July 22, 2008
Western Standard Energy Corp. To Participate in Drilling Partnership for Lodgepole-Bakken
Western Standard Energy Corp., (OTCBB:WSEG), an independent oil and gas exploration company, is pleased to announce its intention to participate in a drilling partnership to fund operations for one Lodgepole well and a second, Lodgepole-Bakken well, both in Dickinson, Stark County, North Dakota.
Western Standard Energy Corp. ('Company') plans to assign two or more of its prospects into a drilling partnership ('Partnership') and through the formation of a new, wholly owned subsidiary, will also act as general partner of the Partnership. The Company will receive an over-riding royalty of 3% for the lease assignments. In addition, it is the Company's intention to invest on a 'heads-up' basis into the Partnership and purchase half of the Partnership units for $3.2 million, equally and alongside third party interests, for a total investment of $6.4 million. The Partnership will have a 100% working interest in the wells, subject to landowner's royalties, with a back-in working interest of 20% to its partner Oil for America, LLC ('OFA').
The initial target will be the Lodgepole objective, with drilling operations expected to cost approximately $1.6 million. It is the Partnership's plan to drill to the Bakken objective once operations are completed on the Lodgepole target. Operations for the Bakken well will incur additional costs of around $3.2 million, bringing an estimated cost of around $4.8 million for one Lodgepole-Bakken well. Furthermore, the Partnership plans to invest in an additional Lodgepole well at a cost of approximately $1.6 million.
According to information provided to the Company by OFA, The Lodgepole Reef play began in 1993 when ConocoPhillips failed to find oil in its primary and secondary targets but tested a porous zone with shows and resulted in an initial production rate of around 400 barrels of oil per day. Since then the Dickinson Lodgepole Unit #74 well has flowed more than 2.6 million barrels of 41.4 API gravity sweet oil and around 1.5 billion cubic feet of natural gas from perforations at 9,721-9,850' in the Mississippian Lodgepole Reef. Another well, the Ranchos #1 has produced over 4.5 million barrels of oil and nearly 2.5 billion cubic feet of gas since May 1995, and still produces over 9,000 barrels of oil a month after nearly 13 years of production. Depth of the Bakken objective, is approximately 10,000 feet, with horizontal lateral extensions of between 4,000 and 8,000 feet. Successful Bakken wells in the area have resulted in estimated ultimate recoveries (EUR) of between 300,000-800,000 barrels of oil over an expected life span of around ten years.
According to the US Geological Survey ('USGS') North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation. A USGS assessment, released in April 2008, shows a 25-fold increase in the amount of oil that can be recovered compared to the agency's 1995 estimate of 151 million barrels of oil. Major and independent oil producers actively developing their acreage in the area include Marathon, ConocoPhillips, Devon Energy, EOG, and Northern Oil and Gas, among others.
About Western Standard Energy Corp.
Western Standard Energy Corp. is an independent oil and gas exploration company, traded on the OTC BB under the ticker symbol WSEG. Western Standard has a portfolio of oil and gas exploration properties throughout Montana and North Dakota. The Company has a 50% stake in Starbuck East prospect, a 42,000-acre shallow gas assembly in Valley County, Montana. The Company also has as a 100% working interest in 7 Lodgepole Reef prospects in Stark and Slope counties, in North Dakota. Shareholders are invited to contact corporate communications toll free at (888) 956-7843 for further information.
Western Standard Energy Corp. Dan Bauer, President
Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Forward-looking statements in this news release include that Western Standard Energy Corp, ('Company') will assign any of its prospects into a drilling partnership; that it will form a new, wholly owned subsidiary; that the subsidiary will act as general partner of the drilling partnership; that the Company will receive an over-riding royalty of 3% for the lease assignment; that the Company will invest on a 'heads-up' basis into the drilling partnership; that the Company or its subsidiary will purchase half of the Partnership units for $3.2 million; that it will invest equally and alongside third party interests; that the total investment will be $6.4 million; that the drilling partnership, or the Company, will have a 100% working interest in any wells, subject to landowner's royalties, and a back-in working interest of 20% to Oil for America, LLC; that it will acquire or develop any Bakken prospects, or that it will be able to generate any production revenues from its prospects; that drilling operations will cost between $1.6 and $4.8 million; and that if drilling operations are successful the Lodgepole Reef will produce as much oil and/or gas as the Dickinson Lodgepole Unit #74 well, or the Ranchos #1 well, if any oil or gas at all; that a successful Bakken well will result in production rates of approximately 300-800 barrels of oil per day, if any; that a successful Bakken will produce an estimated ultimate recovery (EUR) of between 300,000-800,000 barrels of oil over the life of each well, and/or have an expected productive life span of around ten years; that the Company is developing a portfolio of oil and gas properties throughout Montana and North Dakota. It is important to note that actual outcomes and the Company's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include the uncertainty of the requirements demanded by environmental agencies, the Company's ability to raise financing for operations, breach by parties with whom we have contracted, inability to maintain qualified employees or consultants, competition for equipment, inability to obtain drilling permits, potential delays or obstacles in drilling operations and interpreting data, and the likelihood that no commercial quantities of gas are found or recoverable. Readers should also refer to the risk disclosures outlined in the Company's quarterly reports on Form 10-QSB, annual reports on Form 10-KSB and the Company's other disclosure documents filed from time-to-time with the Securities and Exchange Commission available at www.sec.gov.
Cautionary Note to U.S. Investors
The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this document that SEC's guidelines may prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our annual report on Form 10-KSB and quarterly reports on Form 10-QSB available from us or the SEC.