Exall Energy Corporation announces new Upper Devonian Wabamun light oil discovery in the Marten Mountain area, Mitsue, AB and updates drilling

CALGARY, Nov. 3, 2011 /CNW Telbec/ - Exall Energy Corporation ("Exall" or the "Company") (TSX:EE) is pleased to update drilling activities and to announce a new light oil discovery in its Marten Mountan, Mitsue operating area.  Exall's public filings can all be found at www.exall.com or www.sedar.com.

Highlights:

  • Exall has made a significant oil discovery in the Wabamun and Exshaw Formations in and adjacent to the Marten Mountain, Mitsue operational area. The Company is very encouraged by the results of drilling to date and has planned a strategy to further evaluate the potential of both zones
  • Gilwood drilling in the Marten Mountain area over the past three years revealed persistent hydrocarbon presence in the shallower Wabamun and Exshaw Formations on gas detector logs, drill samples and open hole logs
  • As the result of these shows Exall undertook a program to test the productive potential of the zones through testing and coring of the intervals
  • A vertical well at 13-7-75-5W5 was completed in a nine meter porous interval in the Upper Devonian Wabamun Formation. The well tested 35°API oil, slightly sour gas (35 ppm H2S) and formation water from the zone
  • The well was twinned with a vertical well which was cored and logged. The core revealed 9.2 meters of light-oil saturated porosity in the Upper Wabamun Formation with good fluourescence and strong hydrocarbon odour
  • The vertical well was plugged back and a 1000m horizontal leg was drilled in the porous section of the Wabamun Formation. A 20 meter interval near the toe of the horizontal well was initially tested open hole without treatment and produced 30 barrels of 37°API oil per day with 45 to 65% water cut
  • An offsetting horizontal well was then drilled penetrating 1,000 meters  horizontally, of which 664 meters was calculated pay with average porosity of 14% (ranging from 12 to 20%) and calculated SW of 50% (ranging from 60 to 35%). The well is currently undergoing selective, multiple completion and stimulation treatment with the intent of identifying the optimal completion technique for the formation
  • Six exploratory wells targeting the Wabamun are planned through the next two quarters, the first of of which has already been drilled, cored and logged
  • Two wells now have complete core and preliminary core analysis shows up to 12.5 meters of oil-saturated porosity in the main Wabamun zone, with good porosity and permeability residual oil saturation up to 50%
  • Two wells have been cased with Wabamun zone potential, one will be placed on production next week and one is in the process of completion and production testing
  • Exall acquired 174,400 gross (128,249 net) acres of undeveloped land in the Greater Mitsue area with multi-zone light oil potential for a total Greater Mitsue area undeveloped land holdings of 189,480 gross acres (138,040 net acres).
  • The Gilwood drilling program in the Marten Mountain area continues to yield positive results with four oilwells drilled and completed, three placed on production and one pending since the beginning of 2011
  • An additional three Gilwood wells have been cased and are in various stages of completion and testing

Operational Activities

Exall has made a significant oil discovery in the Wabamun and Exshaw Formations in and adjacent to the Marten Mountain, Mitsue operational area. The Company is very encouraged by the results of drilling to date and has planned a strategy to further evaluate the potential of both zones.

The Gilwood drilling program conducted by Exall and partners in the Marten Mountain area over the past three years revealed persistent hydrocarbon presence in the shallower Wabamun and Exshaw Formations on gas detector logs, drill samples and open hole logs. As the result of these shows Exall undertook a program to test the productive potential of the zones.

A vertical well drilled to the Gilwood at 13-7-75-5W5 and Rig Released ("RR") in October 2010 was completed in an nine meter porous interval in the Upper Devonian Wabamun Formation. The well tested 35°API oil, slightly sour gas (35 ppm H2S) and formation water from the interval. The ERCB had initially designated the well a new pool however that designation has been rescinded as the well was not put on production due to the pending completion of the Gilwood interval. The Exshaw Formation was also perforated but it was determined that the perforations were in communication with the Wabamun perforations. The Banff Formation was also tested but yielded only salt water.

The discovery well was twinned with a vertical well which was cored and logged. The core revealed 9.2 meters of light-oil saturated porosity in the Upper Wabamun Formation with good fluourescence and strong hydrocarbon odour.

The vertical well was plugged back and a 1000m horizontal leg was drilled in the porous section of the Wabamun Formation, RR March 9, 2011.

A 20 meter interval near the toe of the horizontal well was initially tested open hole without treatment and produced 30 barrels of 37°API oil per day with 45 to 65% water cut.

After acidizing the well it produced oil and water from the same interval at a higher rate, however a small interval nearer the casing produced near water at a very high rate and it was determined that a fracture or fault had been acid stimulated. Subsequent attempts to seal off the fracture system and run a cemented liner were unsuccessful. The Company decided to plug off the majority of the well bore to isolate the water-producing zone and then run a cemented liner over the heel section. A 10 meter interval of the heel section was then  perforated, acidized and tested. The zone produced oil at 10 to 12 bopd and 75 to 85% water cut. The decision was made to put the well on pump to test the longer term productivity of the zone prior to any further completion operations on the remaining wellbore interval.

An offsetting horizontal well was then drilled in the updip drilling spacing unit. The well penetrated 1,000 meters horizontally, of which 664 meters was calculated pay with average porosity of 14% (ranging from 12 to 20%) and calculated SW of 50% (ranging from 60 to 35%). The well is currently undergoing selective, multiple completion and stimulation treatment with the intent of identifying the optimal completion technique for the formation.

Six exploratory wells targeting the Wabamun and Exshaw will be drilled throught the next two quarters, the first of of which has already been drilled, cored and logged. Preliminary core analysis shows 20 meters of oil saturated porosity in the main Wabamun zone. The Gilwood wells planned through the end of the winter season will also target the Wabamun and Exshaw for evaluation using cores and open hole logs.

Reservoir parameters over the main porous zone, as measured from the complete cores in two wells, are as follows:

  Well #1     Well#2
     
Thickness main porosity (H)   9.2 m     12.9 m
Average Porosity =     15.1% (max 17.8%)   17.5% *(prelim,logs)
Average Permeability =     2.8 mD (max 4.9mD)   2.1+ mD*(prelim)
Residual Oil Saturation =    15.6% (range 5-25%)   42%
Residul Water Saturation =    32.2% (range 19-45%)   15%
Water Saturation =     50% (log calculated)   15% (log calculated)
OOIP (STB per section)=    9.5 million STB    26.3 million STB

The wells are separated by approximately 15 miles with no intervening well control so no estimate can be given regarding reservoir continuity or of total potential volume of oil in place.

Two wells have been cased with Wabamun  zone potential, one will be placed on production next week and one is in the process of completion and production testing.

With the information gained through the completion and testing of the wells Exall proceeded with an aggressive land acquisition program during the first three quarters of 2011. Exall acquired 174,400 gross (128,249 net) acres of undeveloped land in the Greater Mitsue area with multi-zone light oil potential for a total Greater Mitsue area undeveloped land holdings of 189,480 gross acres (138,040 net acres) equivalent to 296 gross sections (215.7 net sections).

The Gilwood drilling program in the Marten Mountain area continues to yield positive results. Since the beginning of 2011 four oilwells have been drilled and completed, three of which have been placed on production through the Company-owned facilities located  at Marten Mountain, the fourth is being tied in and is expected to be on production by mid-November. In addition three Gilwood wells have been cased and are in various stages of completion and production testing.

About Exall

Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta, and Texas. Exall Energy is currently developing the new Mitsue area Marten Mountain discovery in north-central Alberta.

Exall Energy currently has 62,188,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE.

Reader Advisory

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

 

SOURCE EXALL ENERGY CORPORATION

For further information:

Exall Energy Corporation

Frank S. Rebeyka
Vice Chairman
Tel: 403-815-6637
 
Roger N. Dueck
President & CEO
Tel: 403-237-7820 x 223
info@exall.com
Warren F.E. Coles
VP - Finance & CFO
Tel: 403-237-7820 x 224
 

Please visit Exall Energy's website at: www.exall.com

Renmark Financial Communications Inc.
Maurice Dagenais: mdagenais@renmarkfinancial.com
Florence Liberski : fliberski@renmarkfinancial.com
Tel.: (514) 939-3989 or (416) 644-2020
www.renmarkfinancial.com

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EXALL ENERGY CORPORATION

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