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Malcolm Shaw
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Malcolm holds a MSc in Geology from the University of Toronto and has 13 years of experience spanning the resource and investment industries. He started his career as a geoscientist at PanCanadian Petroleum (now EnCana) before transitioning into the investment industry as an international energy... More
  • Crown Point Update -- Vaca Muerta In Play 0 comments
    Feb 12, 2014 9:08 AM | about stocks: CWVLF

    Crown Point released an update from its Hoyada-1 exploration well in the Neuquen Basin, Argentina. I have included the company's press release below. I have also included a press release from London-listed Andes Energia, which made a similar announcement earlier this month in a block to the north (see map below, clipped from their corporate presentation).

    (click to enlarge)

    I'm still piecing the information together, but Andes Energia appears to have roughly 500 million shares outstanding and went up 15 pence/share on their result (see that company's press release below as well). That's a market cap increase of 75 million British pounds. Also note that they had 40% of the Vaca Muerta rights, versus 100% for CWV.

    With over 350 square kilometres (87,500 acres) of Vaca Muerta modeled as being within the oil generation window in their 100%-owned block, the potential upside numbers quickly become staggering for Crown Point. The other Argentinean players are falling over each other to the south in the Vaca Muerta shale play, but this result, combined with the Andes Energia result, should shift the spotlight onto this part of the basin for Vaca Muerta potential.

    The completion and testing program will be designed over the coming weeks, after which time the company will flow test the well.

    The implications in terms of "optionality" are clear, and it will be interesting to see what the market does with today's information, particularly in the context of the recent Andes Energia activity.

    FOR IMMEDIATE RELEASE CWV: TSX.V February 12, 2014

    Crown Point Energy Inc. Announces the Casing of the 100% interest La Hoyada x-1 Exploration Well as a potential Vaca Muerta oil well at Cerro de Los Leones, Mendoza Argentina.

    Calgary, Canada

    Crown Point Energy Inc. (TSX-V:CWV) ("Crown Point" or "the Company") is pleased to announce that it has drilled, logged, cased and rig released the La Hoyada x-1 exploration well as a potential Vaca Muerta oil discovery on the Cerro de los Leones Concession in the Neuquén Basin, Province of Mendoza, Argentina.

    The La Hoyada x-1 well was drilled to a total depth of 1,953 meters and encountered persistent oil shows and gas while drilling through the Vaca Muerta formation which consisted of 125 meters of shale and 84 meters of imbedded fractured igneous intrusives.

    Crown Point believes that the presence of the oil shows and background gas demonstrates that the Vaca Muerta formation at Cerro de los Leones is mature and generating oil. Analogous wells in the area indicate that the fractured intrusive igneous rocks in the Vaca Muerta could function as a conventional fractured reservoir sourcing oil from the surrounding Vaca Muerta shale. Interpretation of samples and logs indicate that 36 meters of the total 84 meters of intrusives were highly fractured and had the best live oil shows during drilling.

    Similar igneous intrusives in the Mendoza portion of the Northern Neuquén basin are recognized as significant hydrocarbon reservoirs having produced over 26 million barrels of oil to date from areas surrounding Cerro de los Leones.

    Additional secondary targets in the well include a 5 meter thick fractured limestone layer at the bottom of the Chachao Formation and several fractured igneous intrusives in the Agrio Formation all with oil and gas shows and full gas chromatography.

    Crown Point has sent the Vaca Muerta drilling samples for laboratory analysis to obtain information on total organic content and thermal maturity. The Company is commencing to design a completion program for the La Hoyada well.

    A potential analogy to the La Hoyada well is the Vega del Sol well x-1, located on the Cerro de los Leones Concession 4 Km. to the northwest of La Hoyada. This well was drilled in 1995 by YPF and encountered the Vaca Muerta 150 meters structurally lower than the La Hoyada well. It was completed in intrusive igneous rocks penetrating the Chachao formation and production tested at rates between 300 and 400 barrels of oil per day. Due to problems with the well cementation program it was subsequently suspended and abandoned by YPF.

    Crown Point believes that this drilling result is confirmation of the conventional and unconventional potential of the Vaca Muerta formation on Crown Point's 100% interest 314,000 acre Cerro de Los Leones Concession. Crown Point's geological model at Cerro de Los Leones has indicated an area of 350 km2 in the oil generation window.

    Las Varillas x-1 well. Discovery in Vaca Muerta

    The Board of Andes (AIM: AEN; BCBA: AEN) is pleased to announce an update on the "Las Varillas x-1". The well, a multi-target unconventional and conventional exploration well, is located in the El Manzano West block in the Neuquén basin, South Mendoza Province, Argentina.

    Highlights:

    · 410 feet (125 metres) of gross pay in the Vaca Muerta formation discovered

    · Persistent presence of oil shows in the Vaca Muerta formation during drilling

    · Las Varillas well to be fracked and tested

    · Las Varillas well is the most northern well to be drilled into the Vaca Muerta, where Andes has 170,000 net acres

    · Third successful well targeting the unconventional Vaca Muerta formation in Andes's portfolio

    · Oil discovered in the conventional Agrio formation and in the Neuquen Group

    The Las Varillas x-1 well, the most northerly well to be drilled into the Vaca Muerta, was vertically drilled reaching a total depth of 7,851 feet (2,393 metres) and encountered 410 feet (125 metres) of gross pay in the unconventional Vaca Muerta formation, the primary target. The top of the Vaca Muerta formation was penetrated at a depth of approximately 7,290 feet (2,222 metres). The drilling was characterised by the persistent presence of oil and gas shows through most of the Vaca Muerta interval. Geochemical data were sampled at two metre intervals through the entire Vaca Muerta column. Oil was also found in the mud pits. Two 18 metres core samples from the Vaca Muerta formation have been recovered and a comprehensive suite of logs has been run. The analysis of this data during the next few months will provide information on porosity, permeability, total organic carbon content, thermal maturity and hydrocarbon composition, which will be used to design the completion, fracking and production testing of this well.

    With regards to secondary conventional targets, core samples totalling 60 feet (18 metres) were taken from the Agrio formation. The top of the Agrio formation was encountered at a depth of 6,355 feet (1,937 metres) with a gross pay of 859 feet (262 metres). Hydrocarbons were encountered in both the Agrio formation and in the Neuquen Group (the same formation target of the Mirador del Valle x-1 discovery well in El Manzano West block, announced on 13 November 2013), and further analysis of this discovery will be done in the months ahead.

    The Las Varillas x-1 well was drilled by YPF with the assistance of the service company Schlumberger. Andes was fully carried during the drilling of this well, as part of the farm-in agreement with YPF under which Andes has a 100% working interest in all production from the Agrio formation and a 40% carried interest in the Vaca Muerta and other formations.

    Alejandro Jotayan, CEO of the Company, commented: "The Las Varillas x-1 is the third successful unconventional well targeting the Vaca Muerta formation drilled by the JV between Andes and YPF. This well, which proved the existence of the Vaca Muerta formation in the El Manzano West block with excellent petrophysical conditions is located in an area where Andes has 170,000 net acres nearby, out of an overall total of 213,000 net acres covering the Vaca Muerta formation. This, together with the conventional discovery of the Mirador del Valle x-1 in the same area and the current productive Chachahuen concession, places Andes in an exciting position to develop these large unconventional and conventional potential resources, together with the other high potential exploration blocks in the Andes's portfolio."

    Disclosure: I am long CWVLF.

    Stocks: CWVLF
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