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Report sets stage for Canadian Overseas Petroleum drill start

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An independent resources report has confirmed what the oil driller Canadian Overseas Petroleum’s (LSE:COPL/CSE:XOP) already estimated itself – that there is a deep oil reserve at its land in Wyoming – and has set the stage for the company to start drilling in the last quarter of this year.

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The report, prepared by independent energy consultancy Ryder Scott, conforms with Canadian regulatory requirements and has confirmed that the company’s Frontier 2 and Dakota discoveries are large stratigraphic oil accumulations with total original oil in place of 993.5 million barrels.

Of that, total original oil in place at Frontier 1 is 704,728,000bbls, Frontier 2 is 217,365,000bbls and Dakota is 71,379,000bbls. Ryder Scott’s report assumes that the area in question covers 20,500 acres of operated company lands.

This is not the full extent of the oil reserves under the company’s land as it only evaluates COPL’s working interest leasehold at the Cole Creek Unit, the non-unit working interest leasehold immediately to the north and east of Cole Creek and includes the western portion of the Barron Flats Federal Deep Unit.

Independent assessment

The full extent of Frontier 1 and Frontier 2 has yet to be independently assessed.  “This independent report validates what we announced at the start of the year and highlights the significant potential of our fantastic Wyoming asset. Compiled to Canadian regulatory standards, the report gives a conservative view, and we expect to see further exploration upside in due course once our drilling program gets under way in the coming months,” said president and chief executive of COP, Arthur Millholland.

In the pipeline, COP is drilling three horizontal wells in 2022-2023. The report identifies 118 potential horizontal well locations that can be exploited at the Frontier 2 and Dakota Reserves. The company plans to start off its drilling campaign with three wells: one horizontal Frontier 1 well and two horizontal wells at Frontier 2, with two of them offsetting the 14-30V discovery well drilled in the third quarter of last year. The drilling of the Dakota horizontal well will come later.

Next steps

The next step, expected to take place between October and end of December, will be to evaluate the three Frontier 1 sands by using coring and open hole testing in the first horizontal well in the Barron Flats Federal Deep Unit targeting the Frontier 2 Formation. After that, the company will drill and complete a horizontal well in the Frontier 1 in the Barron Flats Federal Deep Unit.

The Canadian oil driller has also identified suitable well bores at its Cole Creek Unit to convert the Frontier 1 well for production in the fourth quarter of this year. Once that is done the current resource estimates are likely to either be revised or reclassified.

The latest report follows on from the recent financing and acquisition of Cuda Energy, a private oil and gas company under receivership. Cuda has a non-operating interest in a number of units which are complimentary to those of COPL America, an affiliate of Canadian Overseas Petroleum. Both the report and the acquisition have moved the company a notch closer to becoming an oil producer of considerable scale.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

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