United Hunter Oil and Gas Corp. Announces the Results of the Reservoir Engineering Study on the Proposed Purchase of Oil and Gas Interests in Archer County, Texas
United Hunter Oil and Gas Corp. Announces the Results of the Reservoir Engineering
Study on the Proposed Purchase of Oil and Gas Interests in Archer County, Texas
Vancouver, British Columbia – February 6, 2017, United Hunter Oil & Gas Corp . (UHO: TSX-V)
(“UHO” or the “Corporation”) is pleased to provide an update on the exclusive Option Agreement
(“Option”) it has entered into through its US subsidiary, United Hunter Texas, LLC (“ UHT”), with
Wilson Operating Company , et al, for the option to purchase 100% of the vendors’ oil and gas
interests in the Hull Silk Sikes 4,300’ Sand Unit (“HSS Unit”), which is the same zone covered by
the HSS Unit, in Archer County, Texas (the “Property Interest”).
Further to the press release dated December 12, 2016 , a s part of its diligence process, UHT
contracted with Forrest A. Garb & Associates, Inc., (“ FGA”), an international petroleum
engineering and geologic consulting firm staffed by registered engineers and geologists, to prepare a
more detailed evaluation and report on the proposed acquisition in accordance with the guidelines set
out in National Instrument 51 -101 - Standards of Disclosure for Oil and Gas Activities (the
“Report”) effective Dec ember 31, 2016 , as independent reserves auditor . FGA’s final report
focused on the gross barrels of original oil in place and total proved recoverable reserves remaining
from the Property Interest, being defined as a “quantity of oil estimated with reason able certainty to
be economically producible”.
The Corporation is pleased to announce the results of the FGA study, which honored the geologic
and engineering parameters used to determine the remaining reserves and the proposed development
plan from the 2004 report. FGA’s current evaluation included an update to the log analysis,
including additional well logs from more recent wells drilled in the unit. This resulted in an increase
in the porosity value, increasing the original -oil-in- place (“OOIP”) and the remaining reserves over
and above the original estimates calculated in 2004 . Additionally, estimated oil prices, capi tal costs,
and development timing were also updated.
The remaining oil -in-place for the 4,300 -foot sand was estimated by the volumetric method
considering well logs, a geologic structure map, and an isopach map. The total recoverable oil is
estimated to be 41 percent of the OOIP by analogy to comparable reservoirs. The remaining
recoverable reserves for the 4,300 -foot sand , within the 4,300 -foot unit boundary , were estimated
based on the proposed reactivation of the waterflood and infill drilling program developed on 10-
acre spacing.
The revised OOIP for the 4,300 -ft sand is estimated to be 101,680 thousand barrels of oil (MBbls)
(or 101,680,000 Bbls) and a calculated recoverable estimate of 41,690 MBbls. After subtracting the
cumulative production to date (which is estimated to be 26,890 MBbls) the remaining reserves ar e
estimated to be 14,800 MBbls. The estimated gross remaining recoverable reserves are thus
calculated at 14,425 MBbls of oil and a n estimated net recoverable of 11 ,286 MBbls and ar e
categorized as total, proved reserves, as of December 31, 2016.
Benchmark oil and gas prices , for this evaluation , were based on NYMEX futures contract pricing,
as of the close of business December 30, 2016, for 5 years, then escalated at 2% per year thereafter.
Oil prices have been adjusted by lease for gravity (38-40°API), transportation fees, and regional
price di fferentials, thus resulting in an a verage realized oil price for the life of the project is
$65.50/bbl. Over the proposed life of the project, the gross revenue is estimated at $944,880M.
The estimated future net revenues , those which should be realized from the sale of estimated oil and
gas reserves after the deduction of severance taxes, royalties, ad valorem taxes, direct operating
costs, and future capital expenditures, are estimated to be $470,323M.
A more quantitate analysis of additional well logs warranted the increase in reserve calculations over
the previous study . This work also was influenced by additional information that indicates notably
higher formation water salinity. Th e results in the log calculations attributing more of the obser ved
log resistivity to the presence of oil and gas and, therefore, to slightly lower water saturation. These
new analyses rendered average porosity of 12.9 percent and average water saturation of 35.9 percent.
The porosity was revised upwards from 12.0% to 12.9% in the current reserve calculations.
The field redevelopment is estimated to start in the second quarter of 2017 with 3D seismic being
run and processed, after which drilling will commence. First production is scheduled to begin on or
about July 1, 2017. For the purpose of this proposed project, two drilling rigs were utilized to drill
and complete both producers and injectors at a rate of approximately two wells per month and will
continue until all wells are drilled. It was assumed that no ex isting wells will be used due to
degraded wellbore condition. The plan includes the drilling of 112 producers and 102 injection
wells.
The redevelopment of the field utilizes 112 producers and 102 water injectors. FGA has accepted
UHT’s intent to redeve lop the Hull -Silk Sikes field by drilling the proved undeveloped new wells,
drilling the injection wells, and installing the surface facilities as planned.
The HSS Unit is approximately 12 miles southwest of Wichita Falls, Texas and comprises roughly
2,300 acres in a single operating unit . UHO has been advised that t he overall size of the reservoir is
approximately 5,200 acres in size and the HSS Unit, which sits in the heart of the field, has produced
approximately 27,000,000 barrels since its discovery in 1938 through primary and secondary efforts.
Timothy Turner, CEO of the Corporation, stated that “ We are very pleased with the significant
increase in the calcul ated recoverable reserves over and above what the estimated reserves were
when we signed the option exclusive Option Agreement with the sellers. The new estimates include
an additional 2,300 MBbls of net recoverable reserves. We believe such a redevelopme nt program,
as it has been pr oposed, will see significant returns for the Corporation going forward and we will
continue our due diligence efforts in our further efforts to finalize this acquisition.”
Further details will be provide as they become available.
Certain statements in the documents referred to in this press release may constitute forward -looking
statements within the meaning of applicable securities laws. Forward-looking statements include, but are not
limited to, statements concerning (i) the acquisition of the Property Interest; and (ii) potential results from the
Property Interest . Forward -looking statements generally can be identified by the use of forward looking
terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”,
“believe”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events. Such
forward-looking statements reflect management's current beliefs and are based on information currently
available to management. Forward -looking statements involve risks and uncertainties t hat could cause actual
results to differ materially from those contemplated by such statements. Such forward -looking statements are
subject to risks and uncertainties that may cause actual results, performance or developments to differ
materially from thos e contained in the statements including, without limitation, the risks that: (1) UHO may
not achieve the results currently anticipated; (2) UHO may not be able to obtain the financing necessary to
complete these activities; (3) the results of the Report ma y be incorrect . Although UHO believes that the
expectations reflected in its forward -looking information are reasonable, undue reliance should not be placed
on forward-looking information because UHO can give no assurance that such expectations will prove to be
correct. In addition to other factors and assumptions which may be identified in this press release,
assumptions have been made regarding and are implicit in, among other things, the timely receipt of required
regulatory approvals. Details of the ris k factors relating to UHO and its business are discussed under the
heading “Risk Factors ” in the Management Discussion & Analysis dated November 22, 2016, a copy of
which is available on UHO’s SEDAR profile at www.sedar.com. Readers are cautioned that the foregoing list
is not exhaustive of all factors and assumptions which have been used. Forward-looking information is based
on current expectations, estimates and projections that involve a number of risks and uncertainties which
could cause actual results to differ materially from those anticipated by UHO and described in the forward
looking information. The forward -looking information contained in this press release is made as of the date
hereof and UHO undertakes no obligation to update publicly or revis e any forward -looking information,
whether as a result of new information, future events or otherwise, unless required by applicable securities
laws. The forward looking information contained in this press release is expressly qualified by this cautionary
statement.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For additional information, please contact:
Timothy Turner
CEO
(832) 487-0813
Jeff Ratcliffe
CFO
(778) 987-3925
28385644.2