Silverwing Completes Mississippian and Belly River Commitment
Silverwing Energy stated that effective Dec. 17th, 2007, the Company rig released the 22nd and final well of its intermediate depth drilling program at Tomahawk. This effectively completes Silverwing's drilling commitment of 22 Mississippian and Belly River wells that was to occur before December 31, 2007.
The Company has cased 21 out of the 22 wells drilled and expects to commence in 2008 a program of further evaluation and testing of the multi-zone oil and gas potential uncovered through drilling. Silverwing also announces that with the completion of this drilling commitment, it has secured the Escrow Funds of $11.1 million that was held back by the Farmor against Silverwing completing the initial farm-in agreement. As of December 20, 2007, $6.25 million remains the un-drawn balance in the Escrow Account.
The Tomahawk Farm-in provides Silverwing access to over 51,000 net acres of undeveloped freehold land in the Tomahawk area of central Alberta. The area is known for its under-explored multi-zone oil and gas potential along with highly prospective formations including a Nisku interior patch reef oil trend, a zone of primary interest to Silverwing.
The Tomahawk Farm-in Agreement requires Silverwing to drill 29 wells, including up to 7 Nisku wells in the initial earning phase, with an option to earn additional land with additional drilling commitments. An initial commitment of drilling 22 intermediate depth wells to evaluate the Mississippian (1,700m drilling depth) and Belly River (800m drilling depth) potential was required to be completed no later than December 31, 2007. Silverwing expects to commence drilling of its Nisku program during the first quarter of 2008.
The Nisku is considered one of the hottest light oil plays in Alberta having produced over 350 million barrels of oil and over 1.3 trillion cubic feet of natural gas. Over the course of 2007 Silverwing has noted a significant increase in 3-D seismic activity adjacent to its Tomahawk project by firms targeting the Nisku formations. Drilling success rates in the Nisku in recent years have significantly improved over historical experience due to the use of 3D seismic.
In addition, there has been a marked increase in the prices paid for the acquisition of crown mineral rights and well licensing activity by a number of known Nisku players. Four new Nisku well licenses have recently been announced within the Silverwing Tomahawk project area by competitors. Silverwing believes this recent activity validates its business plan and in particular the value of its Tomahawk land holdings, once these are earned.
The Nisku interior patch reef oil wells being targeted by Silverwing can produce at rates of over 2,000 bbl oil/day and recoveries range in the 750-1,000 mbbls of oil. Silverwing has 5 high-graded Nisku oil prospects in the Tomahawk project, all of which are defined by high-quality 3-D seismic.
In addition, Silverwing has a sixth high quality 3-dimensional seismic-supported Nisku oil prospect at Easyford, Alberta, several kilometres northwest of Drayton Valley, Alberta, and only about 1.5 kilometres from existing Nisku oil production.