17:14:45 EDT Sun 20 May 2018
Enter Symbol
or Name

United Hunter Oil & Gas Corp (2)
Symbol C : UHO
Shares Issued 32,650,957
Close 2017-02-06 C$ 0.23
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United Hunter study estimates 101.68 mmbbl OOIP at HSS

2017-02-06 09:27 ET - News Release

Mr. Timothy Turner reports


United Hunter Oil & Gas Corp. has provided an update on the exclusive option agreement it has entered into through its U.S. subsidiary, United Hunter Texas LLC (UHT), with Wilson Operating Company et al. for the option to purchase 100 per cent of the vendors' oil and gas interests in the Hull Silk Sikes (HSS) 4,300-foot sand unit, which is the same zone covered by the HSS unit, in Archer county, Texas. Further to the press release dated Dec. 12, 2016, as part of its diligence process, UHT contracted with Forrest A. Garb & Associates Inc. (FGA), an international petroleum engineering and geologic consulting firm staffed by registered engineers and geologists, to prepare a more detailed evaluation and report on the proposed acquisition in accordance with the guidelines set out in National Instrument 51-101, standards of disclosure for oil and gas activities, effective Dec. 31, 2016, as independent reserves auditor. FGA's final report focused on the gross barrels of original oil in place and total proved recoverable reserves remaining from the property interest, being defined as a quantity of oil estimated with reasonable certainty to be economically producible.

The corporation is pleased to announce the results of the FGA study, which honoured the geologic and engineering parameters used to determine the remaining reserves and the proposed development plan from the 2004 report. FGA's current evaluation included an update to the log analysis, including additional well logs from more recent wells drilled in the unit. This resulted in an increase in the porosity value, increasing the original oil in place and the remaining reserves over and above the original estimates calculated in 2004. Additionally, estimated oil prices, capital costs and development timing were also updated.

The remaining oil in place for the 4,300-foot sand was estimated by the volumetric method considering well logs, a geologic structure map and an isopach map. The total recoverable oil is estimated to be 41 per cent of the original oil in place by analogy to comparable reservoirs. The remaining recoverable reserves for the 4,300-foot sand, within the 4,300-foot unit boundary, were estimated based on the proposed reactivation of the waterflood and infill drilling program developed on 10-acre spacing.

The revised original oil in place for the 4,300-foot sand is estimated to be 101.68 million barrels of oil and a calculated recoverable estimate of 41.69 million barrels. After subtracting the cumulative production to date (which is estimated to be 26.89 million barrels) the remaining reserves are estimated to be 14.8 million barrels. The estimated gross remaining recoverable reserves are thus calculated at 14,425,000 barrels of oil and an estimated net recoverable of 11,286,000 barrels and are categorized as total, proved reserves, as of Dec. 31, 2016.

Benchmark oil and gas prices for this evaluation were based on NYMEX futures contract pricing as of the close of business on Dec. 30, 2016, for five years, then escalated at 2 per cent per year thereafter. Oil prices have been adjusted by lease for gravity (38-degree to 40-degree API), transportation fees and regional price differentials, thus resulting in an average realized oil price for the life of the project of $65.50 per barrel. Over the proposed life of the project, the gross revenue is estimated at $944.88-million.

The estimated future net revenues, those which should be realized from the sale of estimated oil and gas reserves after the deduction of severance taxes, royalties, ad valorem taxes, direct operating costs and future capital expenditures, are estimated to be $470,323,000.

A more quantitative analysis of additional well logs warranted the increase in reserve calculations over the previous study. This work also was influenced by additional information that indicates notably higher formation water salinity. The results in the log calculations attributing more of the observed log resistivity to the presence of oil and gas and, therefore, to slightly lower water saturation. These new analyses rendered average porosity of 12.9 per cent and average water saturation of 35.9 per cent. The porosity was revised upward from 12 per cent to 12.9 per cent in the current reserve calculations.

The field redevelopment is estimated to start in the second quarter of 2017 with 3-D seismic being run and processed, after which drilling will commence. First production is scheduled to begin on or about July 1, 2017. For the purpose of this proposed project, two drilling rigs were utilized to drill and complete both producers and injectors at a rate of approximately two wells per month and will continue until all wells are drilled. It was assumed that no existing wells will be used due to degraded wellbore condition. The plan includes the drilling of 112 producers and 102 injection wells.

The redevelopment of the field utilizes 112 producers and 102 water injectors. FGA has accepted UHT's intent to redevelop the Hull Silk Sikes field by drilling the proved undeveloped new wells, drilling the injection wells, and installing the surface facilities as planned.

The HSS unit is approximately 12 miles southwest of Wichita Falls, Tex., and comprises roughly 2,300 acres in a single operating unit. United Hunter Oil & Gas has been advised that the overall size of the reservoir is approximately 5,200 acres in size and the HSS unit, which sits in the heart of the field, has produced approximately 27 million barrels since its discovery in 1938 through primary and secondary efforts.

Timothy Turner, chief executive officer of the corporation, stated: "We are very pleased with the significant increase in the calculated recoverable reserves over and above what the estimated reserves were when we signed the option-exclusive option agreement with the sellers. The new estimates include an additional 2.3 million barrels of net recoverable reserves. We believe such a redevelopment program, as it has been proposed, will see significant returns for the corporation going forward and we will continue our due diligence efforts in our further efforts to finalize this acquisition."

Further details will be provided as they become available.

We seek Safe Harbor.

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