Petrolympic, Squatex reassess Masse resources
2016-05-17 17:07 ET - News Release
Mr. Mendel Ekstein reports
PETROLYMPIC LTD.: LOWER ST. LAWRENCE - SEVERAL TENS OF MILLIONS BARRELS OF OIL AND VERY LARGE VOLUMES OF GAS COULD BE PRESENT IN THE CONVENTIONAL RESERVOIRS OF THE MASSE STRUCTURE
Ressources & Energy Squatex and its partner Petrolympic Ltd. have released the results of a major reassessment of resources for the eastern part the Masse structure performed independently by Sproule Associates Ltd. The Masse structure is located in the Lower St. Lawrence permits, some 25 km southeast of Mont-Joli, in the Appalachian Basin of Quebec. Squatex owns a 70% interest in 656,093 hectares (1,621,241 acres) of exploration permits in Quebec over which it is the operator under a joint operation agreement with Petrolympic (30%).
The resources reassessment reported by Sproule includes an authentication of in depth analyzes performed by the Squatex's technical team on the Masse No.2 well logs. These new data completes and confirms the initial data previously acquired in the Masse No.1 well for the eastern part of the Masse structure. Sproule considers that the results of its resources simulations could extend over a probable average area of 5.2 km2.
The potential resources evaluated by Sproule are related to porous levels in the St. Leon and Sayabec Formations encountered in the wells drilled in the eastern part of the Masse structure. The results of the study point out to a potential of 53.6 BCF of gas and 52.2 million barrels of oil over a probable average area of 5.2 km2, an oil equivalent total of 61.1 million barrels (MMBOE).
Resource volumes for Masse have been increased significantly compared to the previous estimate done in 2014 with the addition of a very important oil volume. Gas resources are also improved considerably following the analysis based on the logs recorded in the Masse No.2 well.
The gross pay of the Silurian basin rock of the Lower St. Lawrence extends up to a nearly 540m thick interval recognized by Sproule from the logs in which the net pay varies between 66m and 210m averaging, 130m in thickness. These porous zones are more than encouraging for further work and validate the potential of this region of the Lower St. Lawrence area.
Jean-Claude Caron, President and Chief Executive of Squatex, declares: "Results of the Sproule report make me believe that Masse could be one of the most important discoveries of conventional oil and gas reservoirs made to date in Quebec". Indeed, the Sproule Report points out a probable presence of 10.3 BCF of gas and 10 MMbbl oil per square kilometer. According to an internal study of Squatex's technical team, the Masse structure could extend over more than 80km2. Several porosity anomalies observed on seismic having close similarities the anomalies confirmed by the Masse No.1 and No. 2 wells were also highlighted further west within the property. The assessment done by Sproule does not take into account the presence of these seismic features, these ones being located in their view too far away from the drilled wells. Their occurrence nevertheless represents a significant potential for the Property. Results of the current Sproule study illustrate the rightful vision and efforts of Squatex and Petrolympic who pioneered the development of the oil and gas potential of the Lower St. Lawrence.Results of the resource assessment over 5.2 Km2 from the Sproule Report (6 May 2016)Table S-2 Summary of Project Gross Unrisked Undiscovered Unrecoverable Petroleum Initially-in-Place (PIIP) of the Eastern Masse Structure, Lower St. Lawrence Area, Quebec, Canada1,2 Estimated by Sproule Associates Limited, As of April 30, 2016 Structure Formation Low4 Best5 High6 Mean7 (P90 ) (P50 ) (P10 ) Masse St. Leon Gas (BCF)2,3 0.2 1.0 3.8 1.6 Oil (MMbbl)2,3 2.0 9.9 42.2 17.0 Sayabec Gas (BCF)2,3 4.4 24.0 119.7 49.0 Oil (MMbbl)2,3 2.9 17.1 87.3 35.8 Total7 Oil (MMbbl)2,3 10.0 33.9 113.6 52.2 MMBOE2,3,7 61.1
Notes:1. Undiscovered Petroleum Initially-in-place (equivalent to undiscovered resources) is the quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially in place is referred to as "prospective resources", the remainder as "unrecoverable". Only the in-place volumes are presented here as a development project to recover any hydrocarbons discovered has not been defined. There is no certainty that any portion of these unrisked undiscovered GIIP will be discovered and, if discovered, there is no certainty that it will be developed or, if it is developed, there is no certainty as to either the timing of such development or whether it will be commercially viable to produce any portion of these resources.
2. These are the project gross unrisked undiscovered petroleum initially in place volumes (i.e. 100% project gross) estimated for the Sayabec Formation of the Masse Structure without any adjustments for working interest and before deduction of any royalties.
3. "BCF" is billions of cubic feet, "MMbbl" is millions of barrels of oil, "MMBOE" is millions of barrels of oil equivalent. BOE's may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
4. Low Estimate is considered to be a conservative estimate of the quantity that will actually be in-place. It is likely that the actual remaining quantities in-place will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually in-place will equal or exceed the low estimate.
5. Best Estimate is considered to be the best estimate of the quantity that will actually be in-place. It is equally likely that the actual remaining quantities in-place will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually in-place will equal or exceed the best estimate.
6. High Estimate is considered to be an optimistic estimate of the quantity that will actually be in-place. It is unlikely that the actual remaining quantities in-place will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually in-place will equal or exceed the high estimate.
7. Statistical aggregation is the process of probabilistically aggregating distributions that represent estimates of resource quantities at the reservoir, prospect, or portfolio level. Arithmetic summation and statistical aggregation of the means yield similar results. Arithmetic summation of the Low Estimate, Best Estimate and High Estimate are not statistically appropriate. Both the statistical and arithmetic summation of the unrisked prospects may be misleading because it assumes success for each of the prospect entities. The chance of this occurring is extremely unlikely. Actual recovery is likely to be less and may be zero.
Squatex and its partner Petrolympic are currently setting up a new drilling program to further validate the potential of the Masse structure and they also intend to keep on with the coring exploration program to validate and test similar prospective structures that have been identified over their permits.
Petrolympic CEO Mendel Ekstein commented: "The independent evaluation of the Masse Structure confirms the validity and the robustness of our exploration models. Today we are adding conventional oil and a second reservoir to the potential of this structure. With our planned drilling program in our 100% Mitis Property we also intend to give yet another conventional reservoir to the western Gaspe and Lower St. Lawrence region, an area where end-users abound and are encouraged to switch to natural gas by governmental incentives through the province's new Energy Policy that was released last month. We believe commercial production can be achieved at very low costs."
We seek Safe Harbor.
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