Resource Royalty Ltd. Land Leasing & Drilling Opportunity- Central Alberta Mannville and Duvernay Oil Plays November 2017

Transcription

1 Wetaskiwin Mineral Titles Resource Royalty Ltd. Land Leasing & Drilling Opportunity- Central Alberta Mannville and Duvernay Oil Plays November 2017 Resource Royalty Ltd. owns the N/2 Section W4M which include 320 un-leased net mineral acres of freehold mineral rights (the RRL Lands ). The RRL Lands have been acquired for the development of a multi-well Mannville and Duvernay HZ oil project. The balance of the 640 acre section (being the S/2 Section 13), is controlled by Forge Oil & Gas Limited ( Forge ). In October 2016, Forge drilled a W/E horizontal well from a surface location at 9-11, easterly to a bottom-hole of W4M ( Forge Well ). Forge had apparently experienced drilling/completion difficulties with the Forge Well and the production rate has been affected. See production summary on page 4 which now includes August 2017 production. The August production update shows cumulative total reported (frac) water of 5,566 bbls and production of approximately 24 bbls of oil/day, with solution gas of approximately 71 mcfd. In discussions with Forge in late August, the 9-12 well did not have a water production issue but had an inflow issue. The Forge Well is approximately 1/2 mile south of the RRL Lands. Two prospective sections (1280 acres) of Crown lands immediately offsetting the RRL Lands were sold to a broker (Forge) at the October 26, 2016 Alberta Crown land sale for $712.96/ha ($285.18/ac), for a total bid of $365,000. Additional lands immediately east of the Forge well were also sold to a broker (believed to be Forge) at the November 23, 2016 Crown Land sale for $283/ac. See map on page 5. In 2016, Forge leased the mineral rights (PSK et al) to section W4M and have recently drilled a vertical pilot and then a HZ lateral from 5-17 to 9-17 on section 17. The 9-17 well is on production (1405m vertical, total wellbore length 3038m) and in August 2017 reported production of 23 bopd and 521 mcfd with cumulative water production of 13,738 bbls (hours unknown). See page 5. RRL Land Opportunity Description Mannville and Duvernay Oil Potential The Mannville prospect is a Mannville-age channel/estuary play. Analog upper Mannville oil/gas/ngl pools exist within 30 miles being drilled by Black Spur (50-1 W5M), Altura (48-26 W4M) and Bonavista (42-27 W4M) with encouraging results. The RRL Lands offset the key section W4M ( Forge Lands ) owned and drilled by Forge. A 1990 vertical well at W4M ( Key Well ) was drilled by Sceptre (see 1990 well log on page 3) on the Forge Lands and produced 600 bbls of 24 API gravity oil was abandoned. Based on log analysis and area mapping, the Key Well has approximately 12 metres of net oil pay which is presently being evaluated and accessed with the recently drilled 1.4 mile HZ (1500 meter) Forge Well. A complete geological presentation has been prepared and is available for review. The RRL Lands are also within the Duvernay oil window of the East Shale Basin. Forge had recently engaged Sayer Advisors to market their deeper Duvernay rights, being the rights below Mannville, with a bid date of September 21, Crown lands have been acquired to the SW (Vesta, Raging River, brokers) on the Duvernay play for as much as $2000 NMA. Raging River Exploration Inc. has recently drilled a Duvernay HZ well in W4M and Traverse Energy has recently drilled a HZ Duvernay test well in Sec W4M to test the NE extension of the Duvernay oil play. The RRL lands are believed to be within the oil window for the Duvernay. RRL Leasing or Farmout Options RRL is prepared to lease the RRL Lands (to base Mannville and/or below base Mannville to base Duvernay, with the lessor royalty reserved to RRL based and payable on that portion of any new well horizontal wellbore(s) that traversed the RRL Lands), with a HZ well commitment within 6 months of lease date or, RRL is prepared to farmout the RRL Lands (subject to a lease to RRL) for a HZ well commitment which would evaluate the RRL Mannville or Duvernay rights in the RRL Lands. The lessor royalty reserved to RRL would be based and payable on that portion of any new well horizontal wellbore(s) that traversed the RRL Lands. Mannville Reserve Potential Based on detailed mapping, log analysis and ERCB Pool parameters, reserve potential is as follows: Depth 1400m, porosity 11%+ Trapezoidal/pyramidal reserve analysis used 1

2 6m and up to 12m contours included OOIP of up to 11.6MMbbls section OOIP potential for RRL Lands of 28MMbbls - 50MMbbls (includes Forge et al) Recovery factor (primary) 10% = 2.8MMbbls - 5.0MMbbls recoverable Duvernay Reserve Potential Reserve potential is estimated using information derived from several industry studies and information provided in public data provided on the Raging River and Traverse Energy websites. See page 5. Depth 2200m, avg. porosity 8% Well costs of $5MM (D+C+E) OOIP of up to 8MMbbls to 15MMbbls section EUR well of 300mboe - 500mboe Project Seismic Coverage Several 2D lines of seismic data (shot in ) exist across the RRL Lands. Some of this data has been reviewed for quality and all data is available for purchase. A key 2D line could be acquired for <$10K. In addition, a large 3D seismic program was shot in 2005 over the majority of the RRL Lands and is available for purchase. Project Primary Targets** and Secondary Targets*** Mannville channel** CBM, Belly River, Viking formations*** Duvernay** Infrastructure A successful oil well drilled on the RRL Lands would require a single well battery. It is likely that a multi-well pad would be utilized by the area Operator which would reduce costs. Solution gas could be transported through several shallow gas systems in the immediate area. This area is farmland with surface access adjacent to road infrastructure. Mannville Well Cost and F+D Parameters (estimated from BNP analog) Drilling Costs $1.7MM Completion Costs $1.5MM Equipping & Tie-in Costs $0.40MM Un-risked Reserves/Well (P+P) Upper Mannville (Falher) zone only 285,000 boe (.7 Bcf and 200,000 bbls) F+D Cost $12.50 boe (initial well) 2

3 1990 Key Vertical Well: 100/ W4M 12m bypassed pay (prod. 600 bbls 24 API oil) HZ Well FORGE HZ HONEY W4; Surface Location 100/ W4/00 August 2017 Cumulative production 11,947 bbls, monthly average rate 24 bopd, 71 mcfd, with 5,566 bbls cumulative frac water see comments above; well had inflow issue according to Forge and was re-entered for sand removal in August 2017, Current rate unknown 3

4 HZ Well FORGE HZ HONEY W4 Surface Location / W4/00 August 2017 Cumulative production 4,104 bbls, monthly average rate 23 bopd, 521 mcfd, with 13,738 bbls cumulative water, current rate unknown RRL Lands in Yellow below Forge has most offsetting land 4

5 Forge Sayer Advisors Duvernay Land Bids Due September 21, 2017 (RRL Lands shown in red) Vesta, Raging River and Traverse Energy Drills and RRL Lands 5