Nextraction has substantially increased its leasehold position in the Provost Viking A oil pool by 92%, increasing its net acreage position from 1.625 to 3.125 sections (1040 acres to 2000 acres). Nextraction acquired one section at a 100% working interest (640 acres net to Nextraction) at a cost of $701,584, and one section at a 50% working interest (320 acres net to Nextraction) at a cost of $401,088. The two newly acquired sections are contiguous to each other and are one mile from the Company's existing 50/50 joint venture acreage, allowing for the potential to use existing infrastructure. The acquisition essentially doubles the Company's drilling inventory of horizontal locations up to 36 wells. Nextraction has identified 21 locations on 400 meter spacing whereby the Company could drill at least 4 wells owning 100% interest, and own a 50% interest in 17 locations (resulting in a further 8.5 net wells). In addition, another 15 locations may be drilled at a 50% interest (7.5 net wells), should down spacing be warranted.
The acreage is also prospective for light oil production from the Dina formation that is approximately 150 meters below the Viking formation. A historical well on the acreage produced 18 Mbbls of oil from the Dina formation.
The Company is also pleased to announce that it participated in the successful re-completion of a well on its existing acreage. The well had not been previously fracture stimulated, so the well was fractured using the same technique the Company plans to use on its first horizontal well. Prior to re-completion of the well in mid-June, it produced three barrels of oil per day and is now currently producing 29 barrels of light oil per day, a ten-fold increase. Payout is projected at three months.
The Company is encouraged by the results of the frac as it confirms the high productivity potential of the Company's acreage. The well has been producing for two years and is located directly between two wells that have cumulatively produced 520 Mbbls to date and continue to produce 20 bbls per day of oil. Reservoir pressure measured after completion was near original pressure, suggesting little depletion. The high production rates from the well are consistent with the high pressure and indicate good quality reservoir, as expected. The Company is currently drilling its first horizontal well in the pool offsetting these wells and plans to multi-stage fracture this first horizontal well in the Viking zone in the coming days. The Company also plans to drill a second horizontal well on this joint venture acreage in the third quarter of 2011.
Mark S. Dolar, President & CEO of Nextraction, commented, "We value the Crown leases acquired yesterday as a strategic asset to our Company's growth. We believe the acreage to be very prospective for a multi-well development program and will expand our ability to focus on developing the Viking formation for value added reserves. With our experience and expertise in developing the Viking sand by horizontal drilling and multi-stage fracturing, we see this project as an excellent way to add significant oil reserves as we move towards our goal of being 80% light oil weighted by the end of this year."