Excelsior Energy Limited is pleased to announce it has signed a binding Farm-in Agreement with an Alberta based private company, ("AlbertaCo") to acquire a 75% interest in 18 contiguous sections (11,520 acres) of land in the West Surmont area south of Fort McMurray ("the Asset"), in the heart of the Athabasca oil sands area.
The Asset is located in close proximity to a number of active SAGD (steam assisted gravity drainage) Projects which are in various stages of development which include ConocoPhillips' Surmont Project, and Statoil's Leismer and Corner Project areas.
Excelsior is acquiring its interest by paying 100% of the accrued land costs, future seismic and drilling costs totalling $21.6 million, and a cash bonus of $2.3 million to earn its 75% interest. The cash payment will be made upon completion of the seismic program. The Company has also agreed to pay AlbertaCo a supplemental payment of up to $2.9 million which is contingent upon successful drilling results and the parties agreement to continue operations, and is payable by funding AlbertaCo's 25% share of continuing operations.
The productive reservoir is the McMurray Formation which is comprised of high quality fluvial and estuarine channel sands. There are 13 wells drilled on the Asset and a further 25 wells drilled on adjacent sections that confirm the presence of the reservoir oil sands with gross oil sand thicknesses ranging between 8 meters and 29 meters.
The first stage of the project is to shoot approximately 108 kilometres of 2D seismic to tie the existing wells and to delineate the size and number of potential SAGD oil sand pods. The Company is investigating the possibility of acquiring the seismic program in late summer and we will provide an update once the timing is confirmed. An exploration well program of 18 wells to further delineate the potential SAGD Pods and identify a core area for a pilot project, is planned for winter 2007/8. The Company anticipates engaging a third party, National Instrument 51-101 compliant engineering evaluation once the 2D seismic has been acquired, processed and interpreted.
About Excelsior Energy
The Company is active in oil sands exploration and appraisal in the Hangingstone and West Surmont areas near Fort McMurray, Alberta and will hold a 75% working interest in 57 contiguous sections on completion of its farm-in obligations. The Company also holds a 100% working interest in Blocks 16/1a and 16/6c in the UK North Sea and a minor interest in gas production in Alberta. The Company's strategy is to capture oil and gas appraisal and development opportunities where we can leverage Management's diverse international experience and field development expertise. This includes heavy oil reservoir engineering and development of complex fields. The scale of the oil sands resource opportunity in Alberta complements Excelsior's international portfolio and strategy.
Forward-Looking Statements: This news release contains statements about future events that are forward looking in nature and, as a result, are subject to certain risks and uncertainties such as changes in plans or the occurrence of unexpected events. Actual results may differ from the estimates provided by management. Readers are cautioned not to place undue reliance on these statements.
Contact:
David A. Winter
Excelsior Energy Limited
President and Chief Executive Officer
(403) 537-1015 ext 101
Email: d.winter@excelsior-energy.com
Robert Bailey
Excelsior Energy Limited
Vice President Engineering and Chief Operating Officer
(403) 537-1015 ext 102
Email: r.bailey@excelsior-energy.com
Source: Excelsior Energy Limited
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