VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 01/21/13 -- Petro One Energy Corp. (TSX VENTURE: POP)(PINKSHEETS: CUDBF)(FRANKFURT: C6K1) is pleased to report that the first horizontal well drilled by its farmout partner (a senior oil company) on Petro One's 100% controlled J10 property has discovered oil and appears to be a successful producer, having averaged 147.7 bopd for its first 17 days ranging from 108.6 bopd to 194.9 bopd.
Under the terms of the farmout agreement, described in the Company's August 28, 2012 news release, the farmee paid 100% of the drilling and completion costs, and Petro One has the right to convert its 10% Gross Overriding Royalty ("GORR") into a 30% working interest in the test well within 30 days of receiving notice of Payout. Based on the excellent oil volumes recorded thus far, this new well should substantially increase Petro One's cash flow and daily oil production, and add significantly to the Company's reserve base.
Petro One's partner now has 90 days from the rig release date to elect to drill a second well, to be spudded within 90 days after that election Third and subsequent wells may be elected by the farmee under the same terms as the second well. Petro One will have the option to convert its 10% GORR on the second and all subsequent wells into a 40% working interest. The property can accommodate up to 8 horizontal wells in the Frobisher, and 4 in the Midale. Based on the excellent results from the first well, the company looks forward to its farmout partner exploiting the full potential of the J10 property.
The new oil well is producing from the Frobisher Beds, a porous limestone unit that is widespread in southeast Saskatchewan. The Frobisher is being extensively developed with horizontal drilling in many areas, resulting in long-lived production at good rates. Limited Frobisher drilling has been done in the J10 area to date, but a former vertical Frobisher producer 220 metres downdip from the property yielded more than 100,000 bbl of oil from the Frobisher with a one month IP of 95.6 bopd, as well as more than 407,000 bbl of oil from the overlying Midale Beds, with a one month IP of 146 bopd. The oil in this former producer is light, with an API gravity of 28.1.
On the east half of the property, Petro One also holds rights to oil in the Midale Beds, another prolific carbonate reservoir with long lived production that has also been the target of recent horizontal drilling in the J10 area. A vertical Midale producer in the immediate area had a three month IP of 273.5 bopd. It has produced 736,564 bbl of oil, and is still in production after 44 years.
"Petro One is very pleased with the initial results from the first well on J10 and encouraged by the prolific, long term production that has been demonstrated by producers in the immediate area in both the Frobisher and Midale beds," said Petro One President Peter Bryant. "The initial well could triple the Company's daily oil production based on a 30% share after Payout. We look forward to the potential development of the entire property, as initial results indicate that such development could significantly increase our reserves and daily oil production."
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