In connection with the search for strategic alternatives, Grey Wolf Exploration initiated an engineering review of its most significant producing reserves at Pouce Coupe/Valhalla and a review of the resource potential on its lands.
The company has included the use of horizontal drilling and multi-stage fracturing treatments of the Montney and Doig formations. Given the close comparison of the evaluations, Grey Wolf Exploration believes that this gives greater confidence in its reserve evaluation as these results are within the normal margins of error, and there were no major differences in the reports, though GLJ Petroleum Consultants (GLJ) did assign lower proved and higher probable reserves to the lands than did DeGolyer & MacNaughton (D&M). The GLJ review was only in respect of the Pouce Coupe/Valhalla reserves which represents only a portion of the total reserves of Grey Wolf Exploration Exploration, which as reported earlier are 7,163 Mboe proved, and 14,105 Mboe proved plus probable. It is to be noted that the estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.
GLJ also performed a resource evaluation of the Doig and Montney formations on the Pouce Coupe/Valhalla lands. The report concludes working interest proved plus probable reserves are 44,255 MMcf and the contingent resources are 32,209 Mcf for the best estimate. This provides a combined range from a best estimate of 76,463 MMcf to a high estimate of 128,138 MMcf. This supports Grey Wolf Exploration Exploration’s contention that considerable reserves plus resources remain undeveloped on their lands.
A resource study of the natural gas potential in the Horn River Shales of the Petitot area of northwestern Alberta was undertaken, on behalf of Grey Wolf Exploration by AJM Petroleum Consultants of Calgary (.AJM.). The report indicates that the raw undiscovered natural gas resource initially in place under Grey Wolf Exploration lands ranged from a low of 473 billion cubic feet (Bcf.) to a high of 941 Bcf. This equates to 11.8 Bcf per section, ranging up to 23.5 Bcf per section in the 40 sections of 100 percent Grey Wolf Exploration lands deemed to be in the play. AJM has identified these resources as undiscovered and accordingly there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Grey Wolf Exploration has not booked any reserves in the Horn River Shales at Petitot
It is to be noted that a vertical well drilled by Grey Wolf Exploration (100%) in the winter of 2007/08 at 14-1-123-11 W6M tested gas at 1.4 million cubic feet per day from the Klua Evie section of the Horn River Shales, after a 16 tonne frac.
Robert L. G. Watson, chairman and chief executive officer of Grey Wolf Exploration said “these are merely small steps towards the recognition of the complete reserve potential in the Doig and Montney at Pouce Coupe, and the Horn River Shales at Petitot. We see the potential for a dramatic increase in Grey Wolf Exploration .s reserves over time.”
