Big Sky Petroleum – Exploring Oil and Gas in the Midland Permian Basin
Overview
Big Sky Petroleum (TSXV:BSP) is a Canadian oil and gas exploration and production company with U.S. operations in Texas and Montana. The Company is currently focused on the development of unconventional tight oil reservoirs in the Southern Midland Basin of West Texas, and the Southern Alberta Basin of Montana. The Company uses the latest technology and streamlined operations for a scalable and repeatable business model based on precise execution, while still emphasizing growth.
Investment Highlights
- No debt: 60,676,665 shares outstanding
- Oil and Gas experienced team, with management heavily invested 24.2%
- Drilling in a proven, mature area; on a recognized trend
- Multiple targets identified – growth opportunity within the prolific Midland Permian Basin (MPB)
- MPB is the second largest producing oil and gas region in the US
- Wolfberry property showing multiple producing horizons
- 84 well locations that can be increased to as many as 160 well locations
- Excellent infrastructure close at hand, properties are surrounded by major oil and gas companies
- Clearly defined business model
- High Oil Gravity 38-42 degrees
- The gas produced by Wolfcamp/Wolfberry wells tends to be very rich, with energy content of 1,200-1,500 btu per cubic foot
Key Properties
Texas Midland Basin: Wolfcamp (Horizontal)
The southern Midland Basin Wolfcamp play was initially discovered within Crockett, Irion, Reagan, and Upton counties in South Western Texas, but recent drill testing has extended the area into Glasscock and Schleicher Counties. The productive limits of the ground have not been determined, but cover more than one million acres, and this could reach two million acres, when more ground is proven. The Wolfcamp has multiple productive “benches” that have similar rock quality and petroleum resources in place.
BSP’s Schafer #1 Well
The Wolfcamp is a blanket formation across the Permian Basin and acts as a source rock for much of the areas conventional oil and gas production. The Wolfcamp rock unit generally varies in thickness from 800-1,200 feet, with some areas up to 2,000 feet thick. The depth of the Wolfcamp formation varies from around 5,000 feet on the normally pressured southeastern side of the play to more than 10,000 feet in the over pressured northwest, where the play is generally considered richer in oil. The Wolfcamp has all the necessary petrophysical characteristics of a top shale play.
The Wolfcamp has several zones or benches that are potential targets. Activity to date has focused on the Middle Wolfcamp or “B” bench, but results from the “A” and “C” benches also look promising. There are currently 31 horizontal rigs running in the Wolfcamp play, up from an average of less than 10 in 2011. With the continuation of strong oil prices, the rig count could double in 2013.
BSP’s Schafer #1 Well
There is substantial gas processing capacity in the area, enabling companies to extract most of the NGLs. The NGL barrel in the Wolfcamp is variable, but tends to consist of around 50% ethane, 30% propane, and less than 10% for each of butane, isobutene and natural gasoline. More than 2,000 wells have been drilled since the beginning of the play in late 2007.
BSP’s Schafer #1 Well
IP rates have averaged around 580 BOEPD (barrels of oil per day) since the inception of the play, but have shown steady solid increases over time as completion techniques have improved and lateral lengths have increased. 3Q12 IP rates to date are averaging nearly 700 Boepd.
Wolfberry (Vertical)
The Wolfberry play, so-named because of the commingling of production from the Wolfcamp and Spraberry Formations, is a major low-permeability oil play in the Permian Basin. Located principally in Western Texas, the Permian Basin is one of the most prolific oil-producing basins in North America. The Wolfberry Play is an unconventional oil play characterized by a combination of abundant oil in place, favorable rock mechanical properties, permeable thin beds, and modern well stimulation techniques. These factors combined with robust world oil prices have opened the entire Lower Permian and Upper Pennsylvanian basinal intervals into oil and gas production.
Midland Basin Wolfberry Play
The largest accumulation of oil and gas reserves in the Permian Basin is found in the Spraberry trend, which covers considerable parts of six counties and has a total area of approximately 2,500 square miles. The Spraberry trend is ranked third in the United States by total proven reserves and ranks seventh in total production. The Wolfberry interval is the primary focus of the Company’s vertical drilling activities, and is an active oil play that includes a significant liquids-rich natural gas resource component.
The key to the Wolfberry’s success will be the ability to use multi-stage fracturing on multiple zones in vertical wells and commingling the production from these zones.Where one well might not be economically viable, three wells commingling resources are. Since the late 1990s, more than 8,700 Wolfberry oil wells have been completed and have produced 216 million barrels of oil and 544 billion cubic feet of gas. Initial well production averages 30 to 125 barrels of oil per day, and ultimate per-well recovery is estimated at 100,000 to 140,000 barrels of oil equivalent.
As reported in a January 18th news release, the Schafer No.1 vertical Wolfberry Well was drilled to a TVD (Total Vertical Depth) of 7,370 feet without incident and below the wells’ initial cost estimate. The well has been cored, logged and cased, and the technical data from both the coring and logging operations has been submitted for analysis and evaluation. This information will delineate the multiple horizons within the Wolfberry play. The well is scheduled to be completed and frac’d during the week of February 18th.
Montana – North Western Montana: Williston Basin, Bakken Play
Big Sky Petroleum’s Glacier Project is located in northwest Montana. This project shares many similarities with the Williston Basin Bakken Play. Both plays focus on the presence of porous, low permeability reservoirs adjacent to the world-class mature source rocks of the Bakken Shales. The application of fracture stimulation in horizontal wellbores within this system has proved to be the key to unlocking the high potential of this type of resource play. Our objective is to develop commercial production from Middle Bakken reservoirs adjacent to the demonstrated source rocks of the Bakken shales located within the Alberta Bakken source System.
Summary
Big Sky Petroleum Corporation (TSXV: BSP) is a Canadian based oil and gas exploration and development company focusing on a concentrated portfolio of resource assets located in the Texas portion of the Permian Basin and the Montana portion of the Alberta Basin. Using technical savvy and extensive experience in the Texas Wolfcamp and Montana Bakken shale reservoirs, the Company is establishing and developing large-scale operations in the fastest growing sector of the oil and gas industry: the tight oil play.
With a streamlined business model in place, and significant reserves in proven production areas, the Company is well suited to take advantage of high market driven petroleum prices.
Management
W. Milton Cox – CEO and Director
Mr. Cox has over thirty years of executive experience in resource investment management. From 1982 to present, he has been President of Code America Investments LLC. He holds an M.B.A. in finance from the University of Mississippi, a BSC Petroleum Geology Certificate from the University of Tulsa and is a member of the American society of Mechanical Engineers –ASME.
Sam Nastat – President
Mr. Nastat has been involved in the natural resource capital markets for twenty years. His professional experience includes oil and gas exploration and production as well as mineral exploration and development. Mr. Nastat has fourteen years of oil field project development experience with CodeAmerica Investments LLC.
Mark T. Brown, B.Comm., C.A. – Director and CFO
Mark Brown is president and director of Pacific Opportunity Capital Ltd. Headquartered in Vancouver, BC, Pacific Opportunity is a financial consulting and merchant banking firm active in venture capital markets in North America. Mr. Brown is also an officer and/or director of a number of public and private companies, including Rare Element Resources, Almaden Minerals, Animas Resources, Avrupa Minerals, Pitchstone Exploration, and Tarsis Resources. His corporate activities include transactions, financings and corporate financial planning. Prior to joining Pacific Opportunity, Mr. Brown’s background included managing financial departments of two TSE 300 mining corporations: Eldorado Gold and Miramar Mining.
Mr. Brown has a Bachelor of Commerce from the University of British Columbia and became a Chartered Accountant while with PriceWaterhouseCoopers.
George Robinson – Director
Since 1999 Mr. Robinson has been a managing partner in Robinson Oil and Gas LLC with principal offices in Billings, Mont. Robinson Oil & Gas is an exploration and development and operating company with primary focus in the Williston basin and Sweet Grass Arch in north-central Montana. Prior to founding Robinson Oil & Gas Mr. Robinson had over twenty years of executive management experience with major independent oil companies, Hunt Energy Corporation, Dart Oil & Gas Corporation, and Dominion Exploration Company.
Desmond Balakrishnan – Director
Mr. Balakrishnan is an attorney and a partner of a national law firm since February, 2002. He received his law degree from the University of Alberta in April, 1997, and was called to the British Columbia Bar in May, 1998. Mr. Balakrishnan acts as a director and officer of a number of public companies including Aroway Energy Inc., Great Canadian Gaming Corporation and Electric Metals Inc.
Dr. T. Arden McCracken, PhD – Director
Dr. McCracken has an extensive forty-year career in reservoir and production engineering and engineering management. Has served as Chief Reservoir Engineer Worldwide for BP Exploration Company where he managed over 360 engineers and maintained oversight of a $55m annual budget. Chief Engineer Worldwide for Pennzoil Exploration and Production Company where he had complete technical review and approval of all projects worldwide. Senior Engineering Advisor for all International projects for PennzEnergy/Devon. Dr. McCracken has worked essentially all productive basins in the U.S. and Canada and most sectors of the North Sea, Middle East, North Africa and South America. He was one of the reservoir simulation developers and analyst on some of the early Bakken wells in the Williston Basin.
