LAK Ranch Oil Field
Maha has drilled eight deviated production wells and six water injector wells on the Field since the acquisition in 2013. Two stratigraphic vertical wells have also been drilled. One was extensively cored and deepened to prospect for oil in the deeper Minnelusa sandstone. Extensive field work and laboratory work have confirmed the results obtained in 2007 by Ivanhoe Energy (previous Operator), and a Recovery Factor of 20% has been assigned to the Field by independent experts engaged by Maha. RPS Knowledge Reservoir calculated a best case estimate of original oil in place (OOIP) to be 62 million barrels. To date, less than 150,000 barrels of oil has been produced from the LAK Field.
The oil is of 19 degree API density and is sold to a nearby refinery with a slight discount to the WTI benchmark oil price.
The History of LAK Ranch
The LAK Ranch heavy oil field was discovered in the early 1900's after oil was observed seeping from reservoir sands outcropping within the license area. Poor record keeping prior to the 1960’s leaves an incomplete early exploration history.
In 1957, Parrent Oil Company successfully implemented a solvent Enhanced Oil Recovery (EOR) trial. Unfortunately, the untimely death of a principal owner resulted in premature termination of the project, but not before significant technical successes were achieved.
In 1965, Conoco conducted a limited steam injection ('huff-n-puff') test. Despite positive results, the economics of the time were not favorable for a major oil company and Conoco relinquished the LAK Ranch block.
Local operators drilled two wells during the 1970's but it was not until 1981 that Colorado-based Mapco, (Surtek) applied an advanced alkaline surfactant polymer (ASP) technology, drilled 10 wells, undertook comprehensive laboratory analysis, and commenced field trials on the lease. Financial limitations led to Surtek terminating its involvement.
In 1997, Vancouver based Derek Oil began pursuing a Canadian developed Steam Assisted Gravity Drainage (SAGD) EOR technique.
In 2000, a pair of parallel horizontal wells, each approximately 3000 feet in length, were drilled and a state-of-the-art steam injection and oil processing plant constructed.
In 2005, Derek entered into a joint venture with Ivanhoe. As operator, Ivanhoe completed a 3D seismic survey in 2005 which greatly improved the understanding of the dipping Newcastle reservoir. Ivanhoe also drilled three vertical injection wells and successfully proved up a limited 2.5 acre pilot steam drive. In 2007, Ivanhoe terminated their association with the LAK Ranch to pursue a proprietary technology business.
In 2007, Derek undertook a modified 5-spot steam injection project by drilling twelve wells. Maha believes that the 2007 twelve-well program did not make use of the available 3D seismic to properly plan the wells, that the steam injection wells were configured incorrectly and the poor pump selection by the operator resulted in multiple premature pump failures.
Maha purchased the asset from Derek Oil in early 2013 and assumed operatorship.
The Illinois Basin is one of the oldest and most prolific hydrocarbon producing basins in North America. According to historical records, oil was first discovered largely by accident during the 1860s.
Some 45 years later, production reached commercial levels with ~181,000 barrels being produced in 1905. Since then, the Illinois Basin has produced upwards of 4.2 billion barrels of crude oil, and in recent years continues to produce around 9.5 million barrels annually. Current estimates point to around 10 billion barrels of oil remaining unrecovered primarily in known Illinois Basin fields alone. Hydrocarbon bearing reservoirs are typically found in shallow stacked Mississippian carbonate sequences, the most notable being the Salem and Warsaw formations.
A combination of stratigraphic pinch-outs and regional structuring effectively trap the light 35° API oil within what are largely considered independent carbonate sequences.
The relatively shallow stratigraphic position and segregated nature of these carbonate reservoirs make them prime low risk targets for modern exploitation. Additionally, with the potential of near field discoveries being high, our Illinois assets are the perfect embodiment of Maha’s 50:40:10 portfolio pyramid. The Illinois Basin assets firmly form a solid base and foundation in the portfolio pyramid being low risk producing assets.
Upwards of 100 Potential Drilling Locations
As of March 2020, Maha purchased 160 BOPD of Illinois Basin producing assets, along with 2.014 million barrels of proven (P) oil reserves, 2.941 million barrels of proven + probable (2P) and 5.213 million barrels of proven + probable + possible (3P) oil reserves.
With upwards of 100 potential drilling locations, these assets have huge growth potential. Coupled with low operating costs, development of our newly acquired Illinois Basin assets is a strategically important step that will make significant and reliable long term contributions to Maha's overall growth as an energy producer.