DENVER & PERTH, Australia -- (Business Wire)
Samson Oil & Gas Limited (ASX: SSN)(NYSE MKT: SSN) provides an advisory.
North Stockyard Oilfield, Williston Basin, North Dakota
Samson has owned an equity position in the North Stockyard Oilfield for
several years and has participated in the drilling of six Bakken
Formation wells along with a Mission Canyon Formation well. The six
Section area, (three Sections are designated as the Northern Tier, and
three Sections the Southern Tier) has been developed with a 640 acre
spacing utilizing 5,000 foot laterals. Standard industry practice has
evolved and the norm is to develop the Middle Bakken and the First bench
of the Three Forks Formation at 160 acre spacing. Samson has been keen
to develop the North Stockyard field to this drilling density; however,
several of the other working interest owners in the field, including the
Operator, do not wish to accelerate the development of this field at the
optimal acreage spacing.
As a consequence, Samson and the Operator group have negotiated an
acreage swap for the Middle Bakken/First Bench of the Three Forks
(MB/TF), whereby Samson will acquire these parties’ undeveloped acres in
the Northern Tier and will divest undeveloped acres in the Southern
Tier. After the swap, Samson will own 64% and 57%, respectively, in the
two overlapping 1,280 acre spacing units located in the Northern Tier.
Samson will become Operator for the entire Northern Tier. Samson will
retain its existing equity in the seven producing wells and the deeper
benches of the Three Forks in both the Northern Tier and the Southern
Tier. The formal agreement documenting the swap has been completed and
was executed by Samson and the Operator today.
Samson has appeared in front of the North Dakota Industrial Commission
(NDIC) and requested a 160 acre spacing order in the Northern Tier.
Samson expects that this request, which was unopposed, will be approved
and that the NDIC will consent to the drilling permits that have already
been lodged. This administrative step will then allow Samson to drill an
additional 14 wells in the Northern Tier to develop the MB/TF to a 160
Proved Developed Producing Reserves (PDP)
The PDP reserve of the North Stockyard Oilfield have been assessed by
Ryder Scott as at June 30 2012, at a gross EUR of 1.8 MMSTB valued at
$7.5 million net to Samson using the NYMEX forward curve as at June 30th.
Representing $86 per barrel for the second half of 2012, $88 for 2013,
$87 for 2014 and 2015, $86 for 2016, and thereafter.
Samson has completed an internal estimate that suggests the MB/TF in the
Northern Tier will recover a gross EUR of 7.1 MMSTB (net 3.4 MMSTB)
valued at $42.4 million net to Samson.
Given the administrative status of these wells, these reserves are
currently classed as Probable. At such time as the NDIC approves the
requested spacing order the designation of these reserves is expected to
move from Probable to Proved Undeveloped.
Samson has also completed an estimate of the Probable Reserves of the
deeper Three Fork Benches (TF) and has estimated that these Probable
Reserves, at a gross EUR of 24.5 MMSTB (net 6.1 MMSTB), valued at a
$49.8 million net to Samson.
These estimates are set out in the following table:
Gross EUR MMSTB
Net EUR MMSTB
MB/TF Northern Tier
TF Both Tiers
NPV is calculated at a 10% discount rate, using $80 per barrel for
Samson is planning to mobilize the Frontier Rig 24 to the North
Stockyard Field early in 2013 to drill an initial 6 development wells.
These wells will be drilled from two pads utilizing the skiddable
platform available on Frontier 24. As previously advised, Samson
contracted for the use of this new build rig for an 18 month period at a
contract cost of $14.2 million, although the drilling rig contract, as
amended, caps the liability for cancellation during the term at $5
million. The development wells are designed as 5,000 horizontals in
either the Middle Bakken or the First Bench of the Three Forks. The
wells will be “batched” drilled which are expected to result in
considerable cost savings.
Samson has the majority equity in a recently completed Salt Water
Disposal well in the Northern Tier, as well as a water disposal pipeline
system, that will be utilized to dispose of the water produced from the
development wells in an economic manner. Existing gas gathering
infrastructure is also already in place. Samson therefore expects that a
relatively high net return will be extracted from the development of the
Northern Tier. Samson’s ability to complete the development plan is
contingent on its completion of a planned debt financing or another
capital raising program.
South Prairie 3-D Project, Williston Basin, North Dakota (SSN 25% WI)
Acquisition of the South Prairie 3-D seismic survey has been completed
as planned and the initial processed seismic data was received on
schedule in early December. That seismic data is currently in the
process of being mapped and evaluated.
Samson has a 25% working interest in 23,879 net acres within the South
Prairie 3-D survey. Potential reservoirs include the Mississippian
Mission Canyon Formation and the Devonian Nisku Formation. After the 3-D
data has been evaluated, the first well is planned for the 1st
quarter of 2013.
As previously disclosed, the leads identified on the existing 2-D
seismic data appear to be similar to the oil field immediately adjacent
to the north of the project area. Wells in this other field have
demonstrated recoveries of between 260,000 and 450,000 barrels of oil
for wells drilled at the crest of the structure. Additional Mission
Canyon fields along trend have demonstrated that some wells can recover
as much as 900,000 barrels of oil per well when located on the crest of
the structure. The 3-D seismic is expected to deliver excellent
structural control, such that the wells can similarly be located at the
crest of any structures. Given that the wells are presently expected to
be drilled for approximately $1.1 million, Samson believes that the
return on its investment will be attractive.
Samson’s Ordinary Shares are traded on the Australian Securities
Exchange under the symbol "SSN." Samson's American Depository Shares
(ADSs) are traded on the New York Stock Exchange MKT under the symbol
"SSN." Each ADS represents 20 fully paid Ordinary Shares of Samson.
Samson has a total of 1,996 million ordinary shares issued and
outstanding (including 231 million options exercisable prior to December
31 2012, at AUD 1.5 cents). As at December 28th, total issued
ordinary shares was 1,908 million (equivalent to 95.4 million ADSs) and
88 million outstanding 1.5 cent options. Accordingly, based on the NYSE
MKT closing price of US$0.645 per ADS on December 28th, 2012
the Company has a current market capitalization of approximately US$62
million. (Excluding the value of the outstanding options)
Correspondingly, based on the ASX closing price of A$0.031 on December
28th, 2012, the Company has a current market capitalization of A$59
million (Excluding the value of the outstanding options).
For and on behalf of the board of
SAMSON OIL & GAS LIMITED
Statements made in this release that are not historical facts may be
forward looking statements, including but not limited to statements
using words like “may,” “believe,” “expect,” “calculate,” “anticipate,”
“should” or “will.”
Actual results may differ materially from those projected in any
forward-looking statement. There are a number of important factors that
could cause actual results to differ materially from those anticipated
or estimated by any forward looking information, including uncertainties
inherent in estimating the methods, timing and results of exploration
activities, including exploratory wells, development wells and
workovers. Estimates of contingent recoverable volumes of oil or gas
from planned but undrilled exploration projects are inherently uncertain
and dependent on various contingencies that are outside the control of
A description of the risks and uncertainties that are generally
attendant to Samson and its industry, as well as other factors that
could affect Samson’s financial results, are included in the Company's
report to the U.S. Securities and Exchange Commission on Form 10-K,
which is available at www.sec.gov/edgar/searchedgar/webusers.htm.
The reserves quoted in this release were estimated based on the
definitions and disclosures guidelines contained in the Society of
Petroleum Engineers, World Petroleum Council, American Association of
Petroleum Geologists and Society of Petroleum Evaluation Engineers
Petroleum Resources Management Systems.
The PDP Reserves estimated by Ryder Scott were the responsibility of
Richard J. Marshall a Colorado Registered Professional Engineer.
The Probable Reserves estimated by Samson Oil and Gas Limited were the
responsibility of Terence M. Barr their CEO, a Petroleum Geologist with
37 years of industry experience.
Samson Oil & Gas Limited
Terry Barr, CEO
970-389-5047 (US cell)
Source: Samson Oil & Gas Limited