/THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES/
CALGARY, March 13, 2012 /CNW/ - 3MV Energy Corp. ("3MV" or the "Company") (TSXV: TMV) is pleased to provide the following operational update on its Viking Oil Pool Discovery near Fiske, Saskatchewan.
Prospecting for plays in the Viking formation in the Kindersley area has gone through many different phases. The team at 3MV, the originators of multi-stage fracs in the area, have been on the ground since the beginning of the technological boom in the Dodsland play. The Company has achieved industry leading cost benefits and has introduced field practices that arrest declines in typical oil production. The goal is to seek out wells and technology that will provide higher recovery factors than typical Viking oil wells produce. 3MV continues to build a substantial base production rate while aiming towards a 20 to 25 year sub 7% decline rate after initial flush. This base will allow the Company to pursue similar play areas and move towards meaningful secondary recovery schemes such as gas flood.
3MV has created a methodology to identify the hyperpycnal trends in the Kindersley/Dodsland/Smiley/Plato area of the Viking oil trend. The Company controls over 35 sections on one paleostructurally trapped hyperpycnal event in the Fiske area. Proprietary 3D seismic has been acquired and a 6 well horizontal drilling program was initiated in September of 2011. Completed and equipped well costs in the area have been reduced to $850,000/well in the winter, while summer drilling is expected to yield further efficiencies and reduce costs to below $700,000/well. With the ability to size proppant per frac treatment zone over up to 24 zones, Company costs are reduced, fracs are more efficient, and cleanout times are dramatically shortened.
Initial rates of oil production of up to 150 BOE/d from the hyperpycnal zones are generally higher than wells in the typical Viking oil play. 3MV's higher IPs and lower costs result in quicker payout. Recently, 3MV applied downhole jet pumps that increased production by more than double for a short period of time, but when the decline continues it does so at a slower rate. When production levels out the rate is expected to be approximately double the typical regional level. This means the recovery factor is greater and may ultimately translate into larger reserves.
3MV's new oil play at Fiske has the potential to grow the base production rate to 1,500 BOE/d, and with flush production, depending on the rate of drilling, to over 2,000 BOE/d. Decline rates on wells in the hyperpycnal zones appear to differ somewhat from wells in the regional Viking zone, typically declining approximately 40% in the first month. Production decline from these wells is expected to stabilize at approximately 3% after six to nine months of production.
In 2012, 3MV plans to spend approximately $30 million on the drilling and completion of 35 wells, as well as land and seismic acquisition. This Capital Program will be funded from cash flow, debt, and equity financing. The Fiske Viking oil pool is an exciting prospect for 3MV, as it has the potential to build a long-term oil production annuity representing significant value for shareholders.
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.
The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This news release does not constitute an offer to sell or the solicitation of any offer to buy nor will there be any sale of these securities in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such province, state or jurisdiction.
Certain statements in this news release constitute forward-looking statements. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by 3MV. Although 3MV believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because 3MV can give no assurance that they will prove to be correct.
Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.
The forward-looking statements contained in this document are made as of the date hereof and 3MV 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 securities laws.
For the purpose of calculating unit costs, natural gas volumes have been converted to a barrel of oil equivalent ("BOE") using six thousand cubic feet equal to one barrel unless otherwise stated. A BOE conversion ratio of 6:1 is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion conforms with Canadian Securities Regulators National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). BOEs may be misleading, particularly if used in isolation.
Image with caption: "3MV monthly product sales by product type. (CNW Group/3MV Energy Inc.)". Image available at: http://photos.newswire.ca/images/download/20120313_C3843_PHOTO_EN_11056.jpg
Image with caption: "Production for 3MV's first three hyperpycnal type wells in the Fiske area compared to well averages in the Lucky Hills and Whiteside areas. (CNW Group/3MV Energy Inc.)". Image available at: http://photos.newswire.ca/images/download/20120313_C3843_PHOTO_EN_11055.jpg
For further information:
President & CEO
VP, Corporate Development