The Slave Point formation is a 400 million year old layer of carbonate rocks (sedimentary rock composed primarily of carbonate minerals: limestone and dolostone) that occurs in southern Northwest Territories, northeastern British Columbia and northern Alberta. Exploration targeting this formation has yielded significant pool discoveries in Alberta especially in the Greater Red Earth area where the first vertical wells came on production in the 1960s.
Vertical drilling results were highly dependent on the localized reservoir quality. When a lower-porosity region (rock is tighter) of the reservoir was drilled, it produced significantly less economic results. Horizontal drilling and multi-stage fraccing completions opened up these lower-porosity regions enhancing recoveries and production from zones that where once deemed uneconomic. The Slave Point has greater thickness and lower permeability compared to other “tight rock” unconventional resource plays such as the Cardium and the Viking formations. The Slave Point formation has been rejuvenated thanks to the introduction of new completion techniques that are constantly being tweaked in order to optimize light oil recovery from this pool.
In the greater Red Earth area(Evi, Otter, Golden, Kitty, Utikuma North, Loon and other areas in the vicinity of Red Earth) the players are chasing a low risk light oil play (of 35°-40° API) with low rates of water production and low solution gas volumes. The Slave Point light oil resource play has decades of oil production history, the oil is there and the formation has been drilled through numerous times. The current strength in oil prices and an attractive royalty regime is fueling intense horizontal drilling activities by the operators. The average price paid in the most recent land sale (April 2010) was $5,227/ha.
The Slave Point formation oil play in the Greater Red Earth area has an estimated 1 billion barrels of OOIP (Original Oil in Place) or up to 10 MM OOIP/Section. The land is locked up amongst a few large operators but some juniors were able to assemble significant land packages. According to Penn West Petroleum, although the horizontal wells will likely end up producing just 50 barrels per day after flush production, they are expected to be profitable at today’s crude prices. Pinecrest Energy estimates an operating netback of $79 per barrel of oil at $90/barrel per oil Canadian and recently reported average IP30 rates of 266 bopd for long lateral horizontal wells.
Slave Point Oil Players at Red Earth
The following list will provide you with the players who currently hold Slave Point prospective land at Red Earth. Several companies listed below are developing their land base with an active drilling program as it is considered a core area of operations but only a handful are Slave Point pure plays.
The list was last updated by BeatingTheIndex.com on December 26, 2011.
|Company Name||Trading Symbol||Red Earth Land|
|Penn West Petroleum||TSE:PWT NYSE:PWE||200,000 net acres*|
|Pinecrest Energy||TSXV:PRY||100,000 net acres|
|Lone Pine Resources||TSE:LPR||57,222 net acres|
|Baytex Energy corp.||TSE:BTE NYSE:BTE||28,300 net acres|
|Avenex Energy||TSE:AVF||21,000 net acres|
|Border Petroleum||TSXV:BOR||19,200 net acres|
|Storm Resources||TSXV:SRX||18,900 net acres|
|Pace Oil and Gas||TSE:PCE||18,500 net acres|
|Surge Energy||TSE:SGY||14,800 net acres|
|Great Pacific International||TSXV:GPI||2,250 net acres|
|Hawk Exploration||TSXV:HWK.A||1,500 net acres|
|Arsenal Energy||TSE:AEI||1,488 net acres|
|PetroGlobe Energy||TSXV:PGB||1,120 net acres|
|Harvest Operations Corp.||TSE: HTE.DB.D, HTE.DB.E, HTE.DB.F and HTE.DB.G||Company confidential|
*The Swan Hills acreage to the south of Red Earth is also included as it is also a Carbonates play.
While this post is focused on the greater Red Earth area, the Slave Point formation is also being explored by Arcan Resources (TSXV:ARN) at Hamburg, AB amongst other companies.
This list was compiled by BeatingTheIndex.com from the latest presentations and company news releases. I do not guarantee the accuracy of the data so please do your own due diligence prior to making any investment in a company mentioned above. If you spot an error in the data or know of a company that I missed from the list, please do not hesitate to contact me.