Mountainview Energy Ltd. is pleased to provide an operational update.
Wigness 5-8-1H, Section 5 & 8 T162N-101W, Divide County, North Dakota
The completion program on the Wigness 5-8-1H (the “Wigness Well”), a horizontal Three Forks well, began on the morning of December 29, 2012, with the commencement of a 26-stage fracture treatment. The Company used the “Plug and Perforate” method and completed fracing operations on January 2, 2013. Sanjel performed the fracing operations and successful fracture treatment was achieved at each stage without any difficulties. The Wigness Well is currently flowing back and the Company intends announce an initial production rate by the end of January.
Through its wholly-owned subsidiary Mountain Divide, LLC (“Mountain Divide”), the Company holds a 93.75% working interest in the Wigness Well, 25% of which is subject to reversion to another working interest owner following payout of 100% of the cost of their proportionate working interest costs in the well plus a 200% penalty. Pursuant to Mountain Divide’s previously announced credit facility (the “Facility”), all of Mountain Divide’s oil and gas properties located in Divide County, North Dakota (including the lands in the 12 Gage Project) are subject to a 39% after pay-out net profits interest (the “NPI”) held by Mountain Divide’s lender under the Facility (the “Lender”). The NPI is defined as all revenues received by Mountain Divide, less all operating costs, production taxes, and capital costs incurred by Mountain Divide. Payments on the NPI shall commence upon repayment in full of the outstanding Facility. Pursuant to the agreements underlying the Facility, the NPI will automatically reduce to 20% once the Lender achieves a 1.65 x return on investment.
Leininger 3-10-1H, Section 3 & 10 T162N-R101W, Divide County, North Dakota
The Company spudded the well on December 12, 2012 and completed drilling operations on the Leininger 3-10-1H well (the “Leininger Well”) on December 28, 2012 to a Total Depth of 18,440’. The Company is preparing the Leininger Well for a 26 stage fracture stimulation, which will commence on January 25, 2013. Total operational days from spudding the well to releasing the rig was 16 days—3 days less than the Wigness well and Mountainview plans to complete the Leininger Well by the end of January, 2013. The Leininger Well is the second Bakken/Three Forks well in the three well winter drilling program on Mountainview’s 12 Gage Project. The Leininger Well is located approximately 2 miles east of the Wigness Well. Through Mountain Divide, the Company holds a 87.47% working interest in the Leininger Well, 3 to 4% of which is subject to reversion to another working interest owner following payout of 100% of the cost of their proportionate working interest costs in the well plus a 200% penalty. The Leininger Well is also subject to the NPI.
Olson 35-26-1H, Section 35 & 26 T163N-R101W, Divide County, North Dakota
Mountainview has rigged up Nabors 460 on the Olson 35-26-1H (the “Olson Well”) location. The Olson Well is the final well planned for the three-well winter drilling program on Mountainview’s 12 Gage Project and is located approximately 2-3 miles north-east of the Leininger Well. To date, the Company has drilled and cemented 9 5/8” surface casing to 1435’. Through Mountain Divide, the Company holds a 60.07% working interest in the Olson Well, 3 to 4% of which is subject to reversion to another working interest owner following payout of 100% of the cost of their proportionate working interest costs in the well plus a 200% penalty. The Olson Well is also subject to the NPI.
12 Gage Regional Activity Update
As previously stated there are currently at least five operators developing the Middle Bakken and Three Forks formations near the 12 Gage Project: American Eagle Energy Corporation, SM Energy Company, Samson Resources, Crescent Point Energy Corp. and Baytex Energy Corp. All of the following operators are continuing their development of the Bakken/Three Forks play near the 12 Gage Project. As previously stated, Northwest Divide County has seen recent M&A activity with Continental Resources and Magnum Hunter Resources each making acquisitions in the area. Along with these acquisitions, Murex Petroleum has also permitted wells in the area near the Company’s 12 Gage Project.
Non-Operational Update – Williston Basin
To date the Company has participated in 10 (gross) Bakken/Three Forks wells in the Williston Basin.