TRAFINA Energy Ltd.
TSX VENTURE : TFA.A

TRAFINA Energy Ltd.

February 02, 2011 18:22 ET

Trafina Energy Announces Independent Report on Discovered Oil Initially-In-Place at McMullen, Alberta

CALGARY, ALBERTA--(Marketwire - Feb. 2, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Trafina Energy Ltd. ("Trafina" or "the Company") (TSX VENTURE:TFA.A) is pleased to announce the completion of a report by McDaniel & Associates Consultants Ltd. ("McDaniel") relating to the Company's recently acquired lands in northeastern Alberta (the "McMullen Lands").

The report, entitled "Evaluation of Discovered Oil Initially-in-Place in the McMullen Area – Wabiskaw Formation" (the "McDaniel Report"), is an estimate of the Discovered Oil Initially-in-Place ("OIIP") for Trafina's 15 sections of oil sands rights at a 100% working interest in Township 77, Ranges 25 and 26, west of the 4th Meridian. The McDaniel Report has an effective date of January 31, 2011 and was prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook (COGEH).

The following summary of estimated OIIP is based on the McDaniel Report:

ESTIMATED DISCOVERED OIL INITIALLY-IN-PLACE (1) AS OF JANUARY 31, 2011

Category/Level of Certainty   Discovered OIIP (MMBbl)
Low Estimate (2)   167
Best Estimate (3)   198
High Estimate (4)   235
  1. Discovered Oil Initially-in-Place is the quantity of oil that is estimated, as of a given date, to be contained in known accumulations prior to production. OIIP is the most specific category of resources that can be assigned at this stage because there is insufficient data available at this time to sub classify. The data required to sub classify is data such as viscosity and flow test data that will be obtained when the vertical wells are drilled. There is no certainty that it will be commercially viable to produce any portion of the resources.
  2. 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.
  3. 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.
  4. 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.

Based on analog Wabiskaw oil production adjacent to and in the area of the McMullen Lands, Trafina estimates primary recovery of OIIP to be 7% of OIIP identified in the McDaniel Report. If feasible and appropriate, enhanced oil recovery could add as much as 14% of OIIP identified in the McDaniel Report for total recovery of 21% of OIIP. Economic recovery of oil is dependent on viscosity and flow test data that will be obtained when Trafina drills the vertical wells.

Trafina plans to drill up to five vertical evaluation wells on the McMullen Lands prior to the end of 2011. Road and lease surveys were completed in January 2011. The Company has completed all public and private consultations, including aboriginal consultation required by the local band, even though the McMullen Lands are not on aboriginal territory. Minor forestry approvals from Sustainable Resource Development are required before Trafina can apply to the Alberta Energy Resources Conservation Board for drilling licences. Project timing and development of the McMullen Lands is conditional on receiving the requisite approvals and the subsequent issuance of the drilling licences.

Under the Company's current development program, each successful vertical well may result in the drilling of up to eight slant wells that effectively exploit one quarter section of reserves. The slant wells would be drilled from the existing vertical well surface location thereby dramatically reducing developmental footprints. Road construction is scheduled to start in February 2011 and will be built to a standard that will allow year round access.

The Company's economic modeling assumes that two vertical wells of the original five will meet the geological, reservoir and production thresholds required to justify the drilling of eight slant wells per quarter section. Each subsequent nine well pod is then assumed to have initial productivity of 350 barrels of oil per day (Bopd) for a total of 700 Bopd and total recovery of 7% of OIIP.

As announced on November 18, 2010, at Twin Lakes the Company owns 100% in 12 sections of oil sands rights. Trafina has the right to earn 25% in an additional 13 sections by paying 50% of the cost of drilling two wells. The Company estimates the cost of each well to be $460,000 ($230,000 net). Trafina has elected to participate in the drilling of two wells to evaluate the Grand Rapids formation. The first well is expected to spud by February 10, 2011. The operator plans to drill a third well contingent on the results of the first two wells, with Trafina participating at 25%.

Trafina's recent acquisition and drilling strategy has successfully increased the Company's oil weighting during a time of robust oil prices. Since October 2008, Trafina has increased both its oil reserves and production weighting from approximately 10% to approximately 40%. Current production is estimated to be approximately 500 barrels of oil equivalent per day.

About Trafina

Trafina is a junior oil and gas company based in Calgary, Alberta. The Company's main areas of interest are in the McMullen/Twin Lakes and Pembina areas of Alberta and in the Rangeview and Divide areas of southwest Saskatchewan with other operated production in Wetaskiwin, Retlaw and Ronalane in Alberta. Trafina also has non-operated production in Viking/Kinsella, Alberta and minor interests in Carson Creek/Judy Creek, Alberta. Trafina's shares trade on the TSX Venture Exchange under the stock symbol TFA.A.

Forward Looking Statements: This news release contains forward looking statements and forward looking information including, without limitation, regarding estimated primary recovery of OIIP, the timing for drilling vertical evaluation wells and the subsequent drilling of slant wells (including, without limitation, the total number of such wells to be drilled), the receipt of necessary approvals for drilling to occur on the McMullen Lands, timing for construction of the Company's all-weather road and initial productivity and producing life of any such wells, and the anticipated drilling of up to three wells at Twin Lakes. Operational forward looking information is based on management's expectations regarding future growth, results of operations, production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and future economic conditions. Readers are cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Forward looking statements involves significant known and unknown risks and uncertainties. Reference is made to Trafina's annual information form for the year ended December 31, 2009 dated April 30, 2010 for a description of some of the risks that could affect the Company's future results and could cause results to differ materially from those expressed in the Company's forward looking statements. The forward looking statements contained in this news release are made as at the date hereof and, except as required by applicable securities laws, Trafina does not undertake any obligation to update publicly or otherwise any such 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.

Contact Information

  • Trafina Energy Ltd.
    Kelly J. Ogle
    President and Chief Executive Officer
    (403) 263-0800
    (403) 263-0811 (FAX)
    or
    Trafina Energy Ltd.
    Robert W. Lamond
    Chairman
    (403) 269-9889
    (403) 269-9890 (FAX)
    info@trafinaenergy.com