Significantly, the company noted initial indications are that a high-quality reservoir has been encountered with excellent oil shows and higher porosity than the Rex-1 discovery. The Rex-2 well is currently being stimulated and, following completion, will be put onto production within 14 days.
At the end of a two well farm in period, the company’s interest in the field increases to 50% (subject to the terms of the farm-in agreement). As a result, the 2P+2C reserves and resources net to WBE will increase to 2.004 million barrels.
Whitebark managing director David Messina said: “Whitebark is pleased with the recent success at Wizard Lake field where a significant increase in the company’s reserves and resources has been achieved.
“Our early assessment of the gross potential of this field suggests that the ultimate size of the whole accumulation could be as large as 11.2 million boe.”
Whitebark Energy) originally entered Canada in May 2017 via a 20% interest in the Point Loma JV, recognising an opportunity to apply modern horizontal drilling and fracture stimulation technology to conventional Mannville Group hydrocarbon rich formations which had previously been passed over.
The company has subsequently made a number of acquisitions and divestments since 2017 to focus the portfolio on cash generative assets in Alberta with the goal of growing production to over 1,000bbls/day net to the company.
The future success of the company will be driven by continued development of the Wizard Lake field and further growth from either organic exploration via the drill-bit or acquisition opportunities as they arise.
Whitebark provides Australian investors with exposure to quality Canadian assets at a time when the Canadian equity markets are not recognising the value in their own backyard.
Rex 1 discovery confirms Wizard Lake strategy
Drilled to a vertical depth of 1,414m and horizontal length of 1,237m, and subsequently stimulated with a 27 stage frac, Rex-1 was declared an oil discovery in January 2019.
Initial flow tests achieved a flow rate of ~305bbls/day, with recent production achieving similar flow rates, confirming the commerciality of the field.
Production facilities in place, strong margins
Infrastructure recently constructed in the field includes a multi-well pad, 1.6km pipeline and production facilities, with oil transported via road and sold at nearby refineries.
Field development plans
The initial independent reserves assessment of Wizard Lake indicated the potential for an additional 12 to 17 follow-up well locations which increased top 20+ through land acquisition. The company sees these additional locations as low-risk from a technical perspective, given the successful development of Rex-1 and the confirmed presence of the Rex Sand throughout the nearby area.
M&A Activity at a Low – Opportunity Ripe for Counter-Cyclical Acquisitions
M&A activity in Canada fell to a record low in the first quarter in 2019, reflecting the broader challenges in the Canadian equity markets for Oil & Gas companies.
As a well-funded ASX-listed company with access to Australian equity markets and impending strong cash generation from the Wizard Lake field, Whitebark is well placed to make opportunistic acquisitions for the right assets.