Magnum Energy Inc. Announces Closing of Acquisition of Viking Oil Producing Property
March 16 2011 - 8:30AM
Marketwired
Further to its press releases of March 10, 2011 and February 3,
2011, Magnum Energy Inc. (The "Company" or "Magnum") (TSX VENTURE:
MEN) is pleased to announce that Magnum and its joint venture
partner, Nextraction Energy Corp. ("Nextraction") have closed the
acquisition of the Viking oil assets of a private company in the
Provost area of Eastern Alberta.
The Viking oil asset includes four producing wells with
cumulative average production from the 100% owned and operated
vertical wells of approximately 30 barrels of sweet light crude per
day. Additionally, the 100% owned infrastructure includes a
battery, disposal well, and pipelines situated on 3.25 sections of
largely undeveloped land. Preliminary technical evaluations
indicate the potential to develop an inventory of a minimum of 12
to a maximum of 40 low-risk horizontal drilling locations. Westfire
Energy Ltd. has applied to the ERCB for 4 wells per quarter section
down spacing in immediately adjacent lands.
About the Provost Viking "A" formation:
In 1968, a unitization study was performed by McDaniel
Consultants engineering evaluators which was submitted to the
Energy Resources Conservation Board (ERCB) that indicated that the
pool contained over 80 million barrels of original oil in place
(OOIP). Cumulative recovered oil production to date from vertical
wells drilled over the past 20 years is approximately 3 million
barrels. Vertical wells in the Viking "A" pool have produced up to
300,000 barrels of oil per well. Horizontal wells drilled in the
Viking trend that extends southeast to Dodsland in Saskatchewan and
northwest to Redwater have unlocked the vast reserves from these
pools with excellent economics.
About the Magnum /Nextraction joint venture agreement:
Terms of the JVA provide for the Companies to acquire the 100%
owned property from a third private party for $2.8 million on a
fifty-fifty basis. Nextraction shall fund 100% of the acquisition
and receive 100% of the net revenue from existing production until
payout of the Purchase Price, or until Magnum has paid to
Nextraction 50% of the Purchase Price. Upon payout of the
acquisition, production revenue will be distributed on a 50/50
basis.
Nextraction shall also pay 100% of the costs to drill and
complete to tie-in two horizontal wells to earn its 50% interest.
The wells are projected at 800 meters in depth and at least 900
meters horizontally, with the first well commencing before June 30,
2011. Preliminary estimated costs are $1.5 million per well. The
Companies shall share revenue from the two wells on a 50/50 basis
from the date of first production. Costs and revenue for subsequent
development will then be shared on a 50/50 basis.
A geotechnical team, comprised of individuals from both Magnum
and Nextraction with direct experience drilling both vertical and
horizontal wells in Viking pools, will begin immediately with a
determination of workovers in the existing vertical wells to
optimize production. Preparations are also underway to drill two
initial horizontal wells early this summer.
On behalf of the Company
Richard A. Nemeth, President and CEO
FORWARD LOOKING STATEMENTS DISCLAIMER
Certain statements in this document may contain "forward-looking
statements" or "forward-looking information" within the meaning of
applicable securities legislation. Such forward-looking statements
or information include, without limitation, forecasts, estimates,
expectations and objectives for future operations that are subject
to a number of assumptions, risks and uncertainties, many of which
are beyond the control of the Company. The Company does not assume
the obligation to update any forward-looking statement, except as
required by applicable law.
The TSX Venture Exchange has neither approved or disapproved the
contents of this press release.
Contacts: Magnum Energy Inc. Richard Nemeth President & CEO
604.669.3155 rnemeth@magnumenergyinc.com www.magnumenergyinc.com
Board Marker Group Dean Stuart 403.517.2270
dean@boardmarker.net
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