First oil salesDENVER, COLORADO USA, BRISBANE, QUEENSLAND AUSTRALIA, and VANCOUVER, BRITISH COLUMBIA CANADA. June 5, 2014 (Pacific Time - Canada) The directors and management of Strata-X Energy Ltd. (“Strata-X” or the “Company”) (TSX-V:SXE) (ASX:SXA) are pleased to announce that Strata-X is in the early stages of carrying out controlled long term production tests on two horizontally drilled wells through two separate Devonian aged light oil resource zones in the Illinois Basin, the Lingle and Grand Tower formations. This week, the Company has sold its first oil from the project’s totaling 290 barrels of light crude for an estimated price of $95.75 per barrel.
The target and expectation of the production tests is commercial oil production rates in both zones. It is anticipated that initial flow rates of 100 to 200 barrels of oil per day will be commercial depending on the ultimate decline rates of the wells. Once commercial flow rates are established and following an appraisal well program, infill development drilling could commence in 2015.
The Company’s independent engineers have estimated the two resource zones containing 338 million barrels PIIP (petroleum initially in place) of light oil within Strata-X's 72,000 net acres.(1)(2) ASX disclosure note - 5.28.2 - The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.
Copper Mountain Oil Project Update:
After installing permanent water disposal facilities, Strata-X commenced a slow controlled pump test of the horizontal Blessing 1-4H well late last week. The well is currently averaging 436 barrels of fluid per day consisting of 31 barrels of oil and 405 barrels of water. Over the coming weeks, the water cuts are expected to reduce as the water is drained from the stimulated zones and replaced with oil flowing from the formation matrix.
Approximately 25% of the lateral section of the Blessing 1-4H well has been modestly stimulated and by the previous operator. Pending positive results of this initial controlled pump test, the remainder of the horizontal section of the well may be perforated and stimulated exposing more reservoir to the horizontal wellbore.
The Blessing 1-4H well is Illinois Basin’s first horizontal test of the Devonian aged Grand Tower formation. The Strata-X commissioned, independent third party resource report, has estimated that the Copper Mountain Oil Project has 128 million barrels of PIIP net to Strata-X.
In April 2014, Strata-X purchased 23,595 net acres of production and exploration assets in the Illinois Basin adjacent to its existing Vail Oil Project. The acquisition, known as the Copper Mountain Oil Project, is prospective for conventional and unconventional light oil accumulations in shallow Mississippian age formations (from 700 metres depth) as well as the deeper Middle Devonian age formations (~1200 to 1600 metres depth). Included in the Project acquisition is the Blessing 1-4H horizontal well drilled by the prior operator in mid-2013 (see above).
Vail Oil Project Update:
As previously announced by the Company in a news release dated May 22, 2014, following the completion stimulation of the horizontal Burkett 5-34HOR well, the well flowed back oil, formation water and stimulation fluid totaling 116 barrels of oil and 2,100 barrels of the approximately 4,200 barrels of injected stimulation fluid during a 30 hour flowback.
Following the initial flowback test, the Company brought in a work over rig to swab test the well to determine its potential productivity to help design permanent downhole and surface production facilities. During the swab test increasing gas flows were observed but it was determined that the swabbing could not keep up with the excessive water, oil and filtrate influx rates into the wellbore and the rig was released. The large influx of fluid indicates the successful multistage stimulation of the well was beyond projected expectations.
Strata-X is in the process of procuring and installing a high volume submersible pump to accelerate the fluid draw from the well and to carry out a long term production test to help determine oil and decline rates. Electricity from nearby power lines to run the pump is currently being procured and it is anticipated that it will take about 4 weeks to connect.
Similar to the Blessing well, the initial expectation is that high water cuts relative to oil should reduce in a few weeks as the water and filtrate is drained from the induced fractures and is replaced by light oil flowing from the formation matrix into the induced fractures, to the pump, then to the surface production facilities. The Company will dispose of any produced water on the Burkett 5-34HOR well into its own disposal well located approximately 1200 metres from the Burkett well. Water disposal costs are expected to be less than $1 per barrel.
About Strata-X
Strata-X is a Denver, Colorado (USA) based company and is engaged in the business of oil and gas exploration and development with a variety of exploration opportunities in North Dakota, California, Texas, Illinois and Western Australia and production and development opportunities in California. Strata-X has 139,785,415 common shares outstanding and trades under the symbol “SXE” on the TSX-V and “SXA” on the ASX.