Strategic Oil & Gas Ltd

Strategic Oil & Gas Ltd

July 13, 2010 05:30 ET

Strategic Oil & Gas Ltd. Drills Two Successful Oil Wells at Maxhamish, NE BC

CALGARY, ALBERTA--(Marketwire - July 13, 2010) - Strategic Oil & Gas Ltd. (TSX VENTURE:SOG) ("Strategic" or the "Company") provides an update of its operations at Maxhamish, in northeast British Columbia:


Farmout Agreement

The Maxhamish Farmout Agreement ("Farmout Agreement") announced previously covers over 50,000 contiguous acres of light oil resources play prospective land in northeast British Columbia. The Farmout Agreement provides for the Company to earn, on a rolling option basis, a 38.5% before payout (25% after payout) working interest in the lands. The Maxhamish area is prospective for 40 ° API light sweet oil from the Chinkeh formation found at a depth of 1,600 metres. The Chinkeh reservoir appears to be an extensive sheet sand that has an oil leg down-dip from the existing Maxhamish gas field. 

Well Results

Strategic participated in two horizontal oil wells which were drilled and multi stage fracture stimulated (a-C18-J-D94-O-11 and a-49-J-D94-O-11) and worked over three of the existing vertical wells in the area. The drilling and workover program has earned Strategic a 25.0 percent (after payout) working interest in approximately 13 sections of land.

Both wells drilled penetrated the Chinkeh sand at a depth of 1,600 metres and were drilled horizontally for approximately 1,350 metres. The drilling program was successful in keeping the drill bit within the Chinkeh formation for the entire length of the horizontal program. The horizontal section was then successfully completed using 11 separate oil fracture stimulation stages. The results from these two wells helped confirm the presence of the Chinkeh formation, which Strategic believes is an aerially extensive blanket sand.

Both wells were production tested and placed on production with pump-jacks and tied in to a natural gas gathering and processing facility. As a result, combined deliverability from these wells is currently restricted by the owner of the natural gas facility. The operator has advised us that all the frac oil has now been recovered and the well is flowing formation oil. Based on field performance and internal engineering evaluations, Strategic estimates that Maxhamish wells have a productive capacity in the range of 200 to 250 barrels per day with a targeted recovery of 200,000 to 250,000 barrels of proved plus probable reserves of 40° API oil under primary production. 

Land acquisition

Based on the positive results from the two wells, the Company, along with its partner, bid and was successful at two recent Crown land sales in the Maxhamish area. The two land sales added approximately 19 sections of highly prospective lands for the Chinkeh sand immediately to the west of the lands included in the Farmout Agreement, of which Strategic has a 38.5% interest. The Company has mapped (using integrated 3-D geological modelling techniques) these lands and believes them to contain the underlying continuous Chinkeh sand. Strategic now owns an average interest of 33% in 20,800 gross acres (> 32 sections) of land in the Maxhamish area. With the lands included by the Farmout Agreement and the direct interest lands just acquired, over 100 sections of land are now available for drilling. 

Future Development

The Company is in the early stages of assessing the contingent resources. The initial results add confidence to the Company's initial internal estimates of over 500 million barrels of Total Petroleum Initially in Place (PIIP) on the 100 sections of land available to Strategic. Results of these wells are currently being assessed with the operator and future development plans for the next year will be determined accordingly. A range of development plans are currently being considered. 

To view the Maxhamish, Northeast British Columbia (Area map), please see the following link:

About Strategic

Strategic is a junior oil and gas company with producing properties located in Maxhamish, NEBC and Southern and Central Alberta. Production capability is currently over 300 boe/d (excluding Maxhamish) with additional production expected to be brought onstream during the third quarter of 2010 from a recently announced drilling program at Taber and Conrad in southern Alberta.

Strategic's highly regarded subsurface technical team is primarily focused on implementing development plans for the Maxhamish project and its southern Alberta properties, while reviewing other high impact prospects.

Further information with respect to the Corporation can be found on its website at

Forward-looking information

Certain information set forth in this document, including management's assessment of future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control. Those risks include, without limitation, the effect of general economic conditions, risks associated with oil and gas exploration, development, production, marketing and transportation, loss of markets, industry conditions and competition, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the ability to access qualified personnel and oilfield services, decisions by regulators and the ability to access sufficient capital from internal and external sources. Readers are cautioned not to place undue reliance on the forward-looking statements as the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and actual results, performance or achievements could materially differ from those expressed or implied in such forward-looking statements and accordingly, no assurance can be given that any of the events anticipated by forward looking statements will transpire or occur, or if any of them do so, what benefit Strategic will derive therefrom.

Boe presentation

Barrel ("bbl") of oil equivalent ("boe") amounts may be misleading particularly if used in isolation. All boe conversions in this report are calculated using a conversion of six thousand cubic feet of natural gas to one equivalent barrel of oil (6 mcf=1 bbl) and is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

Petroleum initially in place (PIIP)

There is no certainty that any portion of the estimated PIIP will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the estimated PIIP. Additional drilling and analysis is required to develop a resource on the property.

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.

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