|February 16, 2012 - Vancouver, British Columbia (TSX-V: BBI) Blackbird Energy Inc. ("Blackbird" or the "Company"), is pleased to announce that, further to Blackbird's news release of January 17, 2012, Donnybrook Energy Inc. has informed the Company that the third Montney Horizontal well at Bigstone is scheduled to spud within two weeks from a surface location at 4-28-60-22 W5M and will be an extended reach Hz well with approximately 2,700 metres of lateral length planned to a bottom hole location at 13-33-60-22 W5M. |
Operational Update on Second Montney Horizontal Well
Production tubing has been installed in the Bigstone Hz 15-32-60-22 W5M well and a seven day production test has been completed. The well flowed at an average rate of 1.1 mmcf/d. As previously reported, a review of the 23 stage hydraulic fracture stimulation that was performed on the well indicates that only 5 of the 23 stages of the planned fracture program were successfully stimulated. This rate is consistent with the interpretation that only 5 of the 23 stages are contributing to the well's production. As a result the reported well completion test rates do not reflect the quality of reservoir the well encountered while drilling. The 15-32 well encountered 2,744 metres of high quality Montney reservoir with strong gas shows and excellent penetration rates. The reservoir encountered is comparable to the Montney interval that was successfully completed in the Blackbird Hz 14-29-60-22 W5M Bigstone discovery well (37.5% BPO; 25% APO). The 14-29 well has a 1,200 metre lateral length and tested 4.3 mmcf/d of natural gas and 295 barrels of condensate per day - a ratio of 70 barrels of NGLs per mmcf of gas (1,011 barrels of oil equivalent per day).
Bigstone is located in an area of significant industry activity and recent drilling and completion successes. A 2,760 metre extended reach horizontal well has been recently drilled and completed by an industry competitor offsetting Blackbird's lands 800 metres to the west and parallel to Blackbird's 14-29 well. This well terminated approximately 200 metres from Donnybrook's land block. The operator of the well reported a final 24 hour test rate, after a 4 day flow period, of 12.5 mmcf/d of natural gas and 770 barrels of condensate per day and an estimated 30-35 barrels of condensate per mmcf. This well further demonstrates the potential of the Montney reservoir to the west and indicates the reservoir continues to the northwest onto Blackbird's land block.
Construction of Pipeline and Surface Facilities
Construction operations for the pipeline and surface facilities connecting the 14-29 and 15-32 wells is projected to start late February with wells and facilities ready for production to start by April 1st, 2012.
Unsecured Loan Facility
Blackbird also announces that it has entered into unsecured loan agreements with certain of its directors/officers and several third parties for the provision of loans in the aggregate amount of $1,015,000 (the "Loans"), the purpose of which is to help fund the Company's obligations in respect of the Bigstone Project, specifically in regards to the construction of the pipeline and surface facilities. The Loans are for a one year period and are subject to an annual interest rate of 20%, payable in full at maturity. The terms of the Loans permit the Company to prepay all or part of the Loans at any time and from time to time without bonus, penalty or premium. Approximately 70% of the Loan funds were provided by directors and officers of the Company.
Garth Braun, Chief Executive Officer and Director of Blackbird, commented, "we are very pleased to announce these two major developments in regards to first, the status of the second Montney well and the positive results therefrom, despite the completion issues that were encountered, and second, the commencement of the installation of the production infrastructure. We are now very excited about proceeding onto the third well."
Blackbird's Bigstone Project is comprised of lands and licences covering a total of 5,120 acres (1,120 nets acres), in Township 60, ranges 22 and 23W5 at Bigstone, Alberta. Blackbird has completed all the terms of the farm in agreement, and has earned a 25 per cent of Donnybrook Energy Inc.'s interest in the Bigstone lands and in any future operations within an area of mutual interest.
Blackbird's wholly-owned subsidiary Blackbird Energy LLC ("Blackbird Energy") holds a 75% interest in 3,857 acres of leasehold land located in Gray County, Texas known locally as the "Mathers-Gordon Prospect". The Mathers-Gordon Prospect is a multi pay oil and gas prospect. Blackbird Energy is the operator of the prospect. In addition, Blackbird plans to actively look for further oil and gas properties for acquisition or potential joint ventures.
On behalf of the board of
BLACKBIRD ENERGY INC.
Per: "Garth Braun"
Chief Executive Officer and Director
QIS Capital Corp.
Ph: (250) 377-1182
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding Donnybrook's ability to drill the next well on the project, the timing of the drilling and any results from the well specifically or the Montney Shale play in general and the timing of production and any related facilities. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management's current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a downturn in general economic conditions in North America and internationally, (2) the inherent uncertainties and speculative nature associated with oil and gas exploration and production, (3) a decreased demand for natural gas, (4) any number of events or causes which may delay or cease exploration and development of the Company's property interests, such as environmental liabilities, weather, mechanical failures, safety concerns and labour problems; (5) the risk that the Company does not execute its business plan, (6) inability to retain key employees, (7) inability to finance operations and growth, and (8) other factors beyond the Company's control. These forward-looking statements are made as of the date of this news release and, except as required by law, the Company assumes no obligation to update these forward-looking statements, or to update the reasons why actual results differed from those projected in the forward-looking statements.
Oil Equivalency Conversion (BOE)
Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to BOE at a ratio of 6,000 cubic feet of natural gas to one barrel of oil equivalent (6 Mcf = 1 BOE). The conversion ratio is based upon an energy equivalent conversion method, primarily applicable at the burner tip and does not represent value equivalence at the wellhead. BOE values may be misleading, particularly if used in isolation.
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