Longford Energy Inc.
TSX VENTURE : LFD

Longford Energy Inc.

February 09, 2011 07:59 ET

Longford Energy Announces Updated Resource Assessment for the Chia Surkh Block in the Kurdistan Region of Iraq

CALGARY, ALBERTA--(Marketwire - Feb. 9, 2011) - Longford Energy Inc. (TSX VENTURE:LFD) ("Longford Energy" or "the Company") is pleased to announce that DeGolyer and MacNaughton Canada Limited ("DeGolyer") has completed an independent resource assessment of the Chia Surkh Block, resulting in a 260% increase in recoverable resources from the initial 2009 report and the allocation of contingent resources in addition to prospective resources. The update incorporates the results of field geology work and the recently completed 2-D seismic acquisition program, which covered 307 kilometers.

The updated resource analysis has resulted in the main Chia Surkh, Jeribe and Shiranish resources moving into the contingent category (Table 1) and the prospective resources for the Jeribe, Jaddala and Shiranish formations for the rest of the block (Table 2) have increased significantly as an additional four prospects/leads have been seismically mapped. The Tables below contain the 100% working interest gross volumes. The Company has a 40% working interest in the Block, as does the operator.

DeGolyer conducted its resource assessment in accordance with the standards established by the Canadian Securities Administrators in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Those standards require that prospective resource estimates are prepared in accordance with the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook").

Table 1
Gross Unrisked Contingent Resources
(1),(2) based on 100% Working Interest Share
Chia Surkh Field Oil, Gas and Condensate
As of December 31, 2010
(4)
Block Reservoir Hydrocarbon
Type
Low
Estimate
(2a)
Best
Estimate
(2b)
High
Estimate
(2c)
Chia Surkh     Mbbl/MMcf Mbbl/MMcf Mbbl/MMcf
  Jeribe Oil 1,161 60,220 434,556
  Shiranish Condensate 169 13,338 227,206
  Total Oil+Condensate 1,330 73,558 661,762
  Shiranish Gas(5) 12,981 283,787 2,065,507
Total Recoverable MBOE(8) 3,494 120,856 1,006,028

 

Table 2
Gross Unrisked Prospective Resources
(3)based on 100% Working Interest Share
Chia Surkh Block Oil, Gas and Condensate
As of December 31, 2010
(4)
Block Reservoir Hydro-
carbon
Type
Low
Estim-
ate
(3a)
Best
Estim-
ate
(3a)
High
Estim-
ate
(3a)
Mean
Estim-
ate
(3a)
Chia Surkh     Mbbl/MMcf Mbbl/MMcf Mbbl/MMcf Mbl/MMcf
  (6) Oil 150,462 217,314 333,145 231,174
  (7) Gas(5) 830 2,698 6,777 3,344
Total Recoverable MBOE(8) 150,600 217,791 334,275 231,731

Longford is proceeding with preparatory work for the upcoming drilling program, including the drilling and completion of two appraisal wells to meet the commitments of the first exploration sub period under the Chia Surkh Production Sharing Contract. At present, Longford, as operator of the block, plans to have the first exploration well spud by June 2011 on the Chia Surkh structure where the main objective is to confirm the Jeribe oil reservoir which was discovered in the 1940s and reported to have tested approximately 5000 barrels of oil per day. The well is planned to be drilled to a depth of 2,400 meters.

Mr. Ahmed Said, President and CEO of Longford, stated, "We are very pleased with this updated independent resource estimate and the upgrading of our resources to the contingent category. Our work over the past year has resulted in a significant increase in expected recoverable resources and the expected oil in place. We have seismically mapped an additional four exploration prospects and leads that we believe could provide opportunities to further discoveries and resource expansion. We look forward to commencing our drilling program in mid 2011".

Notes to Tables 1 and 2:

1. The contingent resources are the gross volumes estimated for the Jeribe Oil pool, the Shiranish Gas pool and Shiranish Condensate.

2. Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty and may be sub-classified based on project maturity and/or characterized by their economic status.

2.a. Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

2.b. Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

2.c. High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

3. Prospective Resources: Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity. The estimation of resources quantities for a prospect is subject to both technical and commercial uncertainties and, in general, may be quoted as a range. The range of uncertainty reflects a reasonable range of estimated potentially recoverable quantities. In all cases, the range of uncertainty is dependent on the amount and quality of both technical and commercial data that are available and may change as more data become available.

3.a. Low, Best, High, and Mean Estimates – Estimates of petroleum resources in this report are expressed using the terms low estimate, best estimate, high estimate, and mean estimate to reflect the range of uncertainty.

4. The contingent and prospective resources are as at December 31, 2010.

5. The gross unrisked contingent resources for gas reflect reductions for condensate recovery, surface losses, and fuel gas.

6. Prospective oil reserves have been assigned to the main Chia Surkh structure in the Jeribe and Jaddala reservoirs. Also prospective oil reserves have been assigned to two new prospects to the south-west of the main Chia Surkh structure and are known as the Barda Sur East and West prospects with reservoirs in the Jeribe and Jaddala.

7. Prospective gas reserves have been assigned to the Chia Surkh Shiranish structure.

8. Barrels of oil equivalent (BOEs) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl has been used and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The Chia Surkh Block

The Block comprises three blocks, which were previously designated by the Kurdistan Government as K46, K47 and K48. The Block is 985 square kilometers in size. Apart from some mountainous areas that delineate the Iranian border, the area is generally of low relief with accessibility that Longford has deemed excellent for oil related operations. The area is mostly within the Foothill Tectonic Zone and the boundary with the High Fold Zone trends NNW along the Block's eastern boundary. The Foothill Zone, which is 160 km wide and characterized by long narrow anticlinal structures, contains most of the major oil fields of northern Iraq.

The Block offers both a field development opportunity and multiple exploration prospects. The existing discovery, Chia Surkh structure, trends NW-SE and is understood to cover a surface area of approximately 42 square kilometers with exposed Miocene Injana Formation (Upper Fars) surrounded by Pliocene Bakhtiari Formation (Bai Hassan and Mukdadiya).

A well, which was drilled by the predecessor Anglo-Persian Oil Company in 1902, discovered oil at a depth of approximately 700 meters in a fractured limestone unit of the Lower Fars Formation. After World War II, a deeper well recovered 41º API oil from the Jeribe formation and the underplaying carbonate reservoir with indications that the hydrocarbon column may exceed 500 meters. The Corporation believes that the Chia Surkh reservoir is correlative to the fractured reservoirs in the Kor Mor field that is approximately 70 kilometers to the north-west, as well as the Asmari reservoir present in many Iranian fields. It is also believed that deeper unevaluated Cretaceous horizons could be prospective for oil and gas.

Beside the Chia Surkh structure, the seismic acquisition program has identified three additional structures in the southern portion of the block: Barda-Sur West, Barda-Sur East and Qalami. Furthermore, a fourth lead (Hajilar) has been identified in the northern part of the block. The acquired 2D seismic data indicates a strong possibility of structural closure for Barda-Sur East and Barda-Sur West prospects. The Corporation believes that all of these features add to the exploration upside for this block.

About Longford Energy Inc.

Longford Energy Inc. is a junior Canadian oil and gas exploration and production company. Longford holds a 40% working interest in the Chia Surkh Block Production Sharing Contract in the Kurdistan Region – Iraq. The Block offers a field development opportunity and multiple exploration prospects.

Forward-Looking Information Warning

Except for statements of historical fact relating to the Company, information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the prospective nature of the Block; estimates regarding resources; future oil and gas prices; future exploration and development activities and assessments; ability to identify other fields; ability to recover and produce oil; government relations; and the ability to attract financing on acceptable terms. Generally, forward-looking information can be identified by the use of forward looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Information underlying resource estimates includes the assumptions and parameters set out above and the analysis of the seismic program, historical wells and exploration work conducted on the field. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Longford to be materially different from those expressed or implied by such forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Longford does not undertake to update any forward looking information, except in accordance with applicable securities laws.

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Contact Information

  • Longford Energy Inc.
    Ahmed S. Said
    President & Chief Executive Officer
    +1 (403) 263 3000
    +1 (403) 263 3041 (FAX)
    asaid@forbesenergygroup.com