Petrolia Inc.
TSX VENTURE : PEA

Petrolia Inc.

October 22, 2009 10:00 ET

Petrolia Reveals the First Results of the Petrolia Haldimand No2 Well

QUEBEC, QUEBEC--(Marketwire - Oct. 22, 2009) - Petrolia (TSX VENTURE:PEA) announces that it has just successfully completed drilling of the Petrolia Haldimand No. 2 confirmation well. The well, which reached a depth of 1,200 meters, intersected a 474-meter zone mainly composed of sandstone saturated with light crude oil. Two of the intervals examined show the presence of a high concentration of parallel, sub-vertical open fractures which seem to be fed by matrix porosity. In view of these encouraging results, the well was cased down to its full depth of 1,200 m KB. A service rig will be mobilized in the near future to carry out production tests on the zones of interest.

Haldimand Property

Petrolia is the project operator and has a 65 % share in the Haldimand Property. This property is located a few kilometers from the port of Gaspe, in Quebec. The Petrolia Haldimand No. 2 well was drilled to confirm the characteristics of the Haldimand reservoir and its petroleum reserves. The well is one kilometer from the discovery well, Petrolia Haldimand No. 1, which produced an average of 34 barrels per day over a 12-day test period.

Well results

The Petrolia Haldimand No. 2 well intersected the top of the York River Formation at a depth of 686 m KB (depth measured from the "KB" or Kelly Bushing), i.e., 171 meters higher up than in the discovery well (Petrolia Haldimand No. 1). Forty meters farther down, the well encountered the zone of interest, which mainly consists of massive sandstone beds whose total thickness is at least 474 meters (before correction for the dip of the layers). At 1,200 m KB, the well had not yet reached the bottom of this sandstone formation.

The first traces of light crude, accompanied by a significant increase in the drilling mud's dissolved gas content, were recorded at the top of the massive sandstone, i.e., at 726 m KB. From this level, and down to the total depth of 1,200 m KB, traces of hydrocarbon were consistently observed on the drill cuttings (fluorescence sometimes accompanied by oil stains). Examination of the logs and test results indicate that the 474 m of mainly sandstone lithology in the zone of interest are saturated with oil.

During the drilling, a 9 meters core was cut, starting at 923 m KB. Visual examination of this core revealed the presence of a low primary porosity as well as open fractures with oil oozing from the surfaces. Sixteen sidewall cores were also collected, distributed throughout the zone of interest. Visual examination of most of these sidewall cores indicates low matrix porosity, saturated with hydrocarbon. All the cores were shipped to a Calgary laboratory for analysis. The results should be available shortly and will enable definition of the rock's properties and also allow calibration of the logs, so that the reservoir can be properly characterized.

Conventional logging techniques were employed to measure the rock's physical parameters and the fluid content of the porous fraction. The use of more advanced tools has enabled 1) the assessment of the clay content of the sandstone (SGR), 2) the assessment of the permeability of the layers (CMR), and 3) the detection of two intervals containing a high concentration of parallel, sub-vertical open fractures, by using micro-imaging logs of the wellbore (FMI).

Four drill stem tests were conducted to assess various intervals. The gas produced in three of these tests is considered to be dissolved gas associated with the presence of oil.

- The first test was carried out during the drilling, on the 715 - 763 m KB interval, after intermediate logging. The test shows a low permeability in the beds, and the presence of natural gas.

- The second test, carried out on the 1,099 - 1,131 m KB interval, was designed to show the absence of formation water below the 1,120 m KB presumed Oil Water contact in the Petrolia Haldimand No. 1 well. No water was recovered, and the test shows the presence of low-permeability layers.

- The third and fourth tests (910 - 944 m KB and 849 - 883 m KB), were conducted on heavily-fractured intervals. Both tests produced gas on surface, and mud containing a little of oil was recovered from the drill pipes. Preliminary assessment of test No. 3 by an independent firm suggests the presence of a network of fractures fed by matrix porosity.

The discovery well, Petrolia Haldimand No. 1, was drilled using a light mud, under-balanced with respect to the reservoir pressure, which favoured the flow of oil into the mud during drilling and its accumulations on the surface of the mud tanks. For the drilling of Petrolia Haldimand No. 2, a heavier mud was used, in order to make the drilling operations safe. The pressure of the mud column was therefore closer to the reservoir pressure, preventing major inflows of oil into the mud system.

Further work

Following these results the well was cased to its full depth of 1,200 m KB and the drilling rig was released on October 15th. A service rig will be mobilized in the near future to carry out production tests on the zones of interest.

Meanwhile, data from the Petrolia Haldimand No. 1 and No. 2 wells as well as the 3-D seismic data will be studied by Sproule Associates of Calgary. Other firms specialized in fractured reservoirs may also be consulted. These firms will be charged with:

1. recommending a work program for the final design and execution of production tests on the Petrolia Haldimand No. 2 well;

2. estimating the volume of petroleum in situ and the recoverable reserves;

3. suggesting the most appropriate methods for the development and exploitation of the deposit.

About Petrolia

Petrolia is a junior oil and gas exploration company which owns interests in oil and gas licences covering 15,000 km2 (3.7 million acres), which represents about 18% of the Quebec territory under lease. These leases, the majority of which are located on the Gaspe Peninsula and Anticosti Island, are considered to be very promising and represent almost 70% of Quebec's land-based oil potential. Petrolia foresees its 2009 drilling projects as a major exploration milestone. The Company has 41 M shares outstanding.

This press release was prepared by Bernard Granger, Petrolia's Chief Geologist.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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