BlackPearl Resources Inc.



Mooney, Alberta


KEY FACTS

Working interest100%

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Land 58,880 net acres
2P reserves 15 MMboe (Dec. 31, 2013)
2C resources 35 MMboe (Dec. 31, 2013)
API 16° API
Recent Production 3,696 barrels of oil equivalent per day (Q1 2014)
Depth 900 metres
Formation Bluesky
Production Potential 7,000 - 10,000 barrels of oil equivalent per day



Mooney is a conventional heavy oil property located in north-central Alberta. BlackPearl has a 100% working interest in approximately 92 sections (58,880 acres) in the Mooney field. The Mooney field produces mainly from the Cretaceous Bluesky sand formation, which is at a depth of approximately 900 metres.

BlackPearl acquired its interest at Mooney when it acquired Atlas Energy Ltd. in 2006. The field was initially developed for conventional production using horizontal wells. A waterflood was attempted in 2006; however, it only recovered an additional 2% to 3% of the oil in place. The Company believed the performance of the Mooney field could be further enhanced through ASP flooding. ASP flooding involves adding a polymer chemical to the water to thicken it. The addition of alkali and surfactant chemicals reacts with the natural acidity of the oil to create an in situ "soap" to mobilize additional reservoir oil. This water and chemical mix is then injected to initially re-pressurize the reservoir and then sweep additional oil to the producing wells. A three well polymer pilot, initiated in 2008 and operated for approximately 14 months was undertaken prior to proceeding to commercial development. During the term of the pilot oil recoveries increased to approximately 18% of the oil in place. Conventional recovery rates without ASP flooding are estimated to be 3% to 5%. As a result of the success of the polymer pilot, in late 2009, the Company filed a development application with the ERCB to commence a commercial ASP flood at Mooney. ERCB approval to proceed with phase one of our commercial ASP flood was received in late 2010 and field construction of the chemical and water handling facilities commenced immediately thereafter. During the implementation of phase one, twenty-five of the existing wells were shut-in and converted to ASP injectors. ASP injection commenced in the third quarter of 2011.

In 2012, we began to see production response from the initial re-pressurization of the reservoir. Production from the ASP flooded area increased from approximately 316 Boe/d in 2011 to approximately 992 Boe/d in 2012. In 2013, production from phase one of the ASP flood averaged 1,864 Boe/d.

In 2012, a new heavy oil processing facility was constructed to handle the increased fluid volumes from the area. The ASP injection facility and heavy oil processing facility that have been constructed at Mooney are expected to accommodate all phases of development at Mooney.

We have also begun development of the phase two and phase three lands at Mooney. As at December 31, 2013, a total of 33 horizontal wells have been drilled on the phase two lands. In 2013, we applied for and received regulatory approval to expand the existing ASP flood to the phase two lands. We are planning to drill two additional wells on the phase two lands in 2014 and then convert the lands to ASP flood. We have drilled one horizontal well on the phase 3 lands and plan to drill up to 10 to 12 additional wells in 2014. There is further expansion potential on our Mooney lands which we plan to test in the future. The oil on these expansion lands is likely heavier than other areas of the pool and we have not established whether ASP flooding is suitable in these areas.

The oil quality at Mooney ranges from 12° API to 19° API, with an average of approximately 16° API. The viscosity of the oil ranges from 150 centipoise to several thousand centipoise.

The Mooney field lies outside the designated Peace River oil sands region and is therefore not eligible for oil sands royalty treatment. However, the Alberta government has programs that encourage EOR developments by reducing royalties on fields with tertiary recovery programs. The Company has received EOR royalty status for phase one of the Mooney ASP flood. The Alberta government is considering changes to its EOR royalty program and, as a result, we have deferred filing our application for EOR royalty status on the phase two lands.

At December 31, 2013, Sproule assigned proved plus probable reserves of 15.0 million Boe to the Mooney area (BlackPearl's working interest, before royalties). In addition, as at December 31, 2013 Sproule has assigned 34.7 million Boe of contingent resources (best estimate) to the Mooney area.  



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