Apex Says Beaufort Sea Wildcat Well to be Tested

Apex Resources

Apex Resources Group updates Beaufort Sea activities and the Mackenzie Valley Pipeline.

The Paktoa C-60 well off the Mackenzie Delta, drilled by Devon Energy Canada, at a cost of approximately CAD$55 to CAD$60 million, reached its targeted depth of approximately 7,900 feet, according to Devon Energy Canada Vice President Michel Scott. The well is being perforated to test the targeted formations, and is anticipated to finalize by the end of March. However, due to the fact that this well remains a tight hole, specific details and drilling results might not be released for up to two years. The Paktoa C-60 was the first "wildcat'' in the Beaufort Sea in Canada, for the past 17 years.

Devon Energy Canada is required to meet a CAD$225 million work commitment and drill four wells by 2008-09, in order to retain four Beaufort Sea exploration licenses. These licenses will cover 860,000 acres that Devon acquired in the 2001 takeover of Anderson Exploration.

At this time, Devon Energy Canada will focus on results of the Paktoa C-60 well, before exploring the other three wells in the winters of the next three years. Devon Energy Canada is also waiting for progress of the business environment, regulatory hearings with the National Energy Board and the Mackenzie Valley pipeline. In addition, Devon Energy Canada is in negotiations with Imperial Oil with respect to gas-gathering, processing transportation issues. Imperial Oil is the project leader of the Mackenzie Valley Pipeline Project. It is anticipated that Federal Regulators will decide on the Mackenzie Valley Pipeline application by 2007.

Apex Resources Group, in June 1997, purchased a 3.745% working interest in the Itiyok 1-27 Well in the Beaufort Sea Area in Canada, which was drilled in 1983. A review of the well data and geological prognosis indicates that a 640 acre area would contain proven recoverable gas reserves of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB (working interest net reserves of 4.04 Bscf and 336 MSTB.) Seismic data indicates a structure closure of approximately 40 square KM with a gross potential reserve of 1.16 TCF and 160 MMSTB (working interest net - 34 Bscf and 4.7 MMSTB). The lands in which the Apex Resources Group Inc. owns an interest comprise of 21.54 square KM containing gross potential reserves of 625 Bscf of gas and 86 MMSTB of oil (working interest 23.4 Bscf of gas and 3.2 MMSTB of oil). Values of proven, probable and possible gas and oil reserves, of Apex interests, as per Citadel Engineering report, have been published previously.

This recent activity by Devon Energy Canada in the Beaufort Sea and other independent explorers, including Anadarko Canada, BP Canada Energy, Chevron Canada Resources, EnCana & Nytis Exploration, pushing the progress of the Mackenzie Valley Pipeline project, and with the North American high need for new gas supplies, continues to increase the value of the 3.745% working interest in the Itiyok 1-27 Well of Apex Resources Group Inc.