HOUSTON, April 18 /PRNewswire/ - Enhanced Oil Resources Inc. (TSX-V: EOR) today announced the report of its December 31, 2010 oil and gas reserves as prepared by Cawley, Gillespie & Associates Inc. (CGA), its independent petroleum engineers.
CGA estimates the Company's net proved primary oil reserves (excluding Chaveroo field and tertiary reserves) at December 31, 2010 to be 2.9 million equivalent barrels of oil (MMBOE). The net present value (10%) of the estimated future net cash flows attributable to the Company's oil and gas interests was estimated by CGA to be US$66.6 million as compared to US$30.1 million at December, 2009.
Net proved oil reserves attributable to the Company's Crossroads Devonian unit (98.5% working interest) have increased to 761,000 barrels, as compared to 755,000 barrels as at December 31, 2009, despite net production during the year of 109,000 barrels. Net production at Crossroads averaged 300 barrels of oil per day (bopd) during 2010, a ten-fold increase from a net 30 bopd when the Company purchased the field in July, 2008. The Company plans to reactivate additional wells over the next few months. As a result of the workover program conducted during 2010 and the production performance during the year, CGA has estimated that Net Proved (1P) reserves have increased to 0.76 MMBO with a Net Present Value (10%) of US$28.6MM.
The results of the CGA report for the Company's Milnesand field (100% working interest) has confirmed the initial evaluation by GPE Consulting in their July 2010 report that significant additional oil can be recovered at Milnesand by down-spacing to 20 acres. In their report, CGA estimated that gross reserves for the 20 acre drilling program were estimated at 2.580 million gross barrels with a composite average of 36,900 barrels per well. Original oil in place for the Milnesand field is estimated at 93 Million barrels (MM BO). Cumulative recovery to date of only 11.6 MMBO points to a recovery factor of only 12.5%, which is considered low for San Andres 40-acre development and water-flooding. The gross 2.58 MMBO expected to be recovered via the 70 well (20 acre) infill drilling program points to a very reasonable 2.8% incremental primary recovery of original oil in place. CGA has estimated that total Net primary Proved (1P) reserves at Milnesand to be 2.12 MMBO with a Net Present Value (10%) of US$38.1MM.
The Company's 21,000 acre Chaveroo field, located 6 miles to the northwest of Milnesand, is a similar San Andres depleted oil field that could, if infill drilling at Milnesand is successful, lead to additional infill reserves and production from up to 250 or more infill development wells. Proving the potential of infill drilling at Chaveroo will be a key focus for the Company during 2011.
The Company had previously reported that CGA had completed a Reserve Report based on the results of the Milnesand CO2 pilot project and concluded that following the initial 12 month injection period, the response indicated that an additional 34,640 barrels of oil could be recovered, in the Proven (1P) category, from each 40-acre producer throughout the primary 3,030 acre pattern flood area. Proved plus probable (2P) reserves were assigned based on a combination of factors, such as how the CO2 flood has tracked the Advanced Resources International Inc. (ARI) prediction, correlating to a Denver City San Andres CO2 flood model, and reasonable incremental recovery of two times incremental proved recovery. This resulted in 2P net recoverable reserves of 3.99 MMBO or 70,112 BO per producer. Proved plus Probable plus Possible (3P) reserves were estimated at 105,280 BO per producer, or 5.9 MMBO to the 3,000 acre Phase 1 area. As a result of the additional infill studies completed this year, the Company can now expect primary reserves from the 20 acre infill program that were not considered during the original CO2 reserve report. The Company considers that the Probable and Possible reserves categories in the original report remain valid, however some if not all of the Proven CO2 oil reserves can now be moved to the infill volumes. We anticipate additional studies to be completed during the year that will address the effects that the infill program will have on future CO2 oil reserves.
Mr. Barry Lasker reports "The results of the Cawley Gillespie reserve report has confirmed the potential that we saw when we purchased these fields in 2007 and 2008. At Crossroads, we have been able to replace our proved developed reserves in 2010, while increasing production, and at the same time producing approximately 14% of the prior year's estimate of proved reserves. At Milnesand, the infill study has high graded the potential for significant reserves increases and production and we are eager to get started on that program. A successful outcome at Milnesand will have considerable bearing on the reserves potential at Chaveroo, an analogous San Andres field, adjacent to Milnesand, yet over three times as large. The Company continues to diligently pursue the well reactivation program in New Mexico and we are excited about the prospects ahead."
About Enhanced Oil Resources Inc.
Enhanced Oil Resources Inc. is an early-stage company, with two principal business segments of
(i) Crude oil and natural gas production through enhanced oil recovery ("EOR") projects it is initiating in the Permian Basin on oil fields acquired by the Company in 2007 and 2008 for that purpose.
(ii) Helium and CO2 resource exploration and production through property interests it controls in approximately 251,000 gross acres of land within the St Johns Helium/CO2 field in Arizona and New Mexico, and where the Company is developing what is thought to be the largest undeveloped helium and carbon dioxide field in North America.
Certain statements contained herein are forward-looking statements, including statements relating to Enhanced Oil Resources' operations; business prospects, expansion plans and strategies. Forward-looking information typically contains statements with words such as "intends," "anticipate," "estimate," "expect," "potential," "could," "plan" or similar words suggesting future outcomes. Readers are cautioned not to place undue reliance on forward-looking information because it is possible that expectations, predictions, forecasts, projections and other forms of forward-looking information will not be achieved by Enhanced Oil Resources. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties. A change in any one of these factors could cause actual events or results to differ materially from those projected in the forward-looking information. Although Enhanced Oil Resources believes that the expectations reflected in such forward-looking statements are reasonable, Enhanced Oil Resources can give no assurance that such expectations will prove to be correct. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Enhanced Oil Resources and described in the forward-looking statements or information. The forward-looking statements are based on a number of assumptions which may prove to be incorrect. Readers should be aware that the list of factors, risks and uncertainties set forth above are not exhaustive. Readers should refer to Enhanced Oil Resources' current filings, which are available at www.sedar.com, for a detailed discussion of these factors, risks and uncertainties. The forward-looking statements or information contained in this news release are made as of the date hereof and Enhanced Oil Resources undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable laws or regulatory policies.
ON BEHALF OF THE BOARD OF DIRECTORS
Barry D Lasker, CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Enhanced Oil Resources Inc.