Junior oiler Pulse Oil Corp (CVE:PUL) has welcomed an independent resource assessment of its Nisku enhanced oil recovery (EOR) project in the Bigoray area of Alberta, which shows it could be sitting on as much as 23.3mln barrels initially in place.
The project consists of 100% controlled Nisku D and Nisku E reef pools at Bigoray and Pulse reckons this figure from consultant Sproule is conservative.
Contingent resources (those quantities thought to be potentially recoverable) were put at 8.07mln barrels of oil equivalent (boe) as an unrisked high estimate.
The best estimate was 6.136mln boe and the low estimate was 3.668mln boe.
Sproule also deemed there was a "high probability" of the Bigoray EOR project becoming a commercial development.
"Although this assessment used a more conservative approach to Petroleum Initially in-Place (PIIP) compared with the PIIP estimates of the Alberta Energy Regulator, we are excited to see that even this more conservative approach resulted in a strong endorsement for the project," said Drew Cadenhead, chief operating officer at Pulse.
"With an independent un-risked high case upside estimated at over 8 million boe's of contingent resources (92% oil), the opportunity to move forward with our EOR project to bring on stream substantial cashflow while targeting to recover those types of oil volumes without drilling a well, creates a substantial opportunity to enhance value for Pulse and our shareholders."
The enhanced oil project will see miscible flood technique used rather than waterflood to recover oil.
This estimate covers juts the two Nisku pools only , namely just 2,720 acres of Pulse's 44,720 acre core holdings, which includes 14,000 acres at Bigoray alone.
Cadenhead added: "Our goal is to make this project happen in 2018 and with the oil price market appreciating heading into 2018, the economics of this EOR project and return for shareholders continue to look more and more attractive alongside improving oil prices."
The Sproule report was based on the results from 17 wells and, where available, core data
The Resource Assessment is based on the results from seventeen wells and, where available, core data.
Where that was not available, log data was used.
Mackie repeats 'speculative buy'..
Following the news, broker Mackie repeated a 'speculative buy' and C$0.50 share price target.
"We expect that with the successful implementation of the miscible flood, the Sproule resource estimates could prove conservative and the upside case of 8.1 million boe is more likely," said analyst Bill Newman.
"The potential upside from a successful Nisku Reef EOR project is so large that we expect substantial stock price appreciation, even if the miscible flood achieves expectations at the low end of the range."
Pulse shares added 4.55% to C$0.23.