SANTA BARBARA,
CA, Dec. 7, 2011 /PRNewswire/
- Underground Energy Corp. ("Underground", "UGE" or the "Company")
(TSX VENTURE: UGE) today provided an operational update as it
continues the process of integrating the six properties covering
39,778 gross acres (29,854 net) that were acquired on November 23, 2011.
"Following the completion of our recent
acquisition, we are working to rapidly integrate the acquired
assets into our portfolio and promptly advance the nearest-term
development opportunities, particularly at the Zaca field," said
Michael Kobler, President and CEO of
Underground. "Our focus for the balance of the year will be on
completing the necessary logistics required to ensure that we can
begin drilling at both Zaca and Asphaltea as early in 2012 as
possible."
Zaca Field Extension
At the recently acquired Zaca Field Extension in
the Santa Maria Basin where
Underground is now the operator and has an 80% working interest in
7,750 acres (6,200 net), the Company has completed reprocessing
existing 2D seismic and has planned the well path for its initial
"step out" development well. The Company intends to commence
drilling this well early in 2012 and, on that basis, is in the
process of scheduling an appropriately sized rig.
The Company has also commenced acquisition of a
2D seismic swath survey over an area of more than 30 miles to
obtain infill coverage between existing older seismic lines. The
new seismic survey is expected to conclude in two weeks with
processing and interpretation expected to be completed by the end
of January 2012. The Company will
also stimulate the existing well at Zaca which currently produces
15-20 bopd; this process is expected to increase current production
from this well.
The Zaca field has produced more than 32 million
barrels of oil from the Monterey
formation to the West of UGE's lease. The existing 2D seismic
indicates that the field extends up dip to the Northeast of the
developed portion of the field and that multiple adjacent untested
Monterey prospects exist on
Underground's lease. UGE has identified an additional 20 to
30 drilling locations on the Zaca Field Extension and several more
in the adjacent exploratory prospects.
Asphaltea
The seismic swath survey shot at the Company's
Asphaltea property in the Santa
Maria Basin in July 2011 has
now been largely processed. Based on the information received to
date, the Company has identified an initial drilling location and
has elected to conduct a small, follow-on seismic shoot which it
believes will provide it with additional precision in positioning
the bottom-hole location of the initial well. Processing and
interpretation of all seismic data from Asphaltea is expected to be
complete by the end of January 2012
with drilling expected to commence thereafter.
Other Operational Activities
As part of its recent acquisition, the Company
acquired significant 2D and 3D seismic over a number of the
properties and the Company is in the process of loading this data
into its geophysical models for interpretation and evaluation of
potential drilling targets across its portfolio. Over the next
several months, the Company will also receive 3D seismic relating
to its Buttonwillow Deep Prospect in the San Joaquin Basin from the large 3D shoot
being jointly undertaken by Occidental and Venoco; it will also
monitor a planned Venoco well which offsets its Buttonwillow property.
At the Burrell Redevelopment Prospect in the
San Joaquin Basin, work was
recently undertaken to shut off sand production by packing the well
with resin-coated sand. This recompletion work appears to have
stabilized the current production of the well at approximately 35
bopd. In addition, Underground is planning to re-complete the
producing well at its Challenger Gas Trend property by perforating
a shallower sand formation that showed good gas saturation when the
well was initially drilled. Underground believes that it can
significantly and efficiently increase production from this well
from its current 60 mcf/d.
GLJ Petroleum Consultants, the Company's
independent qualified reserves evaluator, has initiated work on the
Company's year-end 2011 NI 51-101 compliant reserves assessment of
the properties acquired by the Company and it is anticipated that
this report will be completed by the end of January 2012.
About Underground Energy Corporation
Underground Energy is focused on identifying,
acquiring rights to, exploring for, developing and producing oil
reserves from shale formations in North
America using the latest exploration and recovery techniques
and technologies. Underground focuses on identifying and acquiring
sizable land positions and prospects in historically prolific but
under-explored shale formations as well as in emerging shale plays
that, in both instances, hold large volumes of prospective
resources. Underground currently holds hydrocarbon rights on
approximately 80,303 net acres of highly prospective lands in
California and Nevada with an initial focus on the
Monterey shale in California. Underground is listed on the TSX
Venture Exchange under the ticker symbol "UGE". For more
information on Underground, including a copy of the Company's
latest corporate presentation, please visit www.ugenergy.com.
Underground's regulatory filings are available under the Company's
profile at www.sedar.com.
Cautionary Statements
Historical production data for Zaca is
based upon the records of the California Division of Oil and Gas
and Geothermal Resources obtained by the Company on August 24, 2011.
Statements in this press release contain
forward-looking information and forward-looking statements within
the meaning of applicable securities laws (collectively,
"forward-looking information"). Forward-looking information is
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. In particular, forward-looking
information in this press release includes, without limitation,
statements with respect to: (i) the Company's planned seismic
operations to be conducted on such oil and gas leases; and (ii) the
prospectivity of such oil and gas leases for oil and gas and the
anticipated drilling, completion and production results
therefrom. Readers are cautioned that assumptions used in the
preparation of forward-looking information may prove to be
incorrect.
Although we believe that the expectations
and assumptions reflected in the forward-looking information are
reasonable, there can be no assurance that such expectations or
assumptions will prove to be correct. In particular, assumptions
have been made that: (i) Underground will be able to obtain
equipment and regulatory approvals in a timely manner to carry out
exploration and development activities; (ii) Underground will have
sufficient financial resources with which to conduct its planned
capital expenditures; and (iii) the current tax and regulatory
regime will remain substantially unchanged. Certain or all of the
forgoing assumptions may prove to be untrue.
Forward-looking information is based on
the opinions and estimates of management at the date the statements
are made, and is subject to a variety of risks and uncertainties
and other factors (many of which are beyond the control of
Underground) that could cause actual events or results to differ
materially from those anticipated in the forward-looking
information. Some of the risks and other factors could cause
results to differ materially from those expressed in the
forward-looking information include, but are not limited to:
operational risks in exploration, development and production;
delays or changes in plans; competition for and/or inability to
retain drilling rigs and other services; competition for, among
other things, capital, acquisitions of reserves, undeveloped lands,
skilled personnel and supplies; risks associated to the uncertainty
of reserve and resource estimates; governmental regulation of the
oil and gas industry, including environmental regulation;
geological, technical, drilling and processing problems and
other difficulties in producing reserves; the uncertainty of
estimates and projections of production, costs and expenses;
unanticipated operating events or performance which can reduce
production or cause production to be shut in or delayed; incorrect
assessments of the value of acquisitions; the need to obtain
required approvals from regulatory authorities; stock market
volatility; volatility in market prices for oil and natural
gas; liabilities inherent in oil and natural gas operations; access
to capital; and other factors. Readers are cautioned that
this list of risk factors should not be construed as
exhaustive.
The forward-looking information contained
in this news release is expressly qualified by this cautionary
statement. Underground does not undertake any obligation to
update or revise any forward-looking statements to conform such
information to actual results or to changes in our expectations
except as otherwise required by applicable securities
legislation. Readers are cautioned not to place undue
reliance on forward-looking information.
BOEs may be misleading, particularly if
used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl has been
used and is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Underground Energy Corporation
