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Point Loma annouces new option with partner Salt Bush Energy to further delineate Wizard Lake Rex oil discovery

The Calgary-based company said that its partner Salt Bush Energy Ltd has agreed to incur 100% of the costs to drill, complete and equip the two wells

Point Loma has a number of oil projects in west-central Alberta

Point Loma Resources Ltd (CVE:PLX) announced that its partner on the Wizard Lake Rex oil project has agreed to a two-well farm-in transaction to fund drilling and setup costs.

In a note to investors on Thursday, the Calgary-based company said that its partner Salt Bush Energy Ltd has agreed to incur 100% of the costs to drill, complete and equip the two wells. Salt Bush currently has a 30% working interest in the project.

According to Point Loma, a two well farm-out option would result in three producing oil wells. Point Loma would be the operator with a 50% working interest. In addition, the oiler would have a 25% before payout and 50% after payout working interest in both the test well and earning well. It will also have a 50% working interest in the remaining lands.

READ: Point Loma boosts output and revenue in first quarter

The current plan for the two earning wells would be to drill from existing pad locations to reduce time and cost to bring the wells on stream, Point Loma said in a statement. A test well and an option well are planned at Wizard Lake to follow up on the successful Rex oil discovery well drilled in 2018.

Both the test well and option well will be horizontally drilled to 1,400 metres and 1,800 metres, respectively, and will utilize multi-stage frac completions. The test well, where Point Loma will retain a 25% working interest BPO and 60% APO, is expected to spud by August this year. Salt Bust will make the decision to proceed on the option well.

Wizard Lake is expected to begin production in early June this year. The project has net proven and probable reserves booked of 525 million barrels of oil.

The oil company also updated investors on its other properties in west-central Alberta. At Upper Manville, Point Loma identified and captured a pool target north of the company’s Paddle River Lower Mannville oil producing property that could lead to a number of follow-up opportunities. It also uncovered two high impact targets to drill near Banff.

Point Loma recently released its quarterly figures showing an increase in revenue and production levels.

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

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Price: 0.08 CAD

Market: TSX-V
Market Cap: $7.12 m

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