Under the terms of the agreement, FAR will have a 15% working interest in an initial test of the deep pressured Wabamun fractured carbonate reservoir, which is estimated by Suncor to have potential recoverable reserves of 17 billion cubic feet. The 600-acre lease is part of a broader area of mutual interest.
Participation in the initial test well also earns FAR an option to participate in an additional, much larger (50 bcf plus), seismically controlled Wabamun prospect north-east of the initial test site on an 800-acre lease, according to FAR executive chairman Michael Evans.
Several low-risk lower potential Cretaceous targets have been identified on both blocks, with up to four locations in each section, according to FAR.
“Kakwa is an opportunity identified by our Houston office that has the potential to generate significant cash flows for FAR in the very near term,” Evans said.
“Following meetings between FAR, joint venture partner Reeder and Suncor during the recent NAPE expo in Houston, the Kakwa project is seen as a building block for participation in further opportunities in Canada with Suncor, one of Canada’s leading energy providers. Having a rig contracted in this market is an added plus.”
The initial test well is to be drilled to a planned total depth of 13,000 feet (3950m) and is expected to take about 60 days with an estimated dry hole cost of $C4.7 million ($A5.54 million).
The location is immediately adjacent to a highway and to a pipeline offering good logistics for early production in the event of success, according to FAR.
Technical analysis suggests an excellent chance of encountering the seismically defined Wabamun reservoir but the play is supported by additional secondary targets in the Cretaceous (estimated 2 bcf potential) at shallower depths, according to Evans.
“Analogue fields for the Wabamun play are Berland River (57 bcf) and Musreau (16-20 bcf),” he said.
“Initial production rates of 15 million cubic feet per day are considered likely for the Wabamun reservoir. Gas prices are similar to those achieved in the broader North American market with payback possible within 18 months.”
Working interests in the Kakwa project will be Calgary-based Choice Resources (operator with a 40% stake), First Australian Resources (15%); Texas-based companies Reeder Energy (15%) and MBOE (10%); and British Columbia-based companies Running Fox Resources and Bolthouse Capital (10% each).
The leases are subject to overriding royalties retained by Suncor.
Suncor Energy is an integrated publicly traded energy company, strategically focused on developing one of the world’s largest petroleum resources, the Canadian Athabasca oil sands. In addition, it explores for, develops and produces natural gas in Western Canada and refines and markets a range of petroleum and petrochemical products.
