Northern Petroleum Plc reported the acquisition of additional leases in Canada, following the Alberta Crown lands sale, and provided further detail of the production opportunity.
Northern acquired additional leases over 4,000 acres increasing its aggregate holding of petroleum and natural gas mineral rights in Canada to 9,300 acres. These leases are all centered in one basin in Northern Alberta. To date they have produced a combined 11 million barrels of oil from an estimated 56 million barrels of oil originally in place, representing a recovery factor of approximately 20 percent. The total acreage contains 37 abandoned wells, of which 19 have initially been identified by Northern as being capable of re-entry for further production.
This area has multiple redevelopment opportunities for the existing high productivity reefs in the Keg River Formation as well as the Muskwa emerging unconventional shale play.
The basin contains over 800 pinnacle and atoll reefs of the Keg River Formation formed during the Mid-Devonian and are encased in sealing evaporites of the Muskeg Formation. Discovered in the 1960s, most of the reefs were developed and abandoned having only recovered approximately 27 percent of the light oil originally in place. In excess of 2,000 wells have produced almost one billion barrels of light oil from the Keg River Formation in the basin to date, as reported by the energy regulator in Alberta.
Northern has now successfully acquired a land package of critical mass to start operations. The work program during 2013 and into 2014 will focus on activities during the winter season, when complete access is possible. During the summer it is planned that a small number of wells will be put on short term production test to establish flow rates, confirm reservoir characteristics and the final design of the winter season program. This information will then be used to build infrastructure, at an optimum level relative to operational
Derek Musgrove, managing director, commented:
"This basin exploitation and redevelopment opportunity combines two key elements of Northern's strategy: low-cost entry and near term material value growth. The oil and gas industry in Canada is fast paced and well regulated, which is the perfect environment for small companies to grow and at the rate expected by our shareholders. We have acquired some excellent exploitation opportunities and a good team to bring the project into production."
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