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CalStar Oil & Gas Ltd.
Suite 601 Asia Pacific Centre
100 4th Ave. S.W. Calg AB T2P 3N2
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KEY EXPLORATION PLAYS IN NORTH AMERICA
Update as of January 28, 2008
Minimize Risk - Maximize Return...............................
CalStar Oil & Gas Ltd. has announced the results of its first well in the Fenn Big valley project in central Alberta. The Leduc #1 Well has encountered commercial oil potential across two intervals; 1903 to 1932 KB meters (limestone) and 1940 to 1962 KB (dolomite) in the second interval, both in the Leduc formation. A stimulation program is being designed to establish commercial rates in our Leduc #1 Well. The hydrocarbons recovered from all tests conducted were light oil and solution gas. The second location is up-dip and shows strong likelihood of having trapped significant volumes of oil. It will be spudded in February of 2008.
CalStar signed a Seismic Option and Farm-Out Agreement with Chevron U.S.A. Inc., of Houston, TX, covering its acreage in the San Joaquin Basin, adjacent to the Kern River Oilfield in Bakersfield, Calif., in July 2007. CalStar expects to begin drilling in the first or second quarter of 2008. As announced on January 9, 2008, the 3-D seismic acquisition over the AMI area has been completed and the data is currently being processed. A portfolio of future drilling prospects will be identified beginning in February 2008. The wells at East Slopes will be relatively inexpensive to drill and complete. The program will be four wells initially, with a total of nine wells in the first six months.
CalStar Oil & Gas Ltd. (CalStar) has developed two key projects of significant potential:
1) East Slopes of the San Joaquin Basin Oil Exploration & Development Project
CalStar Canada, through a wholly owned subsidiary owns an 80% interest in Nomad Hydrocarbons LLC (NHLLC). NHLLC is a 50% Joint Venture (JV) partner in the exploration and development of undrilled oil fields in an Area of Mutual Interest (AMI) covering over 2500 Sections on the East Slopes of the San Joaquin Basin in King, Fresno Tulare and Kern County, California. The JV Partners entered into agreements with an experienced Team of Geologists and Geophysicists in California which Team had spent years mapping undrilled areas in the AMI. The AMI contains oilfields which have produced over 2 Billion Barrels of oil for the past 100+ years.
The JV Partners have acquired significant leases in numerous Core Areas of the AMI and have done many types of large and small area mapping and data acquisition in order to assemble its Core Area Leases. Leasing is substantially complete in 4 Core Areas and is progressing in several others. The 4 Core Areas are being prepared for a 30 Section 3-D Seismic Program. The JV is the first such program to explore using 3-D, as this area has been dormant for new exploration for many years. NHLLC has significantly reduced its risk and capital exposure in this Project by farming out portions of its exploration program and costs to JV Partners.
As of July 12, 2007, CalStar is pleased to announce the signing of a Seismic Option and Farmout Agreement with Chevron U.S.A. Inc., of Houston Tx., whereby CalStar and its Partners have contributed 16,000 acres to the JV and Chevron has contributed 3000 acres, to the area that will be undergoing a 3-D program through the third quarter of 2007. When the seismic program is coompleted, the results will be interpreted and drill targets selected and drilled before year end.
2) Pinnacle Reef Project in Alberta Canada
CalStar Canada signed a Joint Venture Agreement with Partners, Alberta Pinnacle Oil Company Ltd. (APOC) and Hectori Inc., both of Calgary, Alberta, in December 2006. CalStar Canada has an option to participate as a 50% JV Partner in a pinnacle reef oil exploration and development project at Fenn Big Valley in central Alberta. The option exists for 30 days from completion an interpretation of an intensive 3-D Seismic Program conducted by APOC. The 3-D seismic data acquisition is now complete and is beginning processing and interpretation.
The program will identify an initial three Leduc Pinnacle well program, the first well of which will be licensed and spudded in the fall of 2007. The drilling locations are now being surveyed and the licensing process for the wells is underway. We anticipate the first well to be spudded in late September 2007.
The JV Partners have conducted numerous other studies, data gathering and interpretive mapping to determine the potential for additional Nisku and Leduc Devonian Reefs in an AMI of 120 Townships (over 2 million acres). The Partners are using 12 separate technologies to define their drilling Prospects and have arranged exclusive use of several proprietary exploration technologies for the entire AMI. The AMI surrounds the Fenn Big Valley Nisku and Leduc Devonian Reef Complexes which have produced over 350 million barrels of light oil to date. The partners have assembled a senior reef exploration and development team which has spent over 10 years developing the prospects in the AMI.
The JV Partners have identified numerous Leduc Pinnacle and Nisku targets and are in the process of preparing for their initial 3 well Leduc Pinnacle Reef program on Hectori Inc. acreage. APOC and CalStar will pay 100% of costs on this initial acreage to earn 75% Before Payout and 50% after Payout of 200% of well costs. The JV Partners are also preparing to lease and farmin to other Prospects in numerous other Core 4 Section Areas within the AMI. Hectori Inc. has conducted data acquisition and interpretation within the AMI for over 7 years and is supplying several exploration technologies for exclusive use in the AMI and is receiving a Gross Overriding Royalty of 3% within the AMI.
For further information, please contact Ted K. Cantlon at 403 390-4911
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