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Tim HoopsManaging Director
Sleeping Giant Gas Project Primer
North Dakota, USAJune 2014
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Forward-Looking Statements This summary contains certain statements which constitute forward-looking statements or information ("forward-looking statements"), including statements regarding the use of proceeds. These forward-looking statements are based on certain key expectations and assumptions, including assumptions regarding the general economic conditions in USA and globally, industry conditions in USA and the operations of the Company. These factors and assumptions are based upon currently available information and the forward-looking statements contained herein speak only as of the date hereof. Although the Company believes the expectations and assumptions reflected in the forward-looking statements are reasonable, as of the date hereof, undue reliance should not be placed on the forward-looking statements as the Company can give no assurances that they will prove correct and because forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. These risks include, but are not limited to: uncertainties and other factors that are beyond the control of the Company; global economic conditions; risks associated with the oil and gas industry; commodity prices and exchange rate changes; operational risks associated with exploration, development and production operations; delays or changes in plans; specific risks associated with the ability to execute production sharing contracts, ability to meet work commitments, ability to meet the capital expenditures, estimated size of any seismic features and whether additional geosciences work will progress to defining drillable locations; risk associated with stock market volatility and the ability of the Company to continue as a going concern. The Company assumes no obligation to update any forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements, except as required by securities laws. (Additional information identifying risks and uncertainties is contained in filings of the Company with Canadian securities regulators).
Disclaimer This summary shall not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. Person absent registration or an applicable exemption from the registration requirements of such Act or laws.
In addition, the Company makes not representation or warranty, express or implied, in relation to, and no responsibility or liability is or will be accepted by the Company or its directors, officers, shareholders, partners, employees or advisers as to or in relation to the accuracy or completeness of the information, statements , opinions or matters (express or implied) arising out of, contained in or derived from this presentation or any omission from this presentation or of any other written or oral information or opinions provided now or in the future to any interested party or its advisers.
Cautionary Statement: Undiscovered Resources, OOIP and BOE Undiscovered Hydrocarbon-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. There is no certainty that any portion of the undiscovered resources will be discovered or that, if discovered, it will be economically viable or technically feasible to produce. Original-Oil-in-Place (equivalent to Discovered Petroleum Initially in Place), also known as ‘discovered resource’, is defined as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of OOIP includes production, reserves and contingent resources; the remainder is defined as unrecoverable. The terms “barrels of oil equivalent” or “boe” may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (6 mcf) to one barrel (1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Disclaimer Statement
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Large Biogenic Gas Potential at shallow depths
Large Structural accumulation
Excellent reservoir properties
Analog field has reserves of 157 Bcf EUR(1), 640,000 Mcf per well on 160 ac spacing,
Multiple markets between $4 and $5.75/Mcf
120,000 net acres, leased under favorable terms
Executive Summary Sleeping Giant Gas Project
Map Ref: USGS(1) Report dated 18 May 2010 by Mr. Walt King, registered Colorado Petroleum Engineer, for the benefit of White Eagle Exploration, Inc. the seller of the Sleeping Giant Gas Project to Strata-X.
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Elements Needed for a Commercial Biogenic Gas Accumulation
All geologic elements are present in Sleeping Giant
Required Geologic Element Sleeping Giant Geologic Attributes
Reservoir – Can be thought of as a storage tank and is measured in units of porosity or the amount of void space available to store natural gas
Upper Cretaceous Niobrara Formation with porosity up to 40% (excellent storage capacity)
Structure – Geologic surfaces that are higher than the surrounding areas and often act to accumulate hydrocarbons as they migrate upward.
Well established structural high covers an area approximately 2500 sq. km.
Seal – Geologic interval that is impermeable and allows the migrating hydrocarbons to be trapped in a reservoir.
Ardmore bentonite - a well recognized zone that is know to trap hydrocarbons through the region.
Hydrocarbon Source – Formation that originally generated the hydrocarbons. Sometimes this can be within or in juxtaposition to the reservoir and sometimes it is located some distance away.
High Total Organic Carbon (TOC) within the Niobrara formation and allows for a very simple generation and migration pathway from the source to the reservoir.
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Reservoir – Niobrara Formation and equivalents
Production from similar aged formations in Saskatchewan and Alberta exceeds 70 Tcf(1)
Production from Colorado, Kansas and Nebraska exceeds 1 Tcf from over 2,500 wells
Upper Cretaceous formation similar to Niobrara extend over 3,000 km in front of the Rockies
(1) National Energy Board, Canada’s Energy Future 2013 – Energy Supply and Demand
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The Niobrara is a chalky marlstone that is made up calcium carbonate coccoliths formed from single cell algae
At shallow depths these fossils remain uncrushed by the overburden and result in outstanding porosity up to 40%
Microscopic view of coccoliths
Chalk is similar to While Cliffs of Dover
Reservoir – Niobrara Formation Chalk and Marlstones
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Structure – Regional Mapping
Utilizing over 150 data points combined with geophysical measurements delineate the 2,500 km2 regional structure
Indication of natural fracturing on structure
Magnetic Basement Map
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• Cores in the area show the Niobrara to be very organically rich.
• TOC values over 7 have been recorded in the immediate area
• Avg. TOC values of 4.5
• Values greater than 2 considered favorable
Source – Niobrara Marlstones
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• Gas has been tested down dip on flank of structure• Gas shows on mudlogs • Gas odor• Crackling of samples – gas escaping• Gas indication on electric well logs
Indication of gas in the Niobrara
Gas flare from regional off-structure test
• Other geologic factors• Good Total Organic Carbon measured in Niobrara and adjoining shales
• Indication of natural fracturing on structure• Extensive regional seal provides effective barrier for entrapment
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Primary exploration target - Niobrara • Approximate depth of 1,300 feet
Secondary exploration targets: • Pierre• Greenhorn/Belle Fourche• Mowry Shale• Muddy
Yellow = Sandstone
Gray = Shale
Blue= Carbonate
Red = Source Rocks and Actual and
Potential Reservoirs
Williston Basin Cretaceous
Petroleum System
Shallow Exploration Target Formations
Rohweder #1-11 will test the Pierre, Niobrara, Carlile and Greenhorn Fm.
Primary Target(Rohweder #1-11 to test)
Secondary Target(Rohweder #1-11 to test)
Secondary Target
Secondary Target
Secondary Target
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• Colorado, Kansas, Nebraska• > 2,500 producing wells• Ultimate reserves over 1.5 Tcf• Same geologic conditions as the Sleeping Giant area
Niobrara – Analog Area
Niobrara
• Over 100 Bcf produced to date(1)
• Estimated EUR of 157 Bcf (2)
• Approximately 20,000 acres(2)
• EUR/well = 640,000 Mcf at 160 ac spacing(2)
Analog - Beecher Island Economics
Beecher Island
(1) Colorado Oil and Gas Conservation Commission website, www.cogcc.state.co.us, production database accessed 12 June 2014.(2) Report dated 18 May 2010 by Mr. Walt King, registered Colorado Petroleum Engineer, for the benefit of White Eagle Exploration, Inc. the seller of the Sleeping Giant Gas Project to Strata-X.
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Analog – Beecher Island Type Curve (1)
(1) Report dated 18 May 2010 by Mr. Walt King, registered Colorado Petroleum Engineer, for the benefit of White Eagle Exploration, Inc. the seller of the Sleeping Giant Gas Project to Strata-X.
Mcf/Month
Wells are typically stimulated with 100,000 pounds of sand with nitrogen assist
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Analog - Beecher Field: Economic Assumptions (1)
(1) Report dated 18 May 2010 by Mr. Walt King, registered Colorado Petroleum Engineer, for the benefit of White Eagle Exploration, Inc. the seller of the Sleeping Giant Gas Project to Strata-X.
$USD/Mcf
Reserves per well: .64 Bcf per 160 acres
Spot Price: $4.62 (Forward Strip Jun 17, 2014)
Capital Costs: $250,000/well $.39
Royalty expense: 17.5% $.81
Tax: zero first 2 years, $.10 thereafter
$.05
Lease Op Costs: USD $750/mo $.21
Transportation/Market Expense: $.65
Net Back: $2.51/Mcf
Economics Assumed at 640,000 Mcf EUR per well @ 160 acres spacing
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• Rohweder #1-11 located on Beaver Creek Prospect,
1 of 26 identified structures
• Best Estimate of Size: 18,000 ac
• Number of Potential Locations: 112 (@ 160 spacing)
Project Summary
• Large Regional Structures controlling potential shallow gas accumulation
• Multiple Exploration targets shallow gas and deeper oil
• Gas produced from flanks of structure
• Primary Target Niobrara Fm.- Extensive producer of natural gas
• Strong Analog – Beecher Island, Yuma Colorado
• Geologic factors present for significant accumulations
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Supplemental Material
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In this document, the abbreviations set forth below have the following meanings:Oil and Natural GasBbl barrelBbls barrelsMbbls thousand barrelsMMbbls million barrelsMcf thousand standard cubic feetMMcf million standard cubic feetBcf billion cubic feetTCF trillion cubic feet Other
Hydrocarbon Index- measure of the hydrogen richness of the source rock, and when the kerogen type is known it can be used to
estimate the thermal maturity of the rock.
OOIP – Original Oil in Place.
Permeability – the ability or measurement of a rock’s ability to transmit fluids.
Porosity – percentage of pore volume or void space or that volume within rock that can contain fluids.
Reservoir Rock – refers to a subsurface pool of hydrocarbons contained in porous or fractured rock formations.
Rock Eval – is used to identify the type and maturity of organic matter and to detect petroleum potential in sediments.
Source Rock - refers to carbon bearing rocks from which hydrocarbons have been generated or are capable of being generated.
Tmax -highest temperature incurred by a Source Rock, generally higher temperatures equates to larger hydrocarbon generation.
Total Organic Carbon (TOC) – amount of carbon in a geological formation, mainly Source Rocks.
Definitions
