Resource World Magazine

54 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 5 the oil patch report J o e l C h u r y S askatchewan has had its oil and gas renaissance thanks to unconventional drilling and multi-stage fracking within the Bakken shale. However, the prov- ince along with its neighbor in Manitoba could be in for more development, this time at the outer northern fringes of the prolific Williston Basin. The huge basin, spaning two US states and two Canadian provinces, is one of the fastest growing, financed, onshore petroleum regions in less than a decade. Current estimates peg 24 billion barrels of recoverable oil reserves valued of $2.4 trillion as stated by Harold Hamm, CEO of Continental Resources [CLR-NYSE]. So while there are majors playing within Williston, there are pioneers scoping away at the relatively uncharted territory of the basin's northern region. With drilling scheduled for Q1 2015, Saturn Minerals [SMI-TSXV] and part- ner Jaguar Resources [JRI-TSXV] will be chasing what appears to be a large light oil play in the northern Williston Basin. The land base of the combined companies is the largest in the northern Williston Basin at 370,000 acres. They're comprised of two major properties: EP-72 Bannock Creek at 120,000 acres and EP-71 Little Swan at 250,000 acres. From a production standpoint, Saturn and Jaguar appear to be out in the boonies, but the evidence they've compiled so far tells a different story. Given the oil shows they've had both through surface shows and other impressive drill cores from previous mineral exploration drilling cam- paigns, the two appear to be wildcatting with a purpose. "Why do we call it a wildcat play? We call it that because in the Northern Williston there has never been any oil production or major oil discoveries," says Stan Szary, President and CEO of Saturn Minerals. "My dream is that we explore, discover and create a new oil play in Western Canada." Szary's team has definitely stumbled onto something during the company's his- tory, given its transformation from a coal play to a petroleum play. Initial seismic results indicate a Tyvan oil pool-type tar- get on the joint venture's lands. The Tyvan is the closest area compari- son, and a promising one at that. The fault bounded Tyvan oil pools contain upwards of 15 million barrels of recoverable light crude from each structure, and each of those wells is producing in the 150 barrel per day range. Since 2006, production in the Williston has gone parabolic, ballooning to over 72 million barrels produced in less than a decade. Given what they've seen, the Saturn team figures that there's still plenty of space left where the Williston Basin spreads out. "The work we've done so far on Bannock and Little Swan has shown us some indications of really good struc- tures," says Szary. "We have one structure in Bannock which looks particularly good. It's quite large, and at the right level." Due to the lack of major development in the area, Saturn was able to acquire the large land position through a favorable issuance of a Special Exploration Permit (SEP) on each property. Over the last 100 years, there have been approximately 10 wells drilled. Hence, the Saskatchewan government was cooperative in letting Saturn and Jaguar take a solid crack at unlocking what they believe they're seeing out there. And what a great place to conduct wild- cat drilling, as the properties still fit within the large Williston window and drilling costs are expected to be low."These wells will be vertical, not horizontal. Hence, there is no fracking required, and the cost to completion on an initial well is estimated to be between $500,000 and $700,000," says Szary. Should these wells produce in the realm of the Tyvan pools to the south, the per- barrel cost to production would be almost Middle Eastern in nature. "Based on what our partners were able to do in Manitoba, our projected produc- tion costs could be as low as $20 a barrel. Our partners were able to get their costs down to $13 per barrel before, which is approaching Saudi Arabia levels of economics." Given the fact that there is no pipeline infrastructure in the area at present, Saturn and Jaguar are projecting their costs to be in the $20 range, to account for trucking and other methods of getting production to market. However, another bonus for the duo is that a major rail line runs right through their property adding potential for rail transport to market as well. Saturn's partners at Jaguar are no slouches either. The management team is coming off a $100 million merger of their former entity with Crescent Point Energy [CPG-TSX]. Given that their success came from the southern portion of the Basin, the combined team is looking for a repeat of success to the uncharted north. While drilling is expected to take place first on the Bannock Creek property, Saturn looks to have successfully farmed out 50% of its interest in Little Swan. The transaction should add some applicable cash for the company's commitments in the upcoming drilling program. n Saturn and Jaguar chasing Williston Basin light oil

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