PETROLIA: FIRST RESOURCE ASSESSMENT OF MACASTY SHALE, ANTICOSTI ISLAND, QUEBEC
Petrolia Inc. has provided results of an independent resourceassessment of the Macasty shale by qualified reserves evaluator SprouleAssociates Ltd. of Calgary. Based on data available at this time,Sproule's best estimate of the total petroleum initially in place is30.9 billions barrels of oil for the Petrolia land interest holdings.The probability that the total petroleum initially in place exceeds 19.8billion of barrels is 90 per cent (low estimate) and the probabilitythat the total petroleum initially in place exceeds 48.2 billion barrelsof oil equivalent is 10 per cent (high estimate). These estimates arereported as barrels of oil equivalent (boe).
Petrolia engaged Sproule to conduct a resource assessment of the Macastyshale across Anticosti Island where Petrolia holds interests onlicences covering more than 1.5 million acres (6,000 square kilometres).The report is preliminary and is based on data available as at June 1,2011.
Petrolia believes the significant positive factors relevant to the estimates are:
- The Macasty core from the Chaloupe well drilled in 2010 contained residual oil which is located on the high side of the Jupiter fault, where most of the Petrolia acreage is located, and where the shale is interpreted to have been within the oil window and to be oil prone;
- The Macasty shale as the equivalent to the Utica shale of the Saint Lawrence Lowlands which has produced oil and gas on test;
- Core analysis that indicates that the Macasty rock has similar petrophysical and geochemical characteristics to analogous fields found in the northeast United States;
- The Macasty shale is a prolific source rock which has not exceeded the oil generation window over approximately three quarters of the island (most of it located in the Petrolia landholding).
Significant negative factors relevant to the estimates are:
- The Macasty shale has not been tested on Anticosti Island.
- The resources are inferred to exist based on the interpretation and mapping of limited pyrolysis, petrophysical and seismic data.
Because of the limited information available, these resource estimatesmust be treated as scoping-level estimates and used with caution. Use ofthese estimates outside the scope of this study is not appropriate.
The value in conducting this assessment lies purely in its use as abasis for determining whether it appears worthwhile for the company toconduct further investigation into these resources. Petrolia is activelyevaluating options regarding further exploration and determination ofresource potential in order to ensure that optimal shareholder value isobtained from the continuing programs. The Anticosti exploration programis at an early stage; further work is required to determine thepotential for commercially viable resource recovery, prior toconsidering development.
National Instrument 51-101 disclosure requires that the resourceestimates must be classified according to Canadian Oil and GasEvaluation Handbook definitions and disclosed in the most specificcategory. The total petroleum initially in place is classified asundiscovered resources at this time. As a project for the evaluation ofthe recoverable volumes has not been defined due to the very earlyexploration nature of this unconventional resource, the volumes have notbeen classified as either recoverable or unrecoverable at this time.There is no certainty that any portion of the resources will bediscovered. A recovery project cannot be defined for this volume ofundiscovered petroleum initially in place at this time. There is nocertainty that it will be commercially viable to produce any portion ofthe resources.
"From the company's prospective, the Macasty resource assessment showsthe large upside potential of this shale over Petrolia explorationlicences. Further work, in terms of drilling and pilot testing, will benecessary to converts part of the extremely large volume of totalpetroleum initially in place into discovered resources and thereafterinto reserves."
A table shows a summary of the resource assessment.
ESTIMATES OF TOTAL PETROLEUM INITIALLY-IN-PLACE (1) MACASTY SHALE,ANTICOSTI ISLAND, QUEBEC, AS JUNE 1, 2011Classification Low estimate Best estimate High estimate(P90)(3) (P50)(4) (P10)(5)Company net bboe(6) bboe(6) bboe(6)Undiscoveredpetroleuminitiallyin place (2) Gross 19.8 30.9 48.2Petrolia net 9,1 14,1 22,0(1) Total petroleum initially in place (PIIP) is that quantity of petroleumthat is estimated to exist originally in naturally occurring accumulations.It includes that quantity of petroleum that is estimated, as of a given date,to be contained in known accumulations, prior to production, plus thoseestimated quantities in accumulations yet to be discovered.(2) Undiscovered petroleum initially in place (equivalent to undiscoveredresources) are those quantities of petroleum that are estimated, on agiven date, to be contained in accumulations yet to be discovered. Therecoverable portion of undiscovered petroleum initially in place isreferred to as prospective resources, the remainder as unrecoverable.Undiscovered resources carry discovery risk. There is no certainty thatany portion of these resources will be discovered. A recovery projectcannot be defined for this volume of undiscovered petroleum initially inplace at this time. There is no certainty that it will be commerciallyviable to produce any portion of the resources.(3) The probability that the quantity actually in place is equal to orgreater than the estimate is 90 per cent.(4) The probability that the quantity actually in place is equal to orgreater than the estimate is 50 per cent.(5) The probability that the quantity actually in place is equal to orgreater than the estimate is 10 per cent.(6) Bboe equals billions of barrels of oil equivalent. Oil equivalenthas been used to reflect uncertainty in the type of hydrocarbonsexpected to be encountered across the holdings.