TriOil Resources Ltd TRIAF

NAL Lochend Cardium Results positive for TOL

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NAL Lochend Cardium results are Positive for TOL

 

September 13, 2010

SUBJECT:  Operator announces horizontal Lochend/Cochrane Cardium oil well flows at 2,300 boe/d post load fluid recovery

IMPACT:  Positive

EVENT:  This morning, NAL Oil & Gas Trust (TSX-NAE.UN) announced two horizontal Cardium oil wells at Lochend were successful. This is the same play that TriOil Resources (TOL-TSXV) is pursuing and that we have been highlighting as a key catalyst for TOL.

DETAILS: 

·         NAL announced positive drilling results from Lochend/Cochrane Cardium area. NAL’s first well in the program at 13-3-27-3W5M (65% WI) flowed at ~600 boe/d postload fluid recovery and had a first month average production rate of ~170 boe/d. This result was in line with results seen from Garrington horizontals and in line with expectations from the play.

·         However, the big news item from the release was NAL announcing that a second well ( 3-17-27-3W5M), flowed at ~2,300 boe/d post load fluid recovery and produced for five days prior to being shut-in for equipping at an average rate of 1,300 boe/d (85% oil). This significantly above type curve expectations and is one of the strongest Cardium wells drilled to date.

·         This well result from NAL is also significant because it is one of the first well results that has been disclosed publically from Lochend/Cochrane Cardium Play and helps validates TOL’s view of the resource potential. As a reminder, the Lochend Cardium play is just south of Garrington and operators in the area believe that Lochend has similar reservoir characteristics to the Garrington Cardium play. TriOil had internally estimate that Lochend would have better production rates over Garrington due to the thicker Cardium pay, deeper reservoir and Lochend’s proximity to the disturbed belt more natural fracturing)

·         In addition to the NAL wells TriOil, Equal, Bonavista, Tamarack Valley Energy and PetroBakken are all active in the area with over ten horizontal wells licensed or drilling.

·         TriOil is one of largest Lochend Cardium oil land holders. TriOil is one the largest Cardium oil land holders in the Lochend area, with 81 gross (56 net) sections of land. TriOil has the best leverage to this early Cardium oil play given its size as most of the other land holders are mid cap companies.  

·        TriOIl has now finished drilling its first horizontal Cardium well (55% WI partnered with NAL) at Lochend.  The well is awaiting completions operations and we could see drilling results in the next several weeks.  TOL’s wells are highlighted in red in the map above.  TOL is also currently drilling a follow up location (60% WI partnered with NAL), and has two additional wells planned before October. In total, we could see four horizontal Cardium drilling results from TriOil in the next several months.

OUR VIEW: 

This morning’s Cardium well result announcement was positive and is one of the first positive indication of the resource potential of the Lochend play. While it is still early in the development of the Lochend play, we believe that TOL is well positioned having assembled 56 net sections in the heart of Lochend fairway.