QUEBEC CITY, QUEBEC--(Marketwired - Sept. 26, 2016) - Junex Inc. (TSX VENTURE:JNX) ("Junex" or the "Company") is pleased to announce that it has made an application to the Quebec government for a 20 km2 (7.7 mi2 or 4,942 acres) Petroleum and Natural Gas Production Lease ("Production Lease") on its Galt Oil Property on the Gaspé Peninsula in Eastern Quebec. The government has acknowledged receipt of this application and it is currently being processed.
"The excellent results obtained on our Galt oil accumulation, in particular in the Galt No. 4 Horizontal well, have strongly motivated us to apply for a Production Lease at his time. The area being applied for is the central portion of the Galt structure as mapped on data from the 37 km2 sized 3D seismic survey completed in 2015. To our knowledge, it is the first time ever in Quebec's history that an application for a Production Lease has been made for an oil accumulation and we view this as being the next milestone in our Galt Oil Project. This is a testament as to the dedicated effort that we've invested at Galt over the years. We are now at the point where some of potential of this oil accumulation can be developed", said Mr. Peter Dorrins, Junex's President & CEO.
If issued, this will be the second Production Lease obtained by Junex on the Galt Property, with the other being a 200 hectare (2 km2 or 0.8 mi2 or 494 acres) Production Lease held by Junex since 2003 that surrounds the Galt No. 1 well, for which Junex operated a natural gas pilot project using Compressed Natural Gas ("CNG") technology to transport natural gas to local customers by truck in the early 2000's.
In Quebec, a Production Lease is required in order to produce hydrocarbons beyond those volumes recovered under production testing. Provided that certain conditions are met, a production lease is valid for 20 years and is renewable. Over the near term, such a Production Lease will permit Junex to continue its efforts in the Galt No. 4 Horizontal well beyond 240 days of time per government regulations, while drilling additional exploration wells which, if successful, can be commercially produced.
2015 Independent Evaluation
As outlined in a press release made by Junex on August 31, 2015, an independent evaluation performed on Junex's Galt Field property by Netherland, Sewell & Associates, Inc., ("NSAI"), a firm of worldwide petroleum consultants based in Texas, placed their Best Estimate of the total Oil-Initially-In-Place ("OIIP") resources on the property at 557 million barrels for the Forillon and Indian Point formations. This 557 million barrel figure includes Discovered OIIP volumes of 81 million barrels and Undiscovered OIIP volumes of 476 million barrels in the combined Forillon and Indian Point formations, of which Junex's net share of the total OIIP resources is 390 million barrels that includes Discovered OIIP volumes of 57 million barrels and Undiscovered OIIP volumes of 333 million barrels.
In the same evaluation, NSAI's Best Estimate of the total Recoverable Oil Resource Volume on the Galt Field property includes 23,000 barrels of Proved plus Probable Reserves, 8.1 million barrels of Recoverable Unrisked Contingent Oil Resources and 71.4 million barrels of Recoverable Unrisked Prospective Oil Resources, of which Junex's net share of the total Potentially Recoverable Oil Resource Volume includes 16,000 barrels of Proved plus Probable Reserves, 5.7 million barrels of Recoverable Unrisked Contingent Oil Resources and 50 million barrels of Recoverable Unrisked Prospective Oil Resources.
Results from the NSAI Report
NSAI, a world renowned independent reservoir engineering firm was commissioned by Junex to conduct a resource assessment ("the Report") of the original initially-in-place (OIIP) and recoverable contingent and unrisked prospective oil resources to Junex's interest in the Forillon and Indian Point formations for its acreage in Galt Field in the Gaspé Peninsula in Quebec. Using their expertise in evaluating other fractured reservoirs, NSAI's evaluation includes detailed petrophysical analysis of the available well data including a review of the available core & lab analysis data and 2D seismic data & mapping. All results have been prepared in accordance with the regulations pursuant to National Instrument 51-101, Standards for Disclosure for Oil and Gas Activities of the Canadian Securities Administrators.
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, and are classified according to their degree of certainty associated with the estimates.
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Probable Reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Discovered resources oil-initially-in-place (OIIP) volumes are those quantities of petroleum that are estimated, as of a given date, to be contained in known accumulations prior to production.
Contingent resources are those quantities of petroleum that are estimated, as of a given date, to be potentially recoverable from known accumulations but for which the applied project or projects are not yet considered mature enough for commercial development because of one or more contingencies.
The contingent resources estimated in the Report are contingent upon (1) demonstration of the economic viability of project development, (2) approval of a field development plan by Junex's board of directors and the appropriate government authorities, and (3) activity prior to expiration of the leases. If these contingencies are successfully addressed, some portion of the contingent resources estimated in this report may be reclassified as reserves; NSAI's estimates have not been risked to account for the possibility that the contingencies are not successfully addressed.
There is uncertainty that it will be commercially viable to produce any portion of the sub-commercial discovered resources.
Undiscovered resources OIIP volumes are those quantities of petroleum that are estimated, as of a given date, to be contained in accumulations yet to be discovered.
Prospective resources are those quantities of petroleum that are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Unrisked prospective resources are estimated ranges of recoverable oil volumes assuming a petroleum discovery is made and are based on estimated ranges of undiscovered in-place volumes.
There is no certainty that any portion of the undiscovered resources will be discovered, and, if discovered, there is no certainty that it will be commercially viable to produce any portion of this category of resources.
Reserves, contingent resources, and prospective resources should not be combined without recognition of the significant differences in the criteria associated with their classification. However, in some instances (e.g., basin potential studies) it may be desirable to refer to certain subsets of total OIIP. For such purposes the term "resources" should include clarifying adjectives "remaining" and "recoverable," as appropriate. For example, the sum of reserves, contingent and prospective resources estimates involve additional risks, specifically the risk of not achieving commerciality and exploration risk, respectively, not applicable to reserves estimates. Therefore, when resources categories are combined, it is important that each component of the summation also be provided, and it should be made clear whether and how the components in the summation were adjusted for risk.
No quantitative geologic risk assessment was conducted by NSAI for this acreage. Geologic risking of prospective resources addresses the probability of success for the discovery of petroleum volumes and without regard to the chance of development; this risk analysis is conducted independently of probabilistic estimates of petroleum volumes and without regard to the chance of development. Principal risk elements of the petroleum system include (1) trap and seal characteristics; (2) reservoir presence and quality; (3) source rock capacity, quality, and maturity; and (4) timing, migration, and preservation of petroleum in relation to trap and seal formation.
The resources evaluated in the Report were determined from a range of possible values for multiple parameters. These parameters were limited to the critical driving factors for both statistical and practical reasons. The range and number of parameters rely on the available direct and analog data from similar reservoirs in a more mature development stage. It will be necessary to revise these estimates as additional data become available. Also, estimates of resources may increase or decrease as a result of future operations.
With respect to the Galt project, no estimates have been made as to the total cost required to achieve commercial production, there is no estimate as to the specific timeline of the entire project nor as to the estimated date of first commercial production, the anticipated recovery technology would be from primary oil production, and drilling operations are currently underway as part of a pre-development study.
The effective date of the Report is May 31, 2015.
Junex is a junior oil and gas exploration company that holds exploration rights on approximately 5.2 million acres of land in the Appalachian basin in the Province of Quebec, including the Galt Oil Property on the Gaspé Peninsula in eastern Quebec, landholdings on Anticosti Island in the Gulf of St. Lawrence and landholdings in the St. Lawrence Lowlands between Montreal and Quebec City. In parallel to its exploration efforts in Quebec and expansion of its exploration activities elsewhere, the company operates a drilling services division.
Forward-Looking Statements and Disclaimer
Certain statements in this press release may be forward-looking. Forward-looking statements are based on the best estimates available to Junex at the time and involve known and unknown risks, uncertainties and other factors that may cause Junex's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. A description of the risks affecting Junex's business and activities appears under the heading "Risks and Uncertainties" on pages 18 to 22 of Junex's 2015 annual management's discussion and analysis, which is available on SEDAR at www.sedar.com. No assurance can be given that any events anticipated by the forward-looking information in this press release will transpire or occur, or if any of them do so, what benefits that Junex will derive therefrom. In particular, no assurance can be given as to the future financial performance of Junex. Junex disclaims any intention or obligation to update or revise any forward-looking statements in order to account for any new information or any other event. The reader is warned against undue reliance on these forward-looking statements.
Neither the 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.