OLO OIL PLC
("Solo")
Full-scale Production in Progress at the Ausable Field, Canada
Positive Results from Enhanced Oil Recovery (EOR) Program
Solo today announces that full-scale oil production has commenced at the Ausable Field in South Western Ontario, Canada, operated by Solo's Joint Venture partner, Reef Resources Limited ("Reef"). Reef has reported that the field has been on production since the 13 July 2012.
Two of the four wells at the Ausable Oil Field (Ausable #1 and Ausable #5) have now been put on line and total liquids potential of 275 barrel oil equivalent per day (boepd) gross has been computed based on the current gas cycling rate of 236 thousand cubic feet per day (mcfd). The initial two wells production rate averaged 13 boepd although this is now being rapidly scaled up as gas cycling rates are increased.
These initial two wells and the surface facilities have now been fully configured for long-term production. Wells Ausable #2 and Ausable #4 will additionally be placed on production and will add substantially to current daily production. Reef anticipate increasing the gas cycle rate about 20-fold to 5,000 mcfd progressively over the next 4 to 6 months and project that liquids production from the four well scheme will then rise to approximately 700 boepd (gross).
Gas has been injected into the reservoir purchased from a local gas utility and will shortly be supplemented with gas from the North and South Airport wells, both drilled by Reef. The cycling of gas provides both pressure support to the reservoir and additional liquids production. Since March 2012, about 50 million standard cubic feet of dry gas have been injected into the reservoir, which represents approximately 10 per cent of the intended volume. As gas injection continues in the coming months, both oil and condensate production volumes will increase.
The recently completed facilities upgrade has successfully addressed all major issues arising from the installation of venturi pumps in the wells and has incorporated the modifications needed for sustainable long-term gas cycling.
The upgrade was a vital component in the optimisation of Reef's EOR program, which is already delivering results. Reef is currently reviewing the final phase of the facilities project, in which the addition of refrigeration will allow the capture of additional natural gas liquids from the production stream. Reef is now well placed to increase production at Ausable and start rolling out its fully configured EOR process across its portfolio of nearby oil projects.
Solo currently holds a 28.56% interest in the project and an option to increase that to 38.1% in return for further investments of CDN$ 1 million. Based on projected production rates the project is expected to generate positive cashflow to its owners by late 2012.
Neil Ritson, Solo Executive Director, commented:
"We are delighted that, after the recent comprehensive facilities upgrade, the Ausable Field is now entering full-scale operation. As additional wells are hooked up to the new facilities and gas recycling rates are increased we remain confident that our previous estimate of a gross 500 boepd remains achievable by end 2012. The addition of refrigeration facilities and the use of equity gas from the Airport wells will further enhance the economics of the project, which now offers substantial benefits to Solo and its shareholders."
Competent Person's Statement:
The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Director for Solo Oil Plc who has 35 years of relevant experience in the oil industry. Mr. Ritson is a member of the Society of Petroleum Engineers, an Active Member of the American Association of Petroleum Geologists and is a Fellow of the Geological Society of London.
