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Umiat Alaska Core Evaluation Confirms Oil Saturated Reservoir Rock

• Umiat core evaluation confirms high quality oil saturated reservoir rock with oil pay in excess of 150’.

• Phase 2 Winter Appraisal Program gets early start with rig and ancillary equipment stacked on location, with Umiat operations to start in December 2013.

 

Linc Energy Ltd (ASX: LNC) (OTCQX: LNCGY) is pleased to provide core evaluation results from the Umiat 18 well drilled during its 2013 winter appraisal program and the plan for its Phase 2 winter appraisal program commencing in Q1 2014.

 

Umiat Core Evaluation

 As previously reported, the Umiat #18 well was drilled to the core point of 710 ft (216m), logged with Logging While Drilling (LWD) tools, and a 300 ft (91.5m) conventional core through the entire LGS formation was extracted with 100% recovery. The core was transported in a frozen state to Houston, TX where it has gone through extensive evaluation.

 

Preliminary results from the Umiat winter appraisal program core studies analysis are:

• Permeability and porosity (P & P) analyses reveal good porosity of about 16 – 18%, 70270 millidarcies air permeability in the main reservoir sands. For the light crude (37° A PI gravity) found at Umiat, these are outstanding rock properties;

• The sandstones are “friable”, meaning weakly cemented with only a trace of clay which is preferred for optimal oil flow;

• Initial geochemical gas chromatography analyses indicate good, robust hydrocarbon chromatogram signatures consistent with similar data from the original 12 U.S.G.S. Umiat wells;

• From geochemical chromatogram signatures, it was possible to isolate sandstone formation changes from shallow marine to non-marine in the upper 50’ of the core. We learned that 98% of the sandstones are shallow marine, indicative of high quality reservoir rock;

• Visible oil is readily apparent in the core samples under ultraviolet light, confirming that the Lower Grandstand reservoir is completely saturated with hydrocarbons (oil).

 

Mr Scott Broussard, President of Oil and Gas, said, “The experience we gained drilling in the Arctic permafrost and the results generated from the drilling program last winter (with 100% recovery of the core) have provided Linc Energy’s oil and gas team with valuable data to further analyse the Umiat field and provides the technical data required to plan our drilling program this winter whilst adding experience that enhance s the Umiat resource as a whole. Our technicians continue to analyse core plug sections at simulated reservoir temperatures to ensure we incorporate all the learnings into this year’s drilling program. ”

Phase 2 winter appraisal program to commence in December 2013, with drilling to commence in January, 2014.

The Umiat team will again construct a 102 mile (175km) snow road from Dalton Highway to Umiat to support winter operations. However, unlike last year, commencement of drilling will not be dependent on the completion of the snow road. The drilling rig is currently stacked on location at Umiat as are the necessary equipment and supplies, al lowing for an early start to drilling operations this winter. Infield ice roads will be constructed concurrently with the snow road, allowing movement of the rig to the 23H drilling pad. It is expected that operations will commence at Umiat in December this year.

The proposed minimum program will include the drilling, completion, and production flow testing of one horizontal well (23H). Linc Energy also has the option to drill and test the 24H horizontal well at an additional location. The decision to drill the 24H well will be made in 2014 and is subject to overall timing of the 23H well. This year’s planning is a simple execution of the 23H well with a good second option of potentially drilling 24H if it is appropriate to do so.

Mr Peter Bond, CEO and Managing Director of Linc Energy, said, “We have captured many learnings from last year and confidently approach this winter’s drilling program with the knowledge and expertise to successfully achieve our current goals. Successfully flowing oil from the horizontal well unlocks an enormous amount of value for the Umiat asset and the results could potentially transition some of the reserves to the proved (1P) category. With over one billion barrels of oil in place and 2P reserves of 154.5 million barrels of oil equivalent*, this truly is a world class asset, and one Linc Energy is very pleased to be developing in Alaska which I am confident is one of the best current locations for state incentives (of approximately 50% of cash back to Linc Energy by the state) and business cooperation in the world today.”

Company Profile

Linc Energy is focused on both conventional and unconventional oil and gas production. The Company owns a diverse and world-class commodity portfolio that includes oil, gas, shale and coal.

Conventional oil and gas is focused onshore USA (Alaska, Texas, Louisiana and Wyoming) with current production expected to grow significantly from the Company’s existing reserves.

Unconventional oil and gas is focused on our world leading capability in Underground Coal Gasification, the process of converting coal into a valuable synthetic gas in situ. Linc Energy has constructed and commissioned the world’s only UC G to GTL demonstration facility. The Company also owns and operates the world’s only commercial UCG operation in Uzbekistan, which supplies syngas to a nearby power station.

Linc Energy is listed on the ASX (Australia) and the OTCQX (USA).

Umiat Oil Field

Umiat is located on the Alaskan North Slope, approximately 60 miles north of Anaktuvuk Pass and approximately 60 miles south of Nuiqsut.

It has been estimated by Ryder Scott to contain Proved & Probable (“2P”) reserves of 154.5 million barrels of oil equivalent (“MMboe”), and Proved, Probable & Possible (“3P”) reserves of 194 MMboe. 

Linc Energy’s winter drilling program will mark not only the first drilling at Umiat since the late 1970’s, but will be the first time modern arctic drilling techniques will be applied to the reservoirs. Linc Energy anticipates peak production could be approximately 50,000 barrels of oil per day (gross).

The Umiat reservoirs were discovered by the US Navy in the mid1940’s as a part of the exploration of the National Petroleum Reserve #4 (later renamed National Petroleum Reserve-Alaska) and adjacent areas. The US Air Force took over the operation of the Umiat Air Station in the late 1950s.

A total of 12 “legacy wells” have been drilled within the lease area between the years 1944 and 1979. Historical well testing at Umiat has determined that the oil is light, sweet crude with a 37 API gravity and a pour point of less than5 degrees Fahrenheit.

It is just inside the eastern boundary of the Northeast Planning Area of the National Petroleum Reserve – Alaska (NPRA), along the Colville River and managed under the rules and guidelines established for ( NPRA ).

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