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Peavey/Morinville
Alexander/Qui Barre
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Update

• In 2011 and 2012, Alexander brought five new oil wells on-stream, which has substantially increased daily oil volumes.
• In Q4 2012, total production increased 27% to 770 BOE per day from 608 BOE for the same period in 2011.
• In Q4 2012, oil production increased 128% to 415 bbls per day compared to 182 bbls per day for the same period in 2011.
• In Q4 2012, natural gas production averaged 2,132 mcf per day compared to 2,559 mcf per day for the same period the year before.
• In December 2012, production averaged 929 barrels of oil per day, an increase of 263 barrels over Q3 2012 production.
• In Q4 2012 and Q1 2013 the Company drilled and cased three Detrital sand oil wells:
• In December 2012, the 15-12-56-27W4 well was put on stream at the rate of 69 bbl per day of oil and 100 mcf per day of natural gas.
• In April 2013, the 7-7-56-26W4 well was put on stream at the rate of 56 bbl per day of oil and 35 mcf per day of natural gas.
• In June 2013, the 12-12-56-27W4 well was put on stream at the rate of 56 bbl per day of oil and 35 mcf per day of natural gas.

Major Oil Producing Zones

Multi-Zone Potential

• Six potential horizons available in the area:
- Glauconite Sand
- Alexander Sand
- Calahoo Sand
- Basal Quartz
- Poplar Sand
- Detrital Sands

Basal Quartz

• 3 to 5 meters of pay
• 2P PV 10 - $7.3 MM
• Producing on three wells
• Less permeable
• Horizontal well being considered for 2013

Detrital Sand Oil Pool Characteristics

• 25 degree API crude oil, slightly sour
• Vertical or directional wells, good porosity, np frac needed
• Reserves:
- 3 to 7 meters net pay
- 840 MB OOIP per 80 acres
- 10% P1 primary recovery, additional 5%, primary P2
• 5 more development locations on 80 acre spacing based on 3D seismic
• Planning waterflood project and GPP application (preliminary analysis suggests recoveries could double)

Detrital Sand Waterflood – Preliminary Projections

• 40 acre spacing/5 spot design
• Double reserves on secondary recovery
• Long life production IP at 1,300 boe/d
• Increases PV by $60MM (net $38 MM after capex)