LAK Ranch Asset

LAK Ranch Oil Field

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 Energy 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 has drilled 6 ‘horizontal’ wells on the Field since the acquisition in 2013. Two 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, and a Recovery Factor of 20% has been assigned to the Field by independent experts engaged by Maha. RPS Knowledge Reservoir calculated the base 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 quality and is sold to a nearby refinery at close to WTI oil price. The field is now undergoing an expansion program which will include a hot water flood and additional production well drilling.