Effective with the signing of the Farmin Agreement, the Company now holds participation interests in approximately 4,500 gross (3,200 net) acres in two prospective areas named Tejon Extension and Tejon Main. The acreage position is situated between the Tejon North and Tejon Fields which together have surpassed 100 mmboe of oil and gas production. East West will contribute $2.5 million to the joint work program over the next four to six months, holding a 25% participation interest in Tejon Extension leases and a 21.25% participation interest in Tejon Main leases. East West funds will be used to participate in the drilling of two exploratory wells and for acquiring additional joint leases in the area. Sproule and Associates has estimated the unrisked gross resource potential of the Tejon Main and Tejon Extension areas at 11.16 mmboe (P50), with a probability of success ranging from 30% – 80% across a number of target zones.
A drilling rig has been contracted and expected to arrive on location shortly, with Lani to operate in the first well of the program at the Tejon Extension location. The well will test a number of sands in a stratigraphic and structural setting to a depth of 7,500 ft. Shallower secondary targets also exist at this location. The targeted sands are productive in the Tejon North and Tejon fields north and south from the well location.
Under the terms of the AMI, East West and Lani plan to jointly acquire additional prospective acreage on a 50-50 basis in the southern San Joaquin Basin. Lani will assume operatorship of the AMI area, with the Company having an option to become operator at a later date. Lani had acquired approximately 1,000 gross acres at the time of entering into the AMI. East West and Lani hope to add at least an additional 7,000 gross acres in the new play area.
The San Joaquin Basin is being targeted due to the emergence of unconventional hydrocarbon plays in this prolific basin plus significant conventional oil and gas reserves continuing to be discovered. Over 35 bboe have been discovered in the basin. In 2009, Occidental Petroleum Corporation announced it had made a major 150-250 mmboe conventional discovery in the Basin’s deeper geological section. Current production from Occidental’s new discovery is about 150 mmcf/d and 7,500 bpd liquids. The East West-Lani exploration program will focus on a number of shallow oil prospects and leads and target the deeper section that is thought to have similar geologic characteristics to the Occidental discovery area.
David Sidoo, Chairman, commented, “East West is extremely pleased to have completed these agreements with Lani. We look forward to commencing drilling operations shortly and working closely with the Lani team to identify additional sites for future leasing and drilling.”
Reserves and Resources
The prospective resource estimate referenced above has an effective date of December 31, 2011, and have been prepared and audited in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”).
Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both a chance of discovery and a chance of development. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources.
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf : 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Mr. Barry Chovanetz, a petroleum engineer registered in the state of Texas, USA and the Company’s VP of Engineering, has reviewed and approved the technical disclosure in this news release.
About East West Petroleum Corp.
East West Petroleum is a TSX Venture Exchange listed company which was established in 2010 to invest in emerging unconventional and conventional resource plays, leveraging management’s knowledge of international opportunities and unconventional play technical expertise. In its first 18 months of operations, the Company has built an attractive platform of assets: an oil-prone, exploration block in the Assam region of India with the three largest E&P Indian firms ONGC, Oil India and GAIL; four exploration concessions covering 1,000,000 acres in the prolific Pannonian Basin of western Romania and a 500,000 acre exploration block onshore Morocco with conventional and unconventional potential. The Company has also established oil and gas production in Canada. The Company is now poised to enter operational phases in Romania, where it will be fully carried by its partner Gazprom-controlled Naftna Industrija Srbije in a seismic and 12-well drilling program commencing in 2013. The Company will operate geological field work and a seismic program to firm up drilling locations in Morocco. The Company is well funded to cover all anticipated seismic and drilling operations through 2013, with funds available to secure other exploration and/or producing properties.
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.