Junior oiler Point Loma Resources Ltd (CVE:PLX) is poised to start drilling at the Rex (Upper Mannville) and Lower Mannville oil plays in Alberta in the next seven to 10 days following the receipt of two well licenses.
Each target has the potential to significantly increase the group's current oil and natural gas liquids (NGL) production, enhance its growing reserves base and open up new oil development opportunities, the Calgary-based firm told investors.
"With the Rex, Lower Mannville, Banff and Duvernay Shale exposure and a large land position of over 250 net sections, Point Loma has captured a series of high impact oil plays that have significant upside," said Terry Meek, the president and CEO of Point Loma.
"We are excited to kick-off the drilling in Q4 focused on the first two targets (Rex and Lower Manville) with both having the potential for a step change in Point Loma's oil production levels," he added. "With success, both wells open up exciting new oil plays for the company and could lead to a sizeable development inventory. With no bank debt, joint venture partnerships and a focus on lowering operating costs, Point Loma looks forward to executing on its strategic plan over the coming months."
The first horizontal well, where the firm has an 80% working interest, is to be sunk at the Rex target at Wizard lake in this multi-well program and is analogous to the offsetting Leduc area Rex production which has attracted the attention of other key industry operators.
Notably, recent activity by other operators in the area has resulted in highly commercial wells of between 250 and 300 boepd (barrel of oil equivalent per day) at 80% oil, as this large oil discovery continues to be exploited.
Point Loma intends to drill a 1,300 metre lateral with over 30 completion ports.
The company said mapping had indicated a potential pool size of approximately 40 million to 60 million barrels of original oil in place (OOIP).
Meanwhile, at the Mannville target south of Paddle River, where the company has an 80% working interest this is analogous to the offsetting Paddle River Lower Mannville oil production.
Here, Point Loma aims to drill a 1,400 metre lateral with 30 plus completion ports and multi-stage fracs planned.
In addition, Point Loma said that based on recently shot 3D seismic, it was also currently conducting further technical interpretation and analysis on two identified Banff oil opportunities in the West Cove area with the plan to license initial locations for drilling in 2019.
As interpreted, each of these pools are analogous to developments in the offsetting Cherhill and St. Anne areas, which have accumulations of up 90 million barrels of OOIP.
The company controls over 160,000 net acres (250 net sections) and has a deep inventory of oil opportunities in the Mannville (Upper and Lower), Banff, Nordegg, and Duvernay shale formations.
Broker Mackie repeated a 'buy' on the shares following the news and said: "The current two horizontal oil well drilling program has the potential to double the company’s reserves which could re-rate the stock price.
"In 2019, we expect PLX will continue to exploit its large inventory of multi-zone Mannville locations on its 160,000 net acres in West Central Alberta.
"On top of that, PLX has multi-bagger return potential from its conventional Banff oil play and the Duvernay shale oil resource play."
It targets $1.10 for the shares.
Contact Giles Gwinnett at [email protected]
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