Atikwa Expands Roncott Development Potential
Atikwa Resources Inc. has significantly expanded the development potential of its Roncott property through a rolling option farm-in on 22 sections of land contiguous to its producing 7-27 well and the existing Roncott Field. Atikwa will pay 100% of the costs associated with the drilling of one vertical well to earn the right to participate in a rolling option on a 50/50 basis. The rolling option is designed to earn two sections of land for every additional well drilled.
The Company's 7-27 well is currently the best producing vertical well in the pool with stabilized production of approximately 20 barrels per day over the last year. Based on industry data, management believes that a horizontal well drilled into a similar quality Bakken reservoir could produce from five to seven times that of a vertical well. President Sean Kehoe stated: "We are very excited about finally being able to move forward with this play. We have been working for over a year with a number of entities in an effort to build a larger position in and around our successful 7-27 test well and the main pool. We now have enough running room in a Bakken pool that has a history of producing oil economically from vertical wells, due to that fact, this should be an exciting horizontal candidate."
The Roncott field in Saskatchewan was discovered in 1956 as a Bakken formation field that was capable of producing economic, 40 degree API oil, from conventional vertical wells. Government data estimates that there is 10 million barrels of oil in place, however over the life of the pool industry has only extracted about 8% of that or 800,000 barrels of oil from essentially four vertical wells. It is that remaining 9.2 million barrels that the Company plans to target and potentially expand with a horizontal drilling program.
Vertical wells in this pool will qualify for a 50,000 bbl royalty incentive volume with horizontal wells qualifying for 100,000 bbl under the same incentive; consequently the Company will only pay a 2.5% Crown royalty, during this period. The low royalties and the lighter quality crude oil, combine to give favorable cash netbacks for production.