Surge Global Energy Concludes Production Tests at Sawn Lake

Sawn Lake, Athabasca Oil Sands
(Click to Enlarge)
Surge Global Energy announced the results of the production test of the horizontal wells with surface locations at 4-32-91-12W5M ("4-32") and 7-30-91-12W5M ("7-30").

The vertical sections of the wells at 4-32 and 7-30 were cored, logged and drill-stem tested in the Bluesky formation. The cores indicate that the formation has porosity greater than 30%, permeabilities ranging up to eight Darcies, and are impregnated with heavy oil. Log analysis assigns net oil pays of 23 and 22 meters to the 4-32 and 7-30 wells respectively with average oil saturations over the pay sections of 78 and 68 percent, respectively. Analysis of the oils spun out of the cores at 4-32 and 7-30 locations indicate an extrapolated viscosity oil of approximately 500,000 centistokes at 20 degrees Celsius which is approximately the temperature of the formation at Sawn Lake.

While the analysis of the cores and logs of the 7-30 well show high average oil saturation over the pay zone, to date the well has produced water with some showings of flecks of oil not suitable for assay.

The ratio of vertical to horizontal permeability within the oil-bearing sands, a critical parameter in any thermal recovery scenario, was unusually high in 4-32 well. Preliminary analysis of the 7-30 indicates similar permeability characteristics. However, analysis of the oils spun out of the cores at the 4-32 and 7-30 locations and oil samples indicate an oil viscosity that would not flow under a conventional production scenario. This preliminary oil analysis combined with the absence of produced oil from the wells indicates no conventional heavy oil production potential.

A fourth planned well located at 13-29-91-12W5M as previously announced will not be drilled. Drilling of this well at its proposed location would not have provided any significant additional geological or reservoir information beyond that of the three completed and production tested wells. The 4-32 and 7-30 along with the 1-36 well which was production tested earlier in 2006, have been suspended.

As the focus of the operations to date have been on the cold flow productive potential of the formation as envisioned by the farmout arrangement, no assessment of the in-situ production capability has been made to date.

Signet Energy Inc. is a Calgary based independent private company with a strategy to develop into a North American focused heavy oil producer with its activities at this time directed to the delineation of the heavy oil resource oil sands leases and permits comprising 50,240 contiguous acres located in the Sawn Lake area of Alberta's Peace River oil sands region. Signet owns a 100% interest in 5,760 acres contiguous to the Sawn Lake property it acquired at land sale in September 2006 and as Operator of the Sawn Lake property has the right to earn 40% working interest in the 44,480 acres Sawn Lake property through the completion of a 10 horizontal well program for which Signet is responsible for 80% of the drilling costs. To date Signet has drilled three wells to earn a 40% interest in 11,520 acres in the Sawn Lake property. An independent geological and engineering analysis of the oil sands asset of the Sawn Lake property indicates there are over 1.2 billion barrels of heavy oil resource in place on the property of which Signet's net interest after completion of the earn-in would be up to 480 million barrels of heavy oil.

Surge Global Energy, Inc., located in San Diego, California, is the largest shareholder of Signet Energy, Inc. The company invests in assets that target Canadian oil sands and conventional oil and gas properties in North and South America. Surge also holds a working interest in the Santa Rosa Dome project in Mendoza province of Argentina and has rights to earn a working interest in the Keg River Formation in the Kitty area of North Central Alberta, Canada.


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