Mart Resources, Inc.
TSX VENTURE : MMT

Mart Resources, Inc.

May 04, 2011 08:39 ET

Mart Resources, Inc.: UMU-7 Well Testing Results and Increased Export and Pipeline Capacity

CALGARY, ALBERTA--(Marketwire - May 4, 2011) - Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") and its co-venturers, Midwestern Oil and Gas Company Plc. (Operator of the Umusadege field) ("Midwestern") and Suntrust Oil Company Limited ("Suntrust"), are pleased to report final testing results of the UMU-7 well located in the Umusadege field, onshore Nigeria and that the UMU-7 well has now been placed on production. Mart and its co-venturers also report that export and pipeline capacity has been increased for the Umusadege field.

Test Results

Following the completion of the UMU-7 well, flow tests were conducted on the four target sands, being the XIIc, XIV, X and XVIa sands. The UMU-7 well flowed at a stabilized combined cumulative rate of 10,373 barrels of oil per day ("bopd") from the four sands tested on choke sizes ranging between 20/64 to 36/64 inches with API gravity ranging from 39 to 47 degrees.

The table below summarizes the test results from each of the four sands:

SandFeetBOPDAPI GravityChoke Size (inches)Pressure
(PSI)
Basic Sediment and WaterGas/Oil ratio
(scf/barrel)
XIIc172,4593640/6418015%51
XIV422,5904424/646804%77
X104,0843936/643000.5%32
XVIa101,2404720/6423575%14
Total10,373

As previously announced, the first test flowed at a stabilized rate of 2,459 bopd from the XIIc sand on a 40/64 inch choke through 2 7/8 inch tubing.

The XIV sand, a 42 foot oil zone, flowed at a stabilized rate of 2,590 bopd of 44 API gravity oil through 3 1/2 inch tubing on a 24/64 inch choke at a flowing tubing pressure of 680 psi. Basic sediment and water ("BS&W") was 4% and the gas/oil ratio was approximately 77 standard cubic feet per barrel.

The X sand, a 10 foot oil zone, flowed at a stabilized rate of 4,084 bopd of 39 API gravity oil through 2 7/8 inch tubing on a 36/64 inch choke at a flowing tubing pressure of 300 psi. BS&A was 0.5% and the gas/oil ratio was approximately 32 standard cubic feet per barrel.

The XVIa sand, a 10 foot oil zone, flowed at a rate of 1,240 bopd of 47 API gravity oil through 3 1/2 inch tubing on a 20/64 inch choke at a flowing tubing pressure of 235 psi. BS&A was 75% and the gas/oil ratio was approximately 14 standard cubic feet per barrel. The XVIa water production was mainly completion fluid due to significant losses into the formation caused by operational delays during the running of the tubing, completion and wellhead equipment. Additional testing is scheduled to be done on the XVIa zone once drilling of the UMU-8 well is completed and the drilling rig has been moved off the drilling pad.

The UMU-7 well has been completed using a dual-tubing string configuration with the XVI (a) and XIV sands completed in the 3 1⁄2 inch tubing string and the XII(c) and X sands completed in the 2 7⁄8 inch tubing string. As a result of the completion technology used, although the four sands that have been completed can be opened and closed at any time to allow for optimized production, it is only feasible to produce one sand per tubing string due to different pressures within the formations.

Following the completion of testing, the UMU-7 well was placed on long-term production on May 2, 2011 from the X and XIV sands at an aggregate initial rate of 3,352 bopd. This production rate is not necessarily indicative of future production levels as work is still ongoing to stabilize and optimize long term production rates from the well.

Increase in Export and Pipeline Capacity

Mart, Midwestern and SunTrust are pleased to announce that the third party pipeline and export facility owners have confirmed an increase in the export and production capacity from the Umusadege field commencing the first week of May 2011. The increase in production capacity will be shared amongst the existing three member production group currently delivering to the third party pipelines from several fields, which include the Umusadege field. Under the existing agreements, pipeline capacity may be apportioned among the production group and therefore may be subject to periodic adjustment.

Existing pipeline capacity combined with the additional capacity allocated to the Umusadege field is expected to accommodate production from the existing UMU-1, UMU-5 and UMU-6 wells, production from two sands in the UMU-7 well and the UMU-8 well, if successful. Discussions are ongoing with the third party pipeline owners for further production capacity increases to accommodate production from additional development wells in the Umusadege field. Mart and its co-venturers are also increasing the capacity of the production facilities to 30,000 bopd at the Umusadege field in order to accommodate additional volumes from development drilling.

In addition to this increase in existing pipeline capacity, the Corporation and its co-venturers are evaluating new pipeline and export options to provide increased production capacity and to provide another independent export route for Umusadege field production.

Production Update

The Umusadege field is currently producing at a rate of 11,237 bopd which includes 3,352 bopd from the UMU-7 well.

Production averaged 7,551 bopd in the first quarter of 2011 ("Q111") from the Umusadege field. During Q111, the Umusadege field was shut down due to maintenance and modification of production facilities, ongoing adjustments to UMU-6 well production methodology, tie-in of the UMU-7 well for production testing and disruptions of the export pipeline for a total of 17.7 days or approximately 20% of Q111. For internal purposes, Mart budgets 15 days of shut-in time per quarter, though the Company has no control over the amount of shut-in time that will actually occur.

ABOUT MART RESOURCES:

Mart Resources Inc. is an independent, international petroleum company focused on drilling, developing and producing oil and gas from proven petroleum properties in Nigeria, West Africa. The Company is currently producing and developing the Umusadege field along with Midwestern Oil and Gas Co. Plc (the Operator of the field) and SunTrust Oil Ltd. Mart also owns two land drilling rigs, has strong local relationships and experience and is evaluating additional proven undeveloped opportunities in Nigeria.

Except where expressly stated otherwise, all production figures set out in this press release, including bopd, reflect gross Umusadege field production rather than production attributable to Mart. Mart's share of total gross production before taxes and royalties from the Umusadege field fluctuates between 82.5% (before capital cost recovery) and 50% (after capital cost recovery).

Forward Looking Statements and Risks

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact and should be viewed as "forward-looking statements". These statements relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

In particular, statements (express or implied) concerning the timing or success of completion operations on the UMU-7 well, the ability of the Company to successfully complete and commercially produce, transport and sell oil from the UMU-7 well (or any one or more of the hydrocarbon sands identified by the UMU-7 well), the ability of the Company to successfully drill other wells on the Umusadege field and the ability to of the Company to fund future drilling operations should all be viewed as forward-looking statements. Flow rates established during testing of the UMU-7 well as well as during the initial production phase are not necessarily indicative of future production rates and may change materially as the UMU-7 well stabilizes. The flow rates in zones tested is not necessarily indicative that other zones will be productive, including zones where preliminary results indicate that the sands were hydrocarbon bearing.

In addition, statements (express or implied) concerning the allocation of export and pipeline capacity to the Umusadege field from the third party pipeline owners, including the assessment by the Company of the production volumes that may be allocated to the Umusadege field or capable of delivery as described herein should be viewed as forward looking statements. There is no assurance that such production volumes will be made available to the Umusadege field on a permanent or long term basis as the arrangement is dependent on a number of factors including available volumes of oil capable of being delivered by other members of the production group and by the owners of the pipelines. Further, there is no assurance that the owners of the pipelines will not reduce the export and pipeline capacity attributable to the Umusadege field without notice. Any such reduction could have a material adverse effect upon the financial condition and results of operations of the Company.

In addition to the foregoing, certain factors can affect the ability of the Company to produce or deliver oil. These can include planned maintenance programs or unpredictable and unplanned external factors such as accidental or deliberate damage to pipelines and other facilities upon which the Company is reliant. When such disruptions occur, it may not be possible to predict how long such disruptions may last or how long a production shutdown may occur.

There can be no assurance that such forward-looking statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

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 THE RELEASE.

Contact Information