CALGARY, Sept. 11, 2012 /CNW/ - Winstar Resources Ltd. ("Winstar" or the "Company") (TSX: WIX) supplies a progress report regarding the Company's ongoing Strategic Alternative Process and field operations.
Strategic Alternatives Process
On July 3, 2012 Winstar announced the retention of FirstEnergy Capital LLP., to initiate a process to explore and evaluate potential strategic alternatives with a view to enhancing shareholder value. Since mid August the Company has opened three data rooms; London, England and Calgary, Canada with corporate and Tunisian data and Bucharest, Romania containing Satu Mare Concession data.
During the week of September 3, 2012, Winstar received a 'resource evaluation' of shale gas potential within the Silurian Tannezuft 'Hot Shale' present within the Company's Tunisian Concessions of Sabria, Sanrhar, Chouech Essaida and Ech Chouech by NuTech Energy Alliance ("NuTech"), Houston Texas. This study was based upon, but not limited to, log analysis, rock mechanics and geochemical data from four analogous wells. The study supplies comparative data from similar plays in the United States and although at a very early stage of consideration indicates there could be good potential for shale gas development in the future as shown below.
|United States|| Tunisia
Analog - 4
|Shale Gas Play Parameter||Barnett||Fayetteville||Haynesville||Woodford||Marcellus||Eagle Ford|| Silurian Hot
|Depth, ft.|| 6,500 -
|Net thickness, ft.||10-600||20-200||200-300||120-220||50-350||150-300||106|
|Total Organic Content, %||4.5||4-9.8||0.5-4||1-14||3-12||2-6||3.8|
|Total Porosity, %||4-5||2-8||8-9||3-9||10.||6-14||11.5|
|Gas Content, scf/ton||300-350||60-220||100-330||200-300||60-150||200-220||496|
| Clay, %
|Gas In Place|| Acres/
| CONCESSIONAL TOTAL (TCF)
| CONCESSIONAL TOTAL (MMBOE)
| NET TO WINSTAR (TCF)
| NET TO WINSTAR (MMBOE)
Highlights of NuTech Study:
- The Tunisian Tannezuft Silurian Hot Shale has apparent, 'Shale Gas Play Parameters' equal to or better than some established gas shales located within the United States.
- Net to Winstar, NuTech estimates 'Technically Recoverable Shale Gas Resources' of 808 million boes (barrels of oil equivalent) or 4.8 trillion cubic feet of natural gas (Note; this estimate, is prior to the potential 50% working interest back-in at the Chouech Essaida Concession, by ETAP ; the Tunisian State Oil and Gas Company). The Company cautions readers, that the above NuTech estimates are at this stage hypothetical, for to the Company's knowledge the concept has not been tested in any well in Tunisia.
NuTech estimates that a well within Winstar's four southern concessions can potentially drain the shale gas resources from 240 to 274 acres. The NuTech model, proposes a horizontal drain or leg within the Silurian Hot Shale of some 975 meters in length and multiple hydraulic fracturing within the horizontal leg.
Considering the NuTech assumptions, Winstar generated 'generic' single well economics based upon a 4000 meter vertical well with a 975 meter horizontal leg costing $US 15 million (gross), and well performance less than that postulated by NuTech study. In the single well economic model, natural gas is sold at approximately $US 13 per mcf and a well produces (gross) 6 to 8 billion cubic feet of natural gas (during the current term of the concession). These very approximate or scoping economics for a single shale gas well, generates a Net Present Values, Discounted at 10% After Tax of US$16 to $19 million and payout period of 13 to 16 months.
Tunisian production has averaged 1,600 to 1,700 barrels of oil equivalent per day ('boepd') during September 2012, a 40% increase as compared to a Q2 2012 production average of 1,155 boepd. Production increases over Q2 2012, reflect better natural gas nominations at Chouech Essaida from the Tunisian State Electrical and Gas Distribution Company (STEG) who has consistently and almost without interruption nominated for gas throughout the summer and success in re-establishing a portion of the Triassic oil production temporary lost at Chouech Essaida due to downhole mechanical issues.
Winstar sold approximately 44,000 (net after royalty) barrels of Tunisian crude, during the first half of August 2012, for a price of approximately US $112 per barrel. Tunisian natural gas production is being sold daily at prices approximating US $15 per thousand cubic feet (mcf).
Further to an unsuccessful Triassic nitrogen lift recompletion at Chouech Essaida Silurian #10 (100% working interest), a remedial cementing operation will commence sometime in late September. The purpose of the well work over is to isolate an upper water aquifer from a significant Triassic oil zone and thereby establishing commercial production. This operation is expected to take four weeks including mobilization and de-mobilization and cost up to US $3.5 million.
Winstar and its 55% working interest partner ETAP (the Tunisian State Oil and Gas Company) have committed to drill a new 3,800 meter Ordovician test within the Sabria Concession, known as Sabria 12bis. The completed well cost is estimated at US$18 million (gross) or US$8 million (net to Winstar's 45% working interest). Winstar as operator is currently completing a tendering process for a drilling rig and other services. The well is included in the 2012 joint venture budget; however operational plans may have it delayed until early 2013.
On August 28, 2012 Winstar completed the field acquisition of an 80 square kilometer 3D seismic program, over its new natural gas discovery at Moftinu within the Romanian Concession Satu Mare. The seismic is expected to be processed and interpreted by January 2013. Winstar is hopeful that the new seismic will generate direct hydrocarbon indicators in the form of AVO anomalies to help define the size and configuration of the expected gas field. The seismic project including processing and interpretation is estimated to cost US $3.5 million. Winstar pays 100% of these costs to earn up to a 60% working interest in the Moftinu discovery. This is done, in partnership with the Romanian company - Rompetrol SA. In the case Winstar opts to continue into the second work commitment period it will earn up to 60% in the entire Concession.
Winstar is in an excellent financial position. It has no current or long term debt, and has a positive working capital of approximately $8 million as at September 1, 2012. Finally we note that the Tunisian social environment for Winstar is good, consistently improving for the benefit of the Company and its suppliers, since last June.
References herein to boe mean barrels of oil equivalent derived by converting gas to oil in the ratio of 6,000 cubic feet (mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based upon an energy conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead.
This press release contains certain forward-looking statements. These statements relate to future events or future performance of the Company. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "predict", "seek", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to certain events, and are subject to a number of risks, uncertainties and assumptions. Many factors could cause Winstar's actual results, performance, or achievements to materially differ from those described in this press release. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in other public disclosures made by the Company or this press release as intended, planned, anticipated, believed, estimated, or expected. Specific forward-looking statements in this press release include, among others, statements pertaining to the following: factors upon which Winstar will decide whether or not to undertake a specific course of action; and estimated volumes and timing of future production; business plans for drilling, exploration and development; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. The risks to which the Company is subject include those of the oil and gas industry in general, including operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas fields and deposits; volatility in global market prices for oil and natural gas; general economic conditions; competition; liabilities and risks, including environmental liability and risks inherent in oil and gas operations; uncertainties as to the availability and cost of financing and changes in capital markets; alternatives to and changing demand for petroleum products; and changes in legislation and the regulatory environment, including uncertainties with respect to the Kyoto Protocol.
Furthermore, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be produced profitably in the future. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary declaration. These statements speak only as of the date of this press release. The Company does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.
Winstar Resources Ltd. is a Calgary-based junior oil and gas Company, which explores for, develops, produces and sells crude oil, natural gas liquids and natural gas in Tunisia and conducts exploration activities in Romania. Winstar's common shares trade on The Toronto Stock Exchange under the symbol WIX.
Winstar's Calgary headquarters are locations at 3130, 520 - 3rd Avenue SW, Calgary Alberta T2P 0R3.
SOURCE: Winstar Resources Ltd.
For further information:
Mr. Charles de Mestral
Chief Executive Officer
Phone: +41 22 361 14 45
E-mail: [email protected]
(Note: Mr. de Mestral is based in Europe, in a time zone which is eight hours ahead of Calgary time)
Mr. David Monachello
Phone: +1 403 513 4200
E-mail : [email protected]
Mr. Jerrad Blanchard
Chief Financial Officer
Phone : +1 403 513 4204
E-mail : [email protected]