Ryland Oil Corporation
TSX VENTURE : RYD

Ryland Oil Corporation

April 23, 2008 11:39 ET

Ryland Oil Announces Receipt of 51-101 Report and Provides Update on Exploration Activities and 2008 Plans

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 23, 2008) - Ryland Oil Corporation (TSX VENTURE:RYD) announces that it has received a report prepared by MHA Petroleum Consultants, Inc. ("MHA") of Lakewood, Colorado, respecting the Company's petroleum and natural gas holdings in the northern Williston Basin area of Saskatchewan, Canada and in North Dakota, USA as of April 1, 2008 (the "Report"). The authors of the Report are MHA President Leslie S. O'Connor, B.Sc., P.Geol. and Vice President John. P. Seidle, Ph.D., P. E. The Report was prepared as part of Ryland's annual filing obligations in respect of its financial year ended March 31, 2008 and therefore was prepared in accordance with National Instrument 51-101 standards for a review and assessment of unproved properties. The Company's Statement of Reserves Data and Other Oil and Gas Information Form NI 51-101 F1 and Report of Management and Directors on Reserves Data and Other Information Form 51-101 F3 are now accessible on www.sedar.com or by contacting the Company as outlined below.

The following is a summary of the Company's petroleum and natural gas property holdings, a summary of the Report, a detailed review of the Company's exploration activities to date and an outline of its exploration activities planned for the remainder of 2008.

RYLAND'S PROPERTIES

The Company's properties which are the subject of the Report consist of approximately 310,000 net acres in the form of P&NG licenses and leases, all depths, in the northern area of the Williston Basin in southern Saskatchewan and northern North Dakota:

Total gross and net acres owned in Saskatchewan: 299,231

Total dollars paid: $21,396,470 CDN

Average price per acre $71.50 CDN

Total net acres owned in North Dakota: 10,966

Total bonus paid: $968,242 US

Total brokerage fees paid: $354,281 US

Average price per acre $120.60 US

The properties are referred to herein collectively as the "Prospect".

The Report notes that as of April 1 2008, potential reservoir zones have been identified in the Mississippian and Devonian Formations. The Prospect is a large stratigraphic trap within the Mississippian Formation at a total depth of about 6,000 to 7,500 feet. The identified trend measures approximately 85 miles long by 10 miles wide with volumetric calculations of oil in place exceeding 20 billion barrels.

SUMMARY OF THE REPORT

Under National Instrument (NI) 51-101, companies are permitted to disclose resources, in addition to reserves, based on the classification criteria defined in the Canadian Oil and Gas Evaluation Handbook (COGEH). Additional guidance concerning disclosure of resources is provided in the Canadian Securities Administrators (CSA) Staff Notice 51-321, issued in November 2006; in particular, this notice provides guidance concerning disclosure of unproved resources and permits the disclosure of such resources as in-place volumes, rather than recoverable volumes.

The Report concludes that within the Prospect there are from 7.656 billion to 11.556 billion net barrels of undiscovered resources as of April 1, 2008. A summary of the Company's interests in the undiscovered resource estimated to exist within the Prospect on a zone by zone basis is presented in Table A as follows:



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Table A
Summary of Undiscovered Resources
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Net Oil-in-Place
Zone (MMBO)
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Total Mississippian E Isopach 6,400 - 10,300
Total Mississippian F Isopach 876
Total Mississippian D Isopach 380

TOTAL 7,656 - 11,556
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There is no certainty that any portion of the resources will be discovered. Since the Company has not yet had adequate commercial tests on any wells on its holdings, there is no certainty that, if the resources are discovered, it will be economically viable or technically feasible to produce any portion of the resources reported in this table. Additional technical work is underway to determine the quality and properties of the potential oil reservoirs and the economic viability of the resources. Questions concerning the distribution of the oil within the strata, the respective volumes of oil in place and producibility will be addressed as the projects develop.

The Report did not assign any values to the properties comprising the Prospect.

The following is a more detailed summary of the unproved original oil-in-place resource estimation on a zone by zone basis:

Mississippian E Zone

In the Report, MHA has estimated oil-in-place (OIP) for the Mississippian E over the entire isopached zone and over a 15 Township-Range area where the majority of the Company-interest lands lie. The majority of Company acreage lies in Township 1 to 5 North, Range 12 to 26 West 2.

The Prospect has been defined by well control. A large number of wells have penetrated the prospective formation allowing for a high level of confidence in mapping the prospect. The presence of oil is supported by sample shows, gas peaks while drilling, log analysis and the recovery of oil.

MHA has reviewed all of the logs available and has verified the Company's geological tops, net porosity values, and isopach maps. Two isopach maps represent 6% and 12% porosity cutoff values, respectively, have been generated.

The two isopach maps were planimetered: 1) over the entire mapped area and, 2) over the area of majority leasehold acreage (15 Township-Range area).

This calculation results in an estimated oil in place of:

Total isopach area greater than 6% porosity: 12,500 - 20,000 MMBO

15 Township-Range area with porosity greater than 6%: 6,438 - 10,300 MMBO

15 Township-Range area with porosity greater than 12%: 1,927 - 3,083 MMBO

Mississippian F Zone

Similar mapping and calculations were performed for this zone. The estimated oil-in-place was calculated to be approximately 3,300 MMSTB using an average porosity of 8% and an average oil saturation of 63%.

Mississippian D Zone

One additional zone identified with the drilling of the Minton well was mapped. This zone has approximately 6,200 MMSTB of oil-in-place using the reservoir parameters contained in the Report. In the Saskatchewan mapped portion, this zone may contain up to 1,360 MMSTB of original oil-in-place.

SUMMARY OF RYLAND'S EXPLORATION ACTIVITIES ON THE PROSPECT

Since acquiring the Prospect, Ryland has drilled 4 exploration wells and re-entered another. The following section details the work performed in 2007 and the first quarter of 2008:

In 2007, Ryland initiated evaluation of the Prospect, an unconventional oil resource play in the Mississippian Formation, located primarily in Saskatchewan, Canada. The main thrust of the Phase I evaluation effort was to acquire sufficient reservoir and fluid data to confirm the presence of producible hydrocarbons and determine the potential productivity of this low permeability zone. This information was used to guide the acquisition of additional leasehold in the play and will help develop appropriate drilling and completion techniques to allow economic exploitation of this oil resource. The associated geological work highlighted the likely extension of the play across the border into the U.S. and led to the accumulation of a substantial leasehold position in North Dakota.

The Phase I program was started in June, 2007. The initial work consisted of drilling and completing two vertical wells with an emphasis on acquiring extensive reservoir data. The third well in the program was a reentry and horizontal sidetrack of an abandoned well. Later in the year, a shut-in mound well that was acquired as part of an acreage deal was unsuccessfully worked over to try to reestablish production from the mound facies in the trend. The second part of the program was started late in the fourth quarter and consisted of a deep vertical test to the southeast and a grassroots horizontal test in the middle of the acreage block. Both of these wells are undergoing completion and evaluation work at present. The early results emphasize the learning curve that is inherent in successfully exploiting a resource play and the need to proceed prudently during the early evaluation stages of such a play.

Specifics of the Phase I program are described in more detail below.

Phase I - Evaluation

Hardy 7-9-04-21W2

The Hardy 7-9-04-21W2 well was spudded in late June, 2007. The primary objective was to test the main porosity unit in the Mississippian E zone play with a secondary target of evaluating shallow gas potential in the Cretaceous Formation. The location was selected as a direct offset to a well that showed good log character throughout the zone in the thick portion of the mapped trend.

Conventional cores were cut and retrieved from the Cretaceous and the Mississippian E zones. A drill stem test was performed in the Cretaceous section. A complete log suite was run in the well to total depth.

Routine core analysis was performed on all the cores. The Cretaceous zones were predominantly shale facies so very limited conventional data was acquired. The Mississippian core showed the main zone to be very low permeability and surprising low porosity. The discrepancy between the high apparent log porosity and low core porosity was traced to the presence of a high percentage of organic material in the apparent pore spaces.

Special core analysis was performed on some Mississippian samples that included acoustic anisotropy measurements, XRD and petrographic description along with TOC and rock evaluation work. The key results showed the zone to be predominantly calcite with little clay content, a rich source rock with maturity near the oil generation window.

Completion attempts were made in the Mississippian E zone and in two shallow gas intervals.

The Mississippian E zone was perforated and a diagnostic fracture injection test (DFIT) was performed that indicated a low fracture gradient and a relatively high estimated system permeability. A propped fracture job was performed. After initial cleanup, the well produced low salinity water with high H2S concentrations. This result was attributed to the likelihood that the hydraulic fracture communicated with a vertical fault/fracture system in communication with a wet Midale zone which has been found to have similar content in the area.

Two zones were tested in the Cretaceous gas play. Each of the zones were perforated, fracture stimulated, and tested. Although both intervals showed to be gas productive, neither produced economic quantities of gas. Gas samples from the zones were predominantly methane which is consistent with biogenic origins for the gas. The well is suspended pending further evaluation.

Roncott 1-21-5-25W2

The Roncott 1-21-5-25W2 was spudded in July, 2007. The primary objective was to test the Mississippian E unit in the northwest extension of the play.

A conventional core was cut and retrieved from the target section. Light brown oil was observed bleeding from the interval directly below the main porosity interval. A complete log suite was run. Routine core analysis along with TOC and rock evaluation work was performed. The results were consistent with those observed from the Hardy 7-9 work.
One interval in the Mississippian E was perforated and treated with a propellant type stimulation. Swabbing did not yield any substantial inflow and further work was suspended pending completion of core work.

Bengough 7-10-04-24W2

The Bengough 7-10-04-24W2 was a plugged and abandoned well that was re-entered and sidetracked into the lower portion of the main Mississippian E unit. A slimhole lateral was drilled approximately 450 meters and completed with a pre-perforated liner. A mud log was recorded during the drilling but no cores or openhole logging was done in the lateral section of the well. Very little formation fluid was recovered during the initial testing and the well was suspended pending further evaluation.

Bengough 9-32-04-24W2

The Bengough 9-32-04-24W2 was acquired as part of an acreage purchase from Jadex International. The well was shut in after having produced over 15,000 barrels of low gravity oil from a mound facies in the Mississippian Formation.

An attempt was made in November, 2007 to re-establish production from the interval by working over the well to clean up near wellbore damage and improve productivity in the fractured interval. A shallow casing failure occurred during the workover which was repaired but hampered progress. The well appears to have experienced some pressure depletion. It is believed some additional potential remains in the well but the decision was made to suspend further work until summer when the work can be performed more cost effectively.

Oungre 2-3-01-13W2

The Oungre 2-3-01-13W2 was spudded in November, 2007 with the objective of testing the play in southeast portion of the acreage position. The well is located near the U.S. border. One of the key goals of this location was to determine if the source rock maturity differed as the play extended into the basin. Although the primary objective was the Mississipian E zone, secondary potential was believed to exist in the Lower Mississippian and Devonian sections so the well was planned to penetrate those formations. This location was also expected to have potentially productive sections both above and below the Mississippian E zone.

Conventional core was cut and retrieved from both the Mississippian and Devonian sections. A complete openhole log suite was run in the well.

Routine core analysis was performed on all the cores. TOC and rock evaluation work was completed that confirmed good organic content and maturity in the early oil generation window. Oil samples were extracted from the core which showed oil gravities ranging from 29 API in the Mississippian interval to 41+ API in the Devonian section.

Multiple zones were identified for testing and the completion work is currently underway. The zone tests are summarized below:

1) Upper Devonian A - A low porosity zone was perforated and tested but proved to be tight. No further work was merited.

2) Upper Devonian B - A thin section, near the top of the Devonian Formation, that showed good oil saturations in the cores was perforated, stimulated and swabbed. It produced good quality light oil at modest oil cuts and low rates. The zone is being developed with horizontal drilling in nearby areas by other operators.

3) Mississippian B - This interval was perforated, stimulated and swabbed. The zone produced good quality light oil at low oil cuts and good total rates at the end of the swab test.

4) Mississippian C - This interval was perforated, stimulated and swabbed. The zone produced light oil at modest oil cuts and low total rates. The zone is still being evaluated at present.

5) Mississippian E - The upper part of the main target zone is planned to be perforated and tested.

6) Mississippian G - A fairly thick section above the main zone is scheduled to be tested in this well.

7) Mississippian H - A thin carbonate zone looks to be prospective based on a good drilling show and log analysis. This zone may be tested depending upon the results of the intervening sections.

Minton 3-12-03-21W2

The Minton 3-12-03-21W2 well was spudded in December, 2007. This horizontal well was designed to test the main Mississippian E zone and an upper Mississippian F unit.
This location was selected based on data from earlier wells drilled in the area.

Conventional cores were taken in the shallow Cretaceous zone and are being analyzed using shale gas evaluation techniques. A full suite of core tests are being performed.

The lateral leg of the well penetrated both target intervals and the lateral was completed with a pre-perforated liner.

Testing is currently underway. The initial swabbing results before fracture treatment produced light oil with essentially no water cut at low total rates. The well is currently flowing back load fluid after the fracture treatment at good total rates with lower oil cuts.

"We are very pleased to be in position we're in," commented Company Chairman Dick Findley, named 2006 Outstanding Explorer of the Year by the American Association of Petroleum Geologists for his discovery of the prolific Elm Coulee field in Montana, which produces from the Bakken formation and has projected cumulative recoverable primary reserves of 300 to 500 million barrels of light crude. "In the most recent Saskatchewan Crown lease sale held in early April, acreage sold for an average of $982, which suggests that our 300,000 plus acres have a current value substantially above our average cost of around $72.00. Our exploration program to date has confirmed that our acreage contains a substantial undiscovered resource with the potential for reserves in multiple zones. One thing we learned in developing the Elm Coulee field is that it takes time to figure out how to fully exploit these unconventional plays. I think we are on the right track and I am confident that our focus on extensive analysis and testing at the front end of our program will pay off in the long run."

2008 EXPLORATION AND DEVELOPMENT PLANS

The Company's proposed program for the remainder of 2008 will be to continue the evaluation of the prospective reservoir zones that have been identified in the Phase I program. The work will also focus on improving drilling and completion practices for the prospective zones. The evaluation program should help identify and guide the need for acquisition of additional leasehold.

The spring drilling program will start after breakup and will consist of two horizontal wells designed to test different reservoir sections.

The first well will be a step out evaluation well to the Minton well and is intended to test the same zones. It should be spud in the second quarter of 2008 and require about 25 days to drill and case. The completion will be simplified with less testing and more emphasis on optimizing the stimulation design.

The second well will be drilled near the center of the current acreage position. The horizontal section will target two of the more prospective sections identified in the Oungre well. The two primary objectives of the well will be to help delineate the extent of these intervals and to determine the potential for productivity improvement by using horizontal completions in these zones. It will be drilled immediately following the first well and should also take about 25 days to drill and case. A more extensive completion and testing program is expected.

Following the thorough evaluation of these wells, Ryland anticipates another multi-well delineation program to be conducted in the early fall. It is expected that at least one of these wells will be a test on the Company's acreage in North Dakota. Pending the successful completion of these two programs, Ryland expects to move into a development type program in late 2008.

The Company is also planning a shallow gas testing program in the summer of 2008 if the results of the current core work from the Cretaceous Formation support it. The program will probably consist of a combination of recompletions in the Roncott and Bengough wells, along with drilling of several shallow gas wells.

Issued and Outstanding: 150,853,081

The TSX Venture Exchange has not reviewed and does not accept any responsibility for the adequacy or accuracy of this news release, and no regulatory authority has approved or disapproved the information contained herein.

Contact Information

  • Ryland Oil Corporation
    Gerald J. Shields
    President
    (604) 639-4450
    (604) 639-4451 (FAX)
    Website: www.rylandoil.com