Fidelis Acquires Two Wells in Joarcam Project in Canada

Joarcam Field, Alberta
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Fidelis Energy will acquired working interests in two oil wells at the Joarcam Project located in Alberta, Canada.

The terms of the purchase agreement will be based on a "fair market" price for the working interest, established by a third-party reservoir engineer, and to be determined after a 30-day production period is established for both wells. Following this evaluation, closing will be held April 2. Currently, asset sales of equivalent production are approximately $35,000 per barrel of oil per day.

Fidelis will acquire a 100% working interest in the 4-27 oil well from a private Alberta company (51%) and Dixon Oil and Gas (49%). The well has been producing at a rate of 35 barrels per day since production was established in January 2004. Also, Fidelis will acquire a 30% working interest from the private Alberta company in a new well named 13-27. The 13-27 well is undergoing completion and production testing to establish daily rate production. There is the potential for 110 to 115 bpd of production between the two wells with reserves of 300,000 barrels at the two locations.

The overall development strategy envisioned by the operator and other working interest partners at Joarcam could see between 16 and 24 well locations ultimately drilled. Fidelis has negotiated a first right of refusal to acquire the remaining 30% working interest on all future drilling locations at Joarcam from the private Alberta company that covers all potential property-wide reserves, production and other targets that include natural gas potential on the northern portion of the leases.

With success at Joarcam, it is anticipated that the field could produce between 800 and 1,200 barrels of oil per day (bbls/d) if fully developed at an average of 50 barrels per day per well. Oil wells at Joarcam demonstrate very shallow decline curves. The prospect lands are located about 25 miles southeast of Edmonton, Alberta, and there is year-round access to the property.

Currently, the 38 degree API light oil at Joarcam has been priced at more than $48 per barrel. The project is a low-risk development property with oil at shallow depth, short payback period and long life reserves. The play is located in the "Viking C" pool adjacent to the established Joarcam Viking pool, the largest Viking hydrocarbon accumulation in Alberta, Canada.

The seller of the 30% working interest at Joarcam is a private Alberta company, the principals of which also are beneficial shareholders of Fidelis. Additionally, the remaining 70% working interest in the Joarcam property and the 13-27 well is currently being earned by Silver Star Energy Inc. Fidelis is also a partner with Silver Star in the North Franklin Gas Project near Sacramento, Calif., and with whom the management of Fidelis works closely in the evaluation of other potential, jointly feasible exploration prospects.

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