the Froude wells, Paramount Resources and Westminster Resources have a 25 percent interest. Oil has been tested in several other horizons at Froude, an additional 4-6 locations are planned by Berkley and partners over the next three months. An additional four new pool wildcats in new SE Saskatchewan exploration areas, already defined by 3D seismic, are planned by Berkley in the next 2 months.
At Waskahigan, the BPC Chevron Waskahigan 11-36-62-25W5 well is currently drilling at 3200 m, with both Leduc and Swan Hills the primary objectives. The well has already encountered three uphole gas zones which are currently behind intermediate casing. Berkley is participating in the currently drilling Chevron et al Musreau 2-29-62-6W6 test, a step-out to the Berkley interest Chevron et al 8-25-62-6W6, cased gas well. Further deep exploration and development tests are planned in the Waskahigan-Simonette-Musreau play corridor during the first quarter of 1998.
Berkley Petroleum is currently participating with Imperial in two wells in the Red Cap and Voyager areas of Alberta, Berkley has a net 30 percent working interest. Berkley has received a licence for a new pool wildcat at Voyager, the BPC et al 7-22-45-18W5 well is expected to spud in early December. Also expected to spud in December are the BPC et al Turner V. 12-35-20-3W5 and the Esso-Berkley Turner V. 4-21-21-3W5 wells, both pursuing large volume Mississippian targets.
In the NWT, production testing of the C-76 Bovie Lake gas discovery will take place in December when surface access is re-established. The Paramount-Berkley Maxhamish b-57-L 94-0-15 well is currently drilling. Berkley and Paramount are planning a two rig, four well deep drilling program this winter including a step-out to the Bovie discovery and two deep new pool wildcats on separate prospects.
Oiltec Resources
As reported in their nine month report. During the first nine months, Oiltec participated in the drilling of 30 (11.8 net) wells, resulting in 24 oil wells, two gas wells and four dry holes for an overall success rate of 87%. An excellent 75% success rate on four exploratory targets yielded three new pool discoveries with additional development potential. In October, Oiltec's first Red River well at Mansur, Saskatchewan was completed. The 1-33 well is presently flowing light gravity oil at controlled rates. A second Red River target at Huntoon, Saskatchewan is currently drilling. The drilling rig being used for this Red River drilling will stay with Oiltec into 1998, enabling the Company to pursue its deep exploration drilling uninterrupted.
The purchase of additional interests in four core areas and divestiture of two high maintenance properties in the third quarter will result in improved operating efficiencies and reduced operating costs. Oiltec has signed a Letter of Intent to acquire seven producing oil properties (175 BOPD net) in Saskatchewan for $2,300,000. Three horizontal development wells have been drilled on the properties with several more scheduled for drilling. Funding for this acquisition and the ongoing Red River exploration will be achieved through the complete exercise of 3,572,000 warrants which realized $6,251,000 on November 18, 1997.
Orbit Oil & Gas
As reported in their nine month report. Orbit Oil & Gas Ltd. today reported that it had commenced drilling a 13,000' Lower Wilcox test well on its Cabeza Creek prospect in Goliad County, Texas, and that the well has spudded on November 23, 1997. The Company has also entered into an agreement to participate in an Edwards Reef gas
discovery in DeWitt County, Texas. This latter operation will entail the drilling of a 1,500' horizontal section through an Edwards reef, from an existing wellbore. In addition to an increasing exploration effort in the United States, Orbit also reported that three wells drilled in the Barrhead area in west central Alberta, had been cased as gas producers. Orbit holds a 100% working interest in these wells. The Company also confirmed that drilling was either underway or about to commence on gas prospects in the Marlboro, Drumheller, Markerville and Medicine River areas of Alberta.
Orbit reported that it has finalized the terms of its 25% participation in an Association contract in the Llanos basin, Colombia, and anticipates that formal contract execution will take place this week.
Talon Petroleums
As reported in their 6 month report, the third quarter has been active with the drilling of two (2) horizontal Keg River wells on new lands acquired in the Rainbow area this year. The first well (Talon 50 percent, see press release dated Monday November 17, 1997) located at 09-25-110-08W6M has been completed and placed on stream November 21, 1997. The second location at 06-19-110-07W6M (Talon 20 percent) is being cased and drilled horizontally in the Keg River formation with results expected in the next week or two. Talon has spudded a new well on November 22, 1997, in the Peace River Arch area, Alberta which has potential for multiple productive horizons, (50 percent working interest and operatorship), and results are expected in about three weeks. In addition to these operations an aggressive drilling program with potential large reserve and daily production additions are scheduled for the next four to five months on properties currently secured by Talon. Talon has finalized plans to drill up to an additional nine (9) horizontal wells/laterals in the Sousa/Fire and Rainbow areas, (10-14 percent working interest) during the upcoming winter season and drilling rigs have been secured for such operations. A new well is also planned on Talon's Gordondale property (Talon 50 percent) to test the Charlie Lake formation. Talon and its partner have accumulated 2400 gross acres (1200 net) adjacent to the planned location which will provide additional drilling opportunities, including potential horizontal development, should this well be successful. Talon is participating (50 percent BPO, 30 percent APO) in a farmin well planned in the Snowfall area, Alberta to test the Bluesky and Debolt formations, the drilling of which is anticipated prior to March, 1998. At Haro Alberta, Talon (50 percent) plans on participating in a farmin horizontal re-entry well into the Keg River formation and a drilling rig is being pursued. In addition to finalizing our drilling plans for the remainder of the year, Talon has aggressively pursued and successfully acquired additional lands in the greater Peace river Arch area, Alberta at recent Alberta Crown Sales. Talon has acquired 3360 gross acres (2000 net acres) and development and drilling plans are being finalized with partners. Talon plans on drilling and will operate at least two wells (50 percent) on the acquired lands and if successful, additional development locations can be drilled.
MERGERS - ACQUISITIONS
Calibre Energy Inc. - Trego Energy Inc.
The companies announced they have entered into an Agreement which provides that Calibre will make an Offer for all of the Common Shares of Trego on the basis of $1.30 Cash plus 1/5 of a Calibre share for each Common Share of Trego. The combined company will have daily production in excess of 2000 BOE/D and 65,000 net acres of undeveloped lands. The majority of the Calibre and Trego properties are located in central and southeastern Alberta and southeastern Saskatchewan.
Nu-Sky Energy Inc. - Highview Resources Ltd.
Nu-Sky Energy Inc.and Highview Resources Ltd. jointly announced today that they have entered into a letter of intent to amalgamate on the basis that each 3.5 common shares of Highview will be exchanged for 1 common share of the amalgamated company and each common share of Nu-Sky will be exchanged for 1 common share of the amalgamated company. The amalgamation is subject to the execution of formal documentation and the receipt of all shareholder and regulatory approvals. It is anticipated that shareholders meetings to approve the amalgamation will be held February of 1998. Upon completion of the transaction, the amalgamated company will have 12,332,278 common shares issued and outstanding. The amalgamated company will have a production base of approximately 200 BOE/d, (85 percent of which is oil).
Jilbey Exploration Ltd. - Neuquina Resources ltd.
Jilbey Exploration Ltd. ("Jilbey") announced that it has signed a definitive Amalgamation Agreement with Neuquina Resources Ltd. ("Neuquina"), a private Alberta Company. The basic terms of the Agreement are as outlined in the letter of intent executed by the two parties and described in Jilbey's news release dated October 14, 1997. Neuquina is a Calgary based international oil and gas company operating in Argentina through its 99.6 percent owned subsidiary, Arcan Energy S.A. ("Arcan"). Arcan has entered into a farmout agreement to earn a 50 percent working interest in the 54 square kilometre Medianera Concession in the Province of Rio Negro, Argentina by spending U.S. $3.6 million over a period of two years. Arcan is the operator of the Medianera Concession and oilfield which has produced over 14 million barrels of oil to date. Neuquina, through Arcan, will apply its international expertise and its knowledge of Canadian oilfield technology to exploit the proven and potential reserves of the Medianera Concession and oilfield. An engineering report completed by Fekete Associates Inc. of Calgary, Alberta dated June 1, 1996 identified 8.5 million barrels of proven reserves to the zones from which the majority of oil production has come in the past. A workover program is presently underway on 3 of the 30 plus existing wells which have been identified as potential workover candidates.
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