MegaWest Energy announced that GLJ Petroleum Consultants, has completed an independent engineering report of the reserves and resources associated with certain of its key projects. The combined GLJ and Management high estimate of combined recoverable Reserves, Contingent Resource and Prospective Resource is 332 million barrels out of a high estimate of Gross Original Resource (OOIP) of over 2 Billion barrels.
GLJ has independently estimated the oil reserves and resources attributable to MegaWest's interests in its Chetopa Kansas Project, the Upper Warner Sand at its Deerfield Missouri Project and the Big Clifty Sand at its Kentucky Reserves Project, encompassing only 43,982 of the total of over 115,000 mineral acres leased by MegaWest. Volume estimates have been completed, with Net Present Value estimates to be finalized at fiscal year-end. The GLJ reserves and resource estimates were prepared in accordance with the requirements of Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
There is no certainty that any portion of contingent resources will be commercially viable to produce. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
In addition to the GLJ estimated resources, MegaWest has identified the presence of oil accumulations in the Blue Jacket Sand at its Deerfield Missouri Project and in the Tar Springs and Hardinsburg Sands at the Kentucky Reserves Project not included in the GLJ report. MegaWest also has an interest in over 67,500 acres of leases in its Trinity Sands Texas and Big Sky Montana projects, which also have not been evaluated by GLJ at this time. Independent third party reserve and resource estimates will be completed on these resources after the initial round of exploration drilling and analysis is completed in each area.MegaWest's management has undertaken a statistical estimate of the resource potential of the zones and projects which have not been completed by GLJ. Combining the GLJ results with Management estimates indicates a total high estimate (P10) Original Resource (OOIP) is 2.004 billion barrels.
Additional potential exists in MegaWest's 37.5% interest in the deep gas rights underlying 35,217 acres of the Kentucky leases and its interest in the deep gas rights on 22,903 acres in the Texas Trinity Sands Project leases. This additional potential has not been estimated by MegaWest's management at this time and is not included in the figures shown above.
MegaWest owns or has the right to earn an interest in over 115,000 acres in Kansas, Missouri, Kentucky, Texas and Montana. MegaWest's strategy is to grow shareholder value through the selective acquisition of projects with large resource potential located in the vicinity of existing infrastructure and the application of emerging and proven commercial developments in thermal recovery technologies. Delineation drilling and the completion of thermal and enhanced recovery production demonstration projects may increase the value of the unconventional heavy oil resources in each of its core areas.
"Itís estimated North Americaís heavy oil and bitumen deposits contain more than 3 trillion barrels of resource," says Bill Thornton. "While the bulk of this resource is located in Canada, the U.S. does have approximately 150 billion barrels of heavy oil and bitumen resource located primarily in California, Utah, Alaska, Texas, Alabama, Kentucky and Missouri. This is the right time to take a new look at nonconventional heavy oil and bitumen supplies to support the need for North American energy security.
"Outside of heavy oil production in California, little of the remaining heavy oil and bitumen resource in the U.S has been produced to date. Pilots that were initiated in the late 70s and early 80s were shut down owing to high costs and low product prices. During this period, the collection of associated well data and geological information and production methods were not as sophisticated as today."
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