Norwood Resources Ltd.

Norwood Resources Ltd.

September 27, 2007 20:50 ET

Norwood Resources Ltd.: Enhanced Commerciality Prospects at San Bartolo & Las Mesas

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 27, 2007) - Norwood Resources Ltd. (the "Company") (TSX VENTURE:NRS) is pleased to update shareholders related to the Company's activities.


The Company has contracted the reservoir engineering services of Object Reservoir (, a Houston based reservoir engineering consulting group, to independently evaluate the well logs and drill stem testing ("DST") results from the Company's first two wells in Nicaragua, San Bartolo and Las Mesas.

The results of their analysis suggest that several potential reservoir zones were significantly damaged during drilling and testing and many of the test results were inconclusive. Significant potential may exist in zones previously thought to be either water bearing or tight. The gas recovered from the tests and during drilling appears to have come out of solution in the pipe and this consulting group strongly believe the reservoir contains under-saturated oil, which should be confirmed from lab analysis. Their report contains the following observations:

At San Bartolo:

- Intervals 5 (6764' - 6835') and 7 (6210' - 6277') are capable of commercial production rates. These rates could approach the initial flow rates of the DSTs (570 BOPD and 365 BOPD respectively) with proper clean up.

- It is not possible to estimate the size of the reservoir(s) from the DSTs because of the limited flow periods.

- Several of the tested intervals were damaged by drilling or completing overbalanced with respect to the formation pressure. The DSTs did not measure reservoir conditions and these intervals would require some stimulation to determine their real productivity. Intervals 1 (8610'-8638') and 6 (6380'-6584') are included in this group.

- Those intervals that were stimulated with an acid frac did demonstrate significant increase in productivity but some damage could still remain. Recoveries from these intervals included spent acid, gel, completion fluid, gas cut oil and small amounts of oil but no formation fluid. These intervals need to be flowed for longer periods to determine their true production rates. These are intervals 4 (7014'-7244'), 8 (6135'-6185'), 9 (6066'-6110'), 10 (5975'-6010') and 11 (5790'-5885').

- The DSTs conducted on damaged intervals caused several zones in the well to be abandoned without testing and considered unproductive - which may not be the case.

- Successfully tested intervals appear to be normally pressured with under saturated oil and would require artificial lift production. However, the amount of low-pressure gas in the oil could facilitate gas lift production as opposed to installing surface or submersible pumping units.

- This low-pressure gas in solution probably caused the appearance of gas flows during the drilling and the unnecessary increases in drilling fluid weight, which contributed to the formation damage.

- Derivative shut in pressure plots suggest a radial composite system or a constant pressure system suggesting all reservoir pressures are maintained by a strong drive - possibly water.

At Las Mesas:

- Interval 7 (3350'-3460') is the most promising although lack of stimulation prevents complete evaluation. Oil recoveries and a small amount of gas to surface during the test suggest that the interval could be stimulated to produce better than the initial flow rate (107 BOPD) although artificial lift is implied.

- Several deeper intervals showed signs of gas during the completion process but did not test any gas. Tool failures and or introduced completion fluid may have caused them to appear unproductive. Intervals 1 (8818'-8838'), 2 (8708'-8728'), 3 (7846'-8034'), 4 (7054'-7090') warrant further investigation.

- Recoveries from DST 5 (4742'-4810') and 6 (3908' - 4186') are considered invalid because it is suspected that these fluids were from a failed squeeze perforations within the tested intervals.

Recommendations for modifying drilling practices are contained in the report, including single trip tubing-conveyed perforating ("TCP") / DST to maintain under balance perforating, sample chambered DST tools, and the possibility of air drilling. Avoiding formation damage is of paramount importance because of the mineralogy (clay) content of the sands.

In August 2007, The Company began the integration of well data from its initial exploration wells in Nicaragua with seismic data to re-map other potential structural closures. This exercise has confirmed the structural closure at San Bartolo and additional up-dip potential at the Las Mesas well. It also confirms that there are 8 to 10 structures in the surrounding area of significant closure size (2 to 5 square miles) using only the productive interval levels discovered at San Bartolo as the horizons of interest.

Possible reserves will be estimated upon completion of the petrophysical work being conducted by Fronterra Geosciences scheduled for completion later this month. This work includes the XRD (Xray Diffraction) information provided by Core Labs of Houston on the sidewall cores. Pay calculations will then be modified taking into account actual mineralogy content from the wells.

With this additional information, The Company will continue its re-tooling efforts to re-engage its drilling program later this year. To expedite this, the Company is pleased to announce that Mr. Douglas Howell has joined the Company as its Drilling Operations Manager. Mr. Howell, through FJ Brown and Associates of Houston, provided The Company with his drilling engineering expertise during the Company's initial drilling campaign in Nicaragua this past spring. Mr. Howell brings over 35 years of international drilling experience. He is currently engaged in locating drilling and testing equipment suitable for the continuation of The Company's exploration evaluation program in Nicaragua. This retooling effort is key to The Company's efforts to reduce the costs of exploration in Nicaragua and rigs in Houston, Mississippi, Michigan and Oklahoma have already been assessed.

South Texas - Bigfoot:

During the past several months, the Company has purchased more seismic data over the Company's Bigfoot prospect in South Texas. Reprocessing and interpretation of the seismic data set shows refinement of the Cretaceous targets, confirmation as possible reefs and a reinterpretation of both the Queen City and Wilcox formations prospects in the area. The Company is preparing the data for an independent valuation, which will include a recommended work program, likely to include 3D seismic and drilling recommendations. The Company is also evaluating various strategic alternatives to develop Bigfoot and which will maximize shareholder value for this important asset. Included in these alternatives is the creation of a new company, which would be achieved by way of a plan of arrangement, to finance and develop the Bigfoot prospect independently from the Company's assets in Nicaragua. This evaluation should be completed within 60-90 days.


This press release contains certain forward-looking statements. While these forward-looking statements represent our best current judgment, they are subject to a variety of risks and uncertainties that are beyond the Company's ability to control or predict and which could cause actual events or results to differ materially from those anticipated in such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements.

The TSX Venture Exchange does not accept responsibility for the accuracy or adequacy of this release.

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