VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/26/13 -- Big Sky Petroleum Corp. (TSX VENTURE: BSP) is pleased to announce that Petrotech Engineering Ltd. ("Petrotech"), a qualified reserves evaluator, has prepared a National Instrument 51-101 compliant report titled "Evaluation of the Interest of Big Sky Petroleum Corp. in the Oil & Gas Leases in Schleicher County, Texas" dated effective February 28, 2013 (the "Report"). The Report can be found on www.sedar.com and the Company's website http://bspcorp.com/.
At present, the Company has acquired a 90% working interest in 3,450 net acres of oil and gas leases in Schleicher County, Texas, subject to mineral rights and overriding royalty rate of 25%. The Company pays 100% of the drilling, completion, facilities and operating costs for the first three wells until payout of these costs, at which time a third party will back in for a 10% working interest. In subsequent wells, such third party will have the option to participate for a 10% working interest pursuant to the Joint Operating Agreement.
In January 2013, the Schafer #1 Well was drilled to 7,370 feet (vertical well) to test the Wolfcamp and Spraberry Formations in Section 2, Concho County School Land Survey, Abstract 45 in Schleicher County. The well was completed with multi-stage fracture treatments and is flowing back fracture fluids at this time. No test data is currently available.
The evaluation uses the definition of resources and follows the guidelines from the Canadian Oil and Gas Evaluation Handbook ("COGEH"). The net cash flow is calculated at forecast prices and escalated costs on the prospective resources, to all future time and after deduction of the capital and operating costs, royalties, but before deduction of income tax. All cash flow data is in U.S. dollars. A summary of the Company's gross and net share of the prospective resources and net share of the future present worth net present values before income tax, discounted at 0%, 5%, 10%, 15% and 20% is presented as follows:
Unrisked Prospective Resources (Prospects) Gas Resources Oil Resources Before Tax NPV @ 100% Gross Net Gross Net 0% 5% 10% 15% 20%Estimate MMcf MMcf MMcf Mbbl Mbbl M$ M$ M$ M$ M$-------- ----- ------ ------ ---- --------- ------ ------ ----- ----- -----Low 1,200 1,200 918 72 54 1,777 1,183 710 329 17Best 1,800 1,786 1,373 134 100 6,435 5,239 4,292 3,531 2,910High 2,400 2,317 1,790 208 156 11,681 9,838 8,379 7,205 6,245
The forecast prices are based on the closing future prices of NYMEX Futures of WTI oil and Henry Hub gas prices on February 28, 2013. The Report includes a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of resources, timing and amount of capital expenditures, marketability of production, future prices of crude oil and natural gas, operating costs, well abandonment and salvage values, royalties and other government levies that may be imposed over the producing life of the resources. These assumptions were based on prices in use at the date the Report was prepared, and many of these assumptions are subject to change and are beyond the Company's control. The NPV's may not necessarily represent the fair market value of the resource.