Fortem Resources Inc
Effective February 2, 2012, we entered into a Farmout Agreement (“Agreement”)
with Harvest Operations Corp. (“Harvest”). The Agreement provided
for our acquisition of an undivided 100% working interest (“Working Interest”)
in a petroleum and natural gas license covering eight (8) sections of land (5,120
acres, more or less) located in the Compeer Area in the Province of Alberta,
Canada (“Farmout Lands”). The Farmout Lands have no current commercial
production.
The Test Well was spudded on May 27, 2012 and was drilled vertically 905 meters
(2,977 feet) into the Bakken formation. We cut two full bore cores, one from
each of the Viking and Bakken formations, and also ran a drill stem test in
the Viking formation. The plug samples taken from the Viking formation exhibited
strong oil fluorescence indicating light oil and had between 16% and 23% porosity
in the samples. We estimate the net sand pay in the well is approximately 5
meters (16.45 feet). The Bakken formation was found to be uneconomic and was
abandoned. Based on our evaluation, we elected to drill a horizontal leg to
the Test Well running 1,045 meters (3,435 feet) into the Viking formation. The
total depth drilled in the Test Well met the contract depth requirements under
the Agreement.
On September 5, 2012, we received an earning notice from Harvest granting our
company a 100% working interest in the Farmout Lands. Initial production from
the Test Well has been limited by a higher than expected gas solution content.
It is expected the oil ratio will increase as the gas component lessens. Oil
recovered to date is light, sweet crude.
The Viking Formation oil prospect is part of an emerging large oil resource
play in Eastern and Central Alberta as well as in the Dodsland area of Saskatchewan.
We intend to develop the Viking Formation in the Compeer play by up to four
horizontal wells per section per zone.
Our Working Interest in the Farmout Lands are held subject to a non-convertible
overriding royalty payable to Harvest (“Harvest’s Royalty”).
Harvest’s Royalty on net crude oil revenues will be measured on a sliding
scale from 5% to 15% over a range of production volumes from 1 to 150 barrels
per day. Harvest’s Royalty on net gas and other petroleum product revenues
is 15%.