CALGARY, ALBERTA--(Marketwire - Nov. 20, 2012) - Blackdog Resources Ltd. ("Blackdog" or "the Company") (TSX VENTURE:DOG) is pleased to announce that is has increased its working interest ("W.I.") in the Company's Leduc light oil well near Sylvan Lake, Alberta from 15% to 100%. Blackdog acquired the remaining 85% W.I. from three separate parties for total consideration of $20,000 cash and the grant of a gross overriding royalty ("GORR") of 5.8% on light oil and liquids and a sliding scale GORR on natural gas (equal to 1.75% when the price is under $4.00 per mcf or 5.8% when the price is over $4.00 per mcf). The Company now holds a 100% W.I. in the section of land on which the well is situated, subject to the GORR.
The Leduc light oil well was originally spudded in August, 2011 and was drilled vertically to a depth of approximately 2850m. The well was then cased and acid stimulated in October, 2011. After a successful short test period, a 4km pipeline was built to handle all oil, gas, natural gas liquids and water. The well was subsequently put on production in November, 2011 and averaged 235 boepd (approximately 60% oil and natural gas liquids) during its first 30 days of production without the aid of any artificial lift, which could not be installed initially due to disputes with the Company's partners. The well continued to flow until early March, 2012 with a final production rate of approximately 100 boepd (50% oil and natural gas liquids) before it was shut in pending resolution of the dispute.
Blackdog intends to return the well to production before the end of November and is in the process of identifying the best artificial lift design to maximize the long term production of oil and natural gas liquids. The Company believes this will have an immediate and significant positive impact on the Company's production and cash flow.
Blackdog initial 15% W.I. in the well was assigned a 2P reserves value of $1,568,400 in its most recent independent reserves evaluation prepared by Trimble Engineering effective December 31, 2011 and management believes that increasing its working interest to 100% (subject to the GORR) will give Blackdog a significant increase in its overall corporate reserves.
The Company has also identified at least one more potential drilling target on its 100% W.I. section of land. The Company will monitor the production of the first well for several months before making a decision on this second location but given that the 4km pipeline is now built and has the capacity to handle additional hydrocarbons, the Company is encouraged by the economics of this second location. With the increased drilling activity in the Sylvan Lake area recently, the Company's newly constructed pipeline may be a source for additional future revenue for the Company.
Blackdog Resources Ltd. is a junior oil and gas company focused on light oil in South East Saskatchewan and Alberta. The Company currently has 27,166,212 common shares outstanding.
Certain information regarding Blackdog in this news release, including management's assessment of future plans for the Leduc light oil well, future sources of revenue, and the Company's operations, may constitute forward looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with the Company's ability to return the well to production, with oil and gas exploration, development, production, marketing and transportation, loss of markets, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Blackdog's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements or information contained in this news release are made as of the date hereof and Blackdog does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
The term "barrels of oil equivalent" or "boe" may be misleading, particularly if used in isolation. A "boe" conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.