WIND RIVER ENERGY CORP January 28, 2015
Wind River Energy Corp / TSX-V:WVR ("Wind River" or the "Company") announces the results from the annual 51-101 reserve report (the "51-101 Report") on certain of its properties, including the Company's Phat City project in Montana. The 51-101 Report provides an assessment of the amount and value of the potential resource owned by Wind River in the two formations in Phat City discovered by the Company. The two formations within the Phat City Project, called the Nisku and the Bakken/Three Forks formations, are confirmed to have oil in place based on the discovery well drilled by Wind River in late 2011 and a second well drilled in mid-2012.
The 51-101 Report, prepared by petroleum engineering firm Integrated Petroleum Technologies Inc., ("IPT") projected a potential recoverable oil resource in the Nisku formation, of between 156,000 to 838,000 barrels of oil per well using information reported in the 51-101 report, management calculated PV10 values of $854,050 per well for the low recovery case and $13,360,110 per well for the high recovery case. That equates to between $14,500,000 (low recovery case times 17 net wells) and $227,000,000 (high recovery case times 17 net wells) in net present value discounted at 10% for Wind River from the Nisku formation of the Phat City Project.
The 51-101 Report identified that there is potential recoverable oil in the Bakken / Three Forks formation within Wind River's 21,707 acre Phat City Project of between 204,000 to 571,000 barrels of oil, per well on 160 acre horizontal spacing units. IPT used core data from Wind River's Nelson 1-14 well drilled in mid-2012 to support the Bakken/Three Forks analysis, as well as third party trend data which has developed in the area.
The full version of the 51-101 Reserve and Resource report on Wind River's various projects issued by IPT can be found on Wind River's SEDAR filings, on the SEDAR website: Oil and Gas annual Disclosure Filing (51-501F1), dated January 28, 2015.
IPT was retained by Wind River to prepare an evaluation under Canadian Standards National Instrument 51-101 regarding three of Wind River's projects. The evaluation provided in the 51-101 Report is based on interpretation of technical data including cores recovered from recent wells, geological maps, wells logs, petro-physical analysis, cross-sections, engineering materials and other information supplied by Wind River, and published information. IPT is a qualified reserves evaluator and has prepared the 51-101 report in accordance with the COGE Handbook.
An appendix of abbreviations used in the 51-101 Report and in this release is located below.
Phat City Prospect
Wind River has a 41.3% interest in 21,707 acres in the "Phat City Prospect." The Phat City Prospect is located in Valley County of northeastern Montana near the town of Glasgow.
Phat City Nisku
The 51-101 report estimates potential per-well recoveries based on engineering analysis of information obtained from recently drilled wells, data from other wells in the area, and two nearby analog fields, Tule Creek and Tule Creek East Fields. The Tule Creek East Field recovered 10.6 MMstbo (million stock tank barrels) and 2.7 BCF from seven wells which equates to an average recovery of 1.5 MMstbo and 0.4 BCF per well. A stock tank barrel is one barrel of stabilized gas free oil at the surface.
The following table summarizes the attributes assigned to the upper Nusku in the 51-101 report:
Table 6.2.3: Summary of Phat City Nisku Prospective Resource (per 160 acres).
|
Wind River Working Interest |
High Estimate Oil in Place/160 acres (Mstbo) |
Low Estimate Oil in Place/160 acres (Mstbo) |
High Estimate Recoverable Oil/160 acres (Mstbo) |
Low Estimate Recoverable Oil/160 acres (Mstbo) |
| Total | 1,710 | 840 | 838 | 156 |
| Wind River Gross | 846 | 416 | 415 | 77 |
| Wind River Net | 677 | 333 | 332 | 62 |
The 51-101 Report estimates potential prospective oil and gas recoverable resource from a single 160 acre spacing unit. The resource estimate is presented as a total for a single well, and as Wind River's net share. The net share figure takes into account both the Company's working interest share and the impact of royalties. IPT's high estimate of Gross Recoverable Oil per 160 acre spacing unit is 838,000 stock tank barrels and the low estimate is 156,000 stock tank barrels. Based on Wind River's net acreage position this equates to 14.2 MMBO of potentially recoverable oil for the high case (838 Mstbo/well x 17 wells) and 2.6 MMBO for the low case (156 MSTBO/well x 17 net wells).
The Company projects potential single-well economics based upon 1-10-2015 NYMEX pricing less $12/BO (initially, oil at $45 per BO, gas at $3.74 per Mcf). Total drill and complete cost is estimated at $1.4 million per well. For a development well, the Company projects a NPV-10 value of $13.36 million per well and an internal rate of return of over 400% in the high case, and an NPV-10 value of $.854 million and internal rate of return of 26% for the low case.
Phat City Three Forks (Bakken)
The Three Forks (Bakken) formation is also identified in the 51-101 report as a prospective resource. The Cornwell 1-14 well penetrated 70 feet of Three Forks interval. No attempt was made to complete the Three Forks formation for production in the Cornwell 1-14 well since management believes horizontal well completions will be required to effectively exploit the Three Forks formation. The table below summarizes the attributes established in the evaluation of the Three Forks formation in the 51-101 report:
Table 6.2.5: Summary of Phat City Three Forks Prospective resource (per 160 acres)
|
Wind River Working Interest |
High Estimate Oil in Place/160 acres (Mstbo) |
Low Estimate Oil in Place/160 acres (Mstbo) |
High Estimate Recoverable Oil/160 acres (Mstbo) |
Low Estimate Recoverable Oil/160 acres (Mstbo) |
| Total | 1,903 | 1,357 | 571 | 204 |
| Wind River Gross | 942 | 672 | 283 | 101 |
| Wind River Net | 753 | 537 | 226 | 81 |
The 51-101 report estimates potential prospective oil and gas recoverable resource from a single 160 acre horizontal spacing unit. The resource estimate is presented as a total for a single well, and as Wind River's net share. The net share figure takes into account both the Company's working interest share and the impact of royalties. The 51-101 report's high estimate of Gross Recoverable Oil per 160 acre spacing unit is 571,000 stock tank barrels and the low estimate is 204,000 stock tank barrels. Management believes that the Three Forks will be best exploited by utilizing horizontal drilling and completion techniques.
Prospective Resources are those quantities of oil and gas estimated to be potentially recoverable from undiscovered accumulations. There is no certainty that the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.
With respect to assumptions and limiting conditions within the 51-101 report, the 51-101 report is limited to a discussion of the potential undiscovered oil and gas Prospective Resources of the Phat City property. The 51-101 report does not attempt to place a market value thereon.
Day Butte Field
The Day Butte field is located in Fremont County Wyoming. The Day Butte Field produces from the Lower Ft. Union Formation at depths up to 9,704 feet. Wind River owns a 100% working interest in the Day Butte Federal 1-17 well, which is currently the only producing well in the field, as well as 1,080 acres in the vicinity. Wind River's acreage is included within the Moneta Divide project proposed by Encana Corporation, Noble Energy, and Conoco/Phillips. The Moneta Divide project is projected to have 4,200 wells drilled to recover gas from the Ft. Union formation within the next 10 years.
Wind River has received approval for drilling permits for two wells offsetting the Day Butte Federal 1-17 well.
The Day Butte Federal 1-17 well was under repair at the time the 51-101 report was prepared. Therefore the report preparer was not able to assign any proved producing reserves to the well. The well has been repaired and put back into service and is producing at an economical rate.
The following tables summarize the developed and undeveloped reserves assigned to the Day Butte Field in the 51-101 report:
Table 2.1.1
NI 51-101
SUMMARY OF RESERVES AS OF SEPTEMBER 30, 2014 (Forecast Prices & Costs)
| Reserves Category |
Company Gross MMCF |
Company Net MMCF |
Company Gross MBO |
Company Net MBO |
| Proved developed producing | - | - | - | - |
| Proved developed non-producing | ||||
| Proved undeveloped | ||||
| Total Proved | 0 | 0 | 0 | 0 |
| Total Probable | 8,328 | 6,829 | 66.6 | 54.6 |
| Total proved plus probable (P1) | 8,328 | 6,829 | 66.6 | 54.6 |
| Total possible | 71,505 | 61,925 | 572.4 | 494.7 |
| Total proved plus probable plus possible | 79,833 | 68,754 | 639 | 549.3 |
(1) "Gross Reserves" are Corporation's working interest share of reserves before the deduction of royalties owned by others and without including royalty interests of the Corporation.
(2) "Net Reserves" are Corporation's working interest share of reserves after deduction of royalty obligations plus the royalty interests of the Corporation.
Table 2.1.2
NI 51-101
SUMMARY OF NET PRESENT VALUE OF FUTURE NET REVENUE
AS OF SEPTEMBER 30, 2014 (Forecast Prices & Costs)
|
Net Present Values of Future Net Revenue Before Income Taxes Discounted at %/year |
Unit Value Before Income Tax Discounted at 10%/year | |||||
| Reserve Category |
0% MUS$ |
5% MUS$ |
10% MUS$ |
15% MUS$ |
20% MUS$ | US$/MCF |
| Proved developed producing | ||||||
| Proved developed non-producing | ||||||
| Proved undeveloped | ||||||
| Total proved | ||||||
| Total probable | 29,321 | 15,949 | 9,691 | 6,287 | 4,203 | 1.42 |
| Total proved plus probable (P1) | 29,321 | 15,949 | 9,691 | 6,287 | 4,203 | 1.42 |
| Total possible | 296,316 | 172,044 | 114,278 | 83,030 | 64,001 | 1.85 |
|
Total proved plus probable plus possible | 325,637 | 187,993 | 123,970 | 89,317 | 68,205 | 1.80 |
Day Butte Field development single well economics.
The 51-101 report analyzed the projected economics of development wells on Wind River's Day Butte properties. Reserves assigned to the deeper intervals (comparable to 9,290' to 9,704' in the Federal 1-17 well) were classified as probable. Reserves assigned to shallower intervals (8,502' to 9,290' in the Fed 1-17 well) were classified as possible. Gas and oil prices were based on CIG (Wyoming) strip pricing as of 1-10-2015. The results of the analysis are summarized below:
Day Butte single well economics (80 acre spacing)
| Category | Probable and Possible |
| Gross MMscf | 5,697 |
| Net MMscf | 4,467 |
| Gross Mstbo | 45.2 |
| Net Mstbo | 37.4 |
| Investment M$ | 2,500 |
| Rate-of-return (%) | 245 |
| Return on Investment | 7.86:1 |
| NPV10 (M$) | 8,209 |
Emerald Forest Project
The Emerald Forest Project is located in Uinta County, Wyoming. Wind River owns 2,240 acres in the project. The Emerald Forest Project is identified in the 51-101 report as a Prospective Resource. The potential gas reservoir is located at about 5,500 feet deep. Petrographic and petrophysical analyses of a well which was drilled in 1985 were utilized in the analysis as well as other data. A summary of reservoir parameters derived from the study is shown below:
Table 6.2.9: Single well reservoir parameter (80 acre) - Emerald Forest Frontier
| Reservoir Parameters | Single Well |
| Reservoir flow regime | Radial |
| Initial pressure (psi) | 2,600 |
| High estimate net pay thickness (ft) | 193 |
| Low estimate net pay thickness | 100 |
| Porosity (%) | 12.6 |
| Water saturation (%) | 38.3 |
| Reservoir area (acres) | 80 |
| Gas specific gravity | 0.65 |
| Reservoir temperature (oF) | 150 |
| High original gas-in-place (MMscf) | 8,566 |
| High recovery factor (%) | 85 |
| High recovery (MMscf) | 7,281 |
| Low original gas-in-place (MMscf) | 4,439 |
| Low recovery factor (%) | 50 |
| Low recovery (MMscf) | 2,220 |
A summary of the Prospective Resource analysis results is shown below:
Summary of Emerald Forest prospective resource (per 80 acres)
|
Wind River Working Interest |
High Estimate Gas in Place/80 acres (MMscf) |
Low Estimate Gas in Place/80 acres (MMscf) |
High Estimate Recoverable Gas/80 acres (MMscf) |
Low Estimate Recoverable Gas/80 acres (MMscf) |
| Total | 8,566 | 4,438 | 7,281 | 2,220 |
| Wind River Gross | 8,566 | 4,438 | 7,281 | 2,220 |
| Wind River Net | 7,495 | 3,883 | 6,371 | 1,943 |
Prospective Resources are those quantities of oil and gas estimated to be potentially recoverable from undiscovered accumulations. There is no certainty that the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.
With respect to assumptions and limiting conditions within the 51-101 report, the 51-101 report is limited to a discussion of the potential undiscovered oil and gas Prospective Resources of the Emerald Forest property. The 51-101 report does not attempt to place a market value thereon.
Definition of Undiscovered Resources as per COGE Handbook:
Undiscovered petroleum Initially-In-Place (equivalent to undiscovered resources) is the quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered.
Definition of Prospective Resource as per COGE Handbook:
Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity.
Caution Respecting Reserves and Other Oil and Gas Information
The determination of oil and gas reserves or resources involves the preparation of estimates that have an inherent degree of associated uncertainty. Categories of proved and probable reserves and different categories of resources have been established to reflect the level of these uncertainties and to provide an indication of the probability of recovery. The estimation and classification of reserves and resources requires the application of professional judgment combined with geological and engineering knowledge to assess whether or not specific reserves or resources classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk, probability and statistics, and deterministic and probabilistic estimation methods is required to properly use and apply reserves and resources definitions.
All estimates provided in the 51-101 Report and this release have been made assuming that development of each property in respect of which the estimate is made will occur, without regard to the likely availability to the Company of the funding required for that development.
The reserves and resource estimates provided in the 51-101 Report are estimates only. Actual reserves and resources may be greater than or less than the estimates provided. In addition, there is no certainly that it will be commercially viable to produce any proportion of the estimated resources.
The estimated values of future net revenue set out in the 51-101 Report do not represent fair market value.
9.0 Appendix 2: Abbreviations
| ac | acre |
| AOF | absolute open flow |
| API | American Petroleum Institute |
| bbl | barrel |
| bopd | barrels of oil per day |
| BTU | British Thermal Unit |
| BCF | billion cubic feet |
| cp | centipose |
| °F | degrees, Fahrenheit |
| °R | degrees, Rankin |
| ft | feet |
| GOR | gas oil ratio |
| KB | Kelly bushing |
| Mbbl | thousands of barrels |
| MMbbl | millions of barrels |
| M$ | thousand dollars (U.S.) |
| Mcf | thousand cubic feet |
| Mscf | thousand standard cubic feet |
| MMscf | million standard cubic feet |
| Mscfpd | million standard cubic feet per day |
| md | milli-darcy |
| % | Percentage |
| PVT | pressure-volume-temperature |
| Psi | pounds per square inch |
| Psia | pounds per square inch absolute |
| psig | pounds per square inch gauge |
| POR | porosity |
| rb | reservoir barrel |
| stbo | stock tank barrel of oil |
| Mstbo | thousand stock tank barrel of oil |
| Scf | standard cubic feet |
| STOOIP | stock tank original oil-in-place |
| Sw | water saturation |
| TVD | true vertical depth |
| Yr | Year |
| WI | working interest |
About Wind River Energy Corp.:
Wind River is an oil and natural gas acquisition, exploration and development company with a focus on domestic energy projects within the United States. Wind River has oil & gas leases covering 34,245 acres (21,507 net) on two properties located in the Wind River Basin of Wyoming in addition to its other project areas in Colorado, New Mexico, Wyoming, and Montana.
For further information, please visit Wind River's website at http://www.windriverenergy.com/ or contact:
Paul Cox, Director
Wind River Energy Corp.
1010-609 Granville Street
Vancouver, BC V7Y 1G5
T: (604) 689-0037
F: (604) 926-5806
E: pcox@windriverenergy.com
Neither the 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.
FORWARD LOOKING INFORMATION
This press release contains forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. 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 profitably produced in the future.
Although Wind River 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 Wind River 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. These statements speak only as of the date of this press release. Actual results could differ materially from those currently anticipated due to a number of factors and risks including various risk factors discussed in the Company's Management's Discussion and Analysis for the Period ending September 30, 2014, filed on January 28, 2015 under the Company's profile on www.sedar.com.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION ON AT ANY PARTICULAR TIME.
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