Habanero has entered into an agreement to purchase an equity interest in a private company that controls over 10,000 acres of land in the Peace River Oil Sands region of Alberta, Canada. According to a 51-101 compliant reserve report completed by DeGolyer and MacNaughton of Calgary on September 1, 2005, the current possible and probable barrels recoverable are 111,300,000. The property is very close to infrastructure including roads and power, as well there is a pipeline running directly through the property. There is likely a supply of condensate in the area for treating and blending for pipeline sales. The Company is planning a pilot plant for testing the recoverable reserve via Steam Assisted Gravity Drainage (SAGD) and the Company plans to file application to AEUB for the pilot plant during the 1st quarter of 2006. The Company plans to drill two additional wells as part of its current program and will undertake a 3-D seismic survey of the lands that will enable the Company to re-assess the size and extent of its reserves and administer its pilot project. At this time Habanero has taken an equity interest in the Company, but Habanero may have the option to participate in the development and exploitation of the prospect in the future.
Jason Gigliotti, President of Habanero Resources stated, "This oil sands project is the most important project that Habanero currently has and possibly the most important project we will ever be associated with. The oil sands are one of the largest sources of oil reserves in the world and for a company of Habanero's size to have an interest, there is a huge opportunity. When you factor that Habanero has no current long-term debt and cash reserves for additional future drilling, we feel this is the greatest chance for growth for Habanero thus far."
According to the Canadian Association of Petroleum Producers' website, "Production from Canada's vast oil sands reserves now exceeds 1 million barrels per day and is forecast to increase to 2.7 million barrels per day by 2015. Reserves exceed 175 billion barrels of economically viable oil. With current technology, Canada's oil sands are second only to Saudi Arabia in global oil reserves. Capital spending on both in situ areas (too deep to mine) and mining projects in the oil sands totaled more than $28 billion U.S. from 1996 to 2004. Canadian companies will spend close to $7 billion U.S. on oil sands capital investment in 2005. There are close to 35 projects in the planning or expansion process."
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