This medium-risk, deep foothills, light oil and gas play located near Turner Valley, targets the Rundle and Mannville formations. Our 50.4% interest in 640 acres is now operated by Goldnev. The main zone of interest is the Rundle, with Blairmore gas as a secondary target. The land is located over a basically unexploited oil accumulation called the Kew structure, believed to be a faulted out slice of the same structure as the original Turner Valley play.

This play is verified by an existing well on one section, drilled by Shell at 13-21-020-03 W5M, that initially produced at 600 bopd. Goldnev’s first stage, re-entry of the well, was completed August 2010. There is on-going production testing and removal of formation fluid with an expected addition of 100-150 BOD. Stage 2 is drilling of dual leg horizontal new well with expectation of each leg coming on stream at between 400-600 BOD and estimated addition of up to 3M barrels of reserves.

Our potential well site is located by key infrastructure and a paved road. This will allow for multiple drills from the same up-hole location. These are important considerations, as the area has seen a good deal of residential development. The 1.5 sections will allow for at least two more pad locations.

This structure has seen four wells completed into it, all of which encountered oil from the Rundle zone and all of which eventually failed due to mechanical issues. We believe that increased knowledge of the geology and new technology will mitigate these risks. Based on analogs from the existing Turner Valley field, we are expecting horizontal drills to provide very high flowing oil rates.