Manitoba's Spearfish drawing oil attention
Formation watchers have drawn a bead on the ManitobaSpearfish light oil formation, with a report from FirstEnergy Capitalsuggesting it may have twice the amount of original oil in place peracre as the storied Saskatchewan Bakken.
"Drilling activity levels and play-wide production volumes have grownexponentially since the winter of 2008-09, with latest public data(current to January 2011) showing Spearfish production approaching the15,000 barrel of oil equivalent per day range, and likely capable ofmuch more today if it were not for an anomalously wet spring break-upthis year," says the report.
"In terms of resource potential, the regional extent of the Spearfishis still being delineated, however, in areas already shown to beprospective, reservoir parameters can suggest potential OOIP to be inthe realm of 9.0 to 15.0 million barrels per section, which couldrepresent 2-3 times what the southeastern Saskatchewan Bakken offers onaverage."
The Spearfish attracted super-looking oilpatch newcomer Legacy Oil +Gas to invest $185 million to buy assets from Molopo Energy Canada Ltd.in February, paying $93 million in cash and issuing 6.18 million Legacycommon shares.
EOG Resources and Penn West Exploration are considered the leaders inthe play but for maximum exposure, FirstEnergy likes Legacy or SurgeEnergy, who both have concentrated, low risk, development inventories.
Legacy president and chief executive Trent Yanko said at the time that new drilling technologies are making Spearfish pay off.
"It's a classic case where coming in now with the horizontal well andmulti-stage frac technology, you take a marginal play and turn it into ahighly economic play," Yanko said.
"Part of it is the technology advancement in the completions and partof it is price. We wouldn't be doing this if oil was $15 a barrel."