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VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 12, 2013) - Britannica Resources Corp. (News - Market indicators) (The "Company") is pleased to announce on February 6, 2013, executed a definitive Farm-In Agreement & Model Form Operating Agreement (A.A.P.L. Form 610) with Anderson County Land Company ("ACLC") previously announced on January 3, 2013, to earn a 33.3333% working interest in the Days Chapel Enhanced Oil Recovery ("EOR") Project ("Days Chapel" or the "Project"), located in Anderson County, east Texas approx. 110 miles southeast of Dallas, Texas.
Britannica received TSX Venture Exchange (the "Exchange") approval on the transaction January 25, 2013. A finder's fee of 450,000 shares will be issuable to Rex Obermann in stages, in accordance with Exchange rules and policies.
Britannica must expend US$1,500,000 in exploration expenditures on the Project to earn an undivided 33.3333% working interest subject to a total royalty burden of no more than 20%. Britannica has a further option to acquire up to an additional 17.6667% working interest (in 1% increments) of the Project. The purchase price shall be based on a National Instrument 51-101 compliant revised independent Reserve Report and will utilize the value of Proven plus Probable oil reserves at a 20% discounted present value, subject to certain maximum prices depending on valuation methodology used. The purchase price can be paid by up to 2/3rd in shares of Britannica with the remainder in cash based on an agreed formula.
The first phase of the exploration program on the Days Chapel Project is expected to begin shortly, it will include a Drill Coring Program, independent laboratory analysis and geological review. The results from the Drill Coring Program will provide information to update a NI 51-101 compliant independent reservoir engineering report such that all or a portion of Probable Reserves can be reclassified as Proven Undeveloped Reserves. Also, Britannica intends to commission a Reservoir Modeling engineering firm to model the Days Chapel pool using a data set inclusive of the Coring Program results, that will recommend the best enhanced oil recovery techniques, which may include lateral or horizontal drilling that will maximize the recovery factor and reduce the fully developed and produced cost per barrel.
The Days Chapel oilfield in Anderson County, East Texas is shallow Carrizo sand (Eocene Formation) at a depth of 550 feet to 700 feet. The formation lacks natural reservoir "drive" in the form of solution natural gas or water drive. Accordingly, it must be artificially heated to enable the oil to be produced. The Days Chapel oilfield is one of a number of contiguous Carrizo oilfields in the southern part of Anderson County. Whereas the Carrizo formation lacks natural reservoir energy in the form of solution natural gas or water drive, in the late 1960's Shell Oil Company developed the Slocum field, less than two miles south of Days Chapel with a full scale steam-injection using vertical well 7-spot injection patterns. Slocum was Shell's initial steam injection EOR project, in North America, producing over 4 million barrels of oil. Expertise developed by Shell, at Slocum, was subsequently applied on its Belridge (Kern River) heavy oilfield in the San Joaquin Valley of California near Bakersfield as well as in its Alberta heavy oil fields.
Shell drilled 11 core holes at Days Chapel and this data was used by a successor operating company, Dallas Gas & Electric ("DG&E"), to map the Days Chapel oilfield in the early 1990's. DG&E also drilled a number of core holes to calculate the porosity, permeability, and oil saturation of this reservoir as well as one test oil well. The data from these core holes and oil well was applied, together with the Shell core hole data, by DG&E to prepare Upper Carrizo Sand Net Pay Isopach maps for Days Chapel and determine OOIP. DG&E was placed in Chapter 11 bankruptcy by 1993, and as such never pursued development of the Project.
Characteristics of the Carrizo formation obtained from the core holes and test well are:
- Oil gravity - 18 degrees to 20 degrees API;
- Viscosity - 800centipose;
- Porosity - Average of 36%;
- Permeability - 1,500 Millidarcies, and
- Oil saturation - 45%.
The Days Chapel Project has established infrastructures that include paved highways throughout the property, rail access, a sale gas pipeline runs through property, good water sources with rights, valid lease and Mineral Deeds have been assembled by ACLC over a 4-year period. The Project is strategically located close to the Gulf Coast Refineries in the Houston Ship Channel and Beaumont/Lake Charles areas. The price differential has ranged between $20.00 and $30.00 per barrel higher in January 2013 as compared to what Canadian oil producers received.
ON BEHALF OF THE BOARD
Jeffrey Cocks, President