VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 21, 2013) - Petro One Energy Corp. (TSX VENTURE:POP)(CUDBF)(C6K1.F) is pleased to report that the first horizontal well drilled by its farmout partner (a senior oil company) on Petro One's 100% controlled J10 property has discovered oil and appears to be a successful producer, having averaged 147.7 bopd for its first 17 days ranging from 108.6 bopd to 194.9 bopd.
Under the terms of the farmout agreement, described in the Company's August 28, 2012 news release, the farmee paid 100% of the drilling and completion costs, and Petro One has the right to convert its 10% Gross Overriding Royalty ("GORR") into a 30% working interest in the test well within 30 days of receiving notice of Payout. Based on the excellent oil volumes recorded thus far, this new well should substantially increase Petro One's cash flow and daily oil production, and add significantly to the Company's reserve base.
Petro One's partner now has 90 days from the rig release date to elect to drill a second well, to be spudded within 90 days after that election Third and subsequent wells may be elected by the farmee under the same terms as the second well. Petro One will have the option to convert its 10% GORR on the second and all subsequent wells into a 40% working interest. The property can accommodate up to 8 horizontal wells in the Frobisher, and 4 in the Midale. Based on the excellent results from the first well, the company looks forward to its farmout partner exploiting the full potential of the J10 property.
The new oil well is producing from the Frobisher Beds, a porous limestone unit that is widespread in southeast Saskatchewan. The Frobisher is being extensively developed with horizontal drilling in many areas, resulting in long-lived production at good rates. Limited Frobisher drilling has been done in the J10 area to date, but a former vertical Frobisher producer 220 metres downdip from the property yielded more than 100,000 bbl of oil from the Frobisher with a one month IP of 95.6 bopd, as well as more than 407,000 bbl of oil from the overlying Midale Beds, with a one month IP of 146 bopd. The oil in this former producer is light, with an API gravity of 28.1.
On the east half of the property, Petro One also holds rights to oil in the Midale Beds, another prolific carbonate reservoir with long lived production that has also been the target of recent horizontal drilling in the J10 area. A vertical Midale producer in the immediate area had a three month IP of 273.5 bopd. It has produced 736,564 bbl of oil, and is still in production after 44 years.
"Petro One is very pleased with the initial results from the first well on J10 and encouraged by the prolific, long term production that has been demonstrated by producers in the immediate area in both the Frobisher and Midale beds," said Petro One President Peter Bryant. "The initial well could triple the Company's daily oil production based on a 30% share after Payout. We look forward to the potential development of the entire property, as initial results indicate that such development could significantly increase our reserves and daily oil production."
No other results are available at this time. Petro One looks forward to releasing the three month IP rates, elections to drill by the farmin partner and updated reserve status as soon as they become available.
J5 Milton property
Viking production from two vertical oil wells on Petro One's J5 property at Milton, Saskatchewan has averaged 23 bopd over the last six months, returning a netback of approximately $59.00/bbl. The Company has carried out considerable research on other formations at J5 and, as a result, now plans to focus its resources on higher reward multi-zone targets in the Bakken and at the pre-Cretaceous unconformity. Based on seismic, and on production seen on adjacent properties, Petro One believes that drilling these high reward targets at J5 has excellent potential for success. The Viking presents a very a low risk target, but it is believed to be best exploited through horizontal drilling, and the company is exploring the possibility of farming out the Viking rights to develop these resources cost-effectively.
Pursuant to a recent seismic option (News Release August 28, 2012), Petro One completed a 6 kilometre seismic survey to earn a 100% interest in two more sections of Crown Land, expanding its Milton land base to 5 sections (total 1,295 hectares), and has elected to drill an 800 m earning well on or before June 30, 2013 to test these deeper targets. A former producer 600 metres north of Parcel J5 returned 950 ft oil (14.69 API) on drill stem test and 140 bbl on initial production testing, from a 12 metre zone of highly porous, oil stained vuggy dolomite. The oil is interpreted to be stratigraphically trapped in an erosional remnant of Mississippian dolomite against a Mannville channel that cuts down through the pre-Cretaceous unconformity. Seismic has shown that the trap extends across Petro One's property to the southeast, where a similar oil show in porous dolomite was identified from drill cuttings in an abandoned well located 650 metres south of the property, over an interval of 17 metres. Bakken oil in the area is structurally controlled, and the nearest production is only 500 m from the property. The best Bakken well in the area had a 3 month IP rate of 303 bopd and cumulative production of 275,382 bbl. Sites for both the earning well and a second Bakken well to test a clearly defined three dimensional structural closure on the original J5 block have been surveyed, and licensing procedures are underway in preparation for drilling.
J3 Kirkella property
Based on recommendations from its geologists, geophysicists, and engineers, who consider J3 to be a high reward target, Petro One intends to drill a minimum of one vertical well on its J3 property at Kirkella, Manitoba. The site has been surveyed, and licensing is underway in preparation for drilling. Interpretation by an independent geophysical company indicates favorable structure and porosity development in the Cruickshank Crinoidal beds, updip of a vertical well in the Kirkella field with a 3 month IP of 251.3 bopd. Two vertical wells in the same area with commingled Lodgepole-Bakken production have demonstrated that the Bakken is a potential secondary target. The new well is planned to test both formations.
Several other senior oil companies have expressed interest in other Petro One properties, and discussions are ongoing. The Company's assets currently include rights to 14 properties totaling 15.86 sections (4,108 hectares/10,152 acres). The Company plans to continue to build production and develop its assets with the drill bit, both with its own capital, and in collaboration with farm-in partners, and looks forward to exploiting the full potential of these properties.
Quoted production figures for all third party wells were obtained from IHS Accumap.
NATIONAL INSTRUMENT 51-101 DISCLOSURE
Oil production during a period is generally expressed in terms of "barrels per day", which indicates the total oil produced during a period divided by the number of hours that the well was in production during that period. "Barrels per day" is indicative of flow rate while a well is in production and does not mean that such well was in constant production during such period.
ON BEHALF OF THE BOARD
Peter Bryant, President & Director
For further information, please visit the company's website at www.PetroOneEnergy.com, follow the Company's tweets at www.Twitter.com/PetroOneEnergy and contact Jeff Stuart of King James Capital Corporation, handling Investor Relations for t