MGX Minerals Announces N.I. 51-101 Estimated Prospective Oil
and Gas Resource for Paradox Basin Petrolithium Project
VANCOUVER, BRITISH COLUMBIA -- August 9,
2017 -- InvestorsHub NewsWire -- MGX Minerals Inc. (“MGX” or the
“Company”) (CSE: XMG / FKT: 1MG / OTC: MGXMF) is pleased to report
estimated prospective resources (the “Estimate”) attributable to
the Company’s Paradox Basin Petrolithium Project (the “Project”),
consisting of leasehold and royalty interests in San Juan County,
Utah and San Miguel County, Colorado.
The Estimate was prepared by the Ryder Scott Company, L.P.
(“Ryder Scott”), an independent qualified reserves evaluator within
the meaning of National Instrument 51-101 - Standards of Disclosure
for Oil and Gas Activities (“NI 51-101”), with an effective date of
June 30, 2017. The Estimate was prepared in accordance with NI
51-101 and the Canadian Oil and Gas Evaluation Handbook. Although
the salts may not perform well under stimulation or fracking, the
Project contains many clastics and is highly pressurized.
Management estimates the total cost required to achieve commercial
production from the Project to be $8 million based on the
expectation of completion of 3D seismic survey and one horizontal
well being drilled. The timeline of the Project is five years, with
the estimated first date of commercial production being 18 months
from the commencement of drilling using vertical and horizontal
drilling techniques along with proprietary patented water handling
technology as the Project was conceived. Significant economic
factors that may affect the Project relate primarily to operational
costs, efficiencies and commodity pricing.
Table 1
Estimated Gross Volumes
Unrisked Undiscovered Hydrocarbons Initially in Place (Prospective
Areas)
Leasehold Interests in San County, Utah and San Miguel County,
Colorado
As of June 30, 2017
Formation
|
OOIP – MMBO
|
OGIP – BCF
|
COC*
|
|
P90
|
P50
|
P10
|
P90
|
P50
|
P10
|
Paradox Clastics
|
CB2
|
658.412
|
861.819
|
1146.835
|
526.779
|
689.513
|
917.512
|
0.075
|
CB3
|
654.882
|
859.260
|
1147.780
|
523.955
|
687.411
|
918.239
|
0.075
|
CB4
|
202.121
|
266.404
|
360.542
|
161.712
|
213.137
|
288.434
|
0.075
|
CB5
|
522.456
|
689.867
|
921.363
|
417.988
|
551.901
|
737.155
|
0.075
|
CB6
|
105.779
|
140.097
|
185.564
|
84.633
|
112.088
|
148.469
|
0.045
|
CB7
|
29.664
|
39.368
|
52.916
|
23.371
|
31.498
|
42.334
|
0.032
|
CB8
|
302.101
|
397.712
|
524.047
|
241.692
|
318.199
|
419.258
|
0.068
|
CB9
|
182.282
|
240.960
|
321.274
|
145.843
|
192.782
|
257.041
|
0.068
|
CB10
|
233.259
|
303.841
|
405.630
|
186.610
|
243.089
|
324.524
|
0.068
|
CB11
|
31.746
|
42.134
|
57.031
|
25.398
|
33.707
|
45.625
|
0.032
|
CB12
|
148.630
|
196.857
|
261.902
|
118.915
|
157.494
|
209.537
|
0.045
|
CB13
|
147.025
|
194.154
|
259.693
|
117.625
|
155.326
|
207.764
|
0.045
|
CB14
|
50.415
|
66.798
|
89.782
|
40.334
|
53.443
|
71.833
|
0.045
|
CB15
|
103.477
|
136.703
|
182.660
|
82.785
|
109.373
|
146.141
|
0.045
|
CB16
|
43.581
|
57.665
|
77.645
|
34.866
|
46.135
|
62.120
|
0.045
|
CB17
|
59.391
|
77.819
|
104.356
|
47.518
|
62.256
|
83.486
|
0.040
|
CB18
|
73.100
|
97.038
|
129.444
|
58.485
|
77.633
|
103.568
|
0.045
|
CB19
|
267.712
|
349.741
|
470.387
|
214.184
|
279.803
|
376.352
|
0.068
|
CB20
|
46.692
|
61.024
|
82.382
|
37.035
|
48.824
|
65.912
|
0.040
|
CB21 (Cane Creek)
|
563.793
|
736.091
|
989.116
|
451.071
|
588.917
|
791.318
|
0.097
|
CB22
|
89.054
|
118.845
|
161.139
|
71.248
|
95.080
|
128.919
|
0.045
|
Leadville
|
6.900
|
14.200
|
25.000
|
317.100
|
465.200
|
660.200
|
0.066
|
*COC – Chance of Commerciality = Chance of Discovery *
Chance of Development
Table 2a
Summary of Risked Prospective (Recoverable) Hydrocarbon
Resources
Leasehold Interests in San County, Utah and San Miguel County,
Colorado
As of June 30, 2017
|
PROSPECTIVE RESOURCES
|
RESOURCES
|
LIGHT CRUDE OIL
MMBO
|
CONVENTIONAL NATURAL GAS- BCF
|
TIGHT OIL
MMBO
|
SHALE GAS
BCF
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
PROSPECTIVE
(High Estimate)
|
0.26
|
0.20
|
22.55
|
16.91
|
41.17
|
30.88
|
32.94
|
24.71
|
PROSPECTIVE
(Best Estimate)
|
0.14
|
0.11
|
15.29
|
11.47
|
28.78
|
21.59
|
23.02
|
17.27
|
PROSPECTIVE
(Low Estimate)
|
0.07
|
0.05
|
10.10
|
7.58
|
19.91
|
14.93
|
15.93
|
11.95
|
Notes:
- 1.There is no certainty that any portion of the
resources will be discovered. If discovered, there is no certainty
that it will be commercially viable to produce any portion of the
resources.
- 2.Summed volumes in this table are arithmetic
summations of various individual reservoirs at the Project and are
consequently not statistically correct representations of the range
of resources.
- 3.Ryder Scott used probabilistic methods to
conduct the Estimate from a technical standpoint and did not
consider the expiration of the leases constituting the
Project.
- 4.Light Crude Oil and Tight Oil are expressed in
millions of standard 42-gallon barrels (“MMBO”).
- 5.Conventional Natural Gas and Shale Gas volumes
are reported in billions of cubic feet (“BCF”).
Geologic Background
Various operators in the region have concluded that the presence
of open natural fractures is the primary control on well
productivity in the Paradox clastic breaks. Ryder Scott evaluated
21 prospective intervals corresponding to Clastic Breaks 2 through
22. All 21 clastic breaks displayed very consistent stratigraphy
across the elevation area. Lithological correlation of the organic
shale intervals, anhydrites and salts in and adjacent to the
various clastic breaks are relatively even with the various
vintages of wells and well log types ranging from gamma ray–
neutron logs to sonic logs to modern lithodensity– neutron logs.
The clastic breaks display only minor variations in thickness; in
contrast, the intervening salt layers can vary significantly. Most
of the clastic intervals in the area of interest are confined
vertically by salt layers. The presence of salt may inhibit the
creation of fractures in the thinner intervals both from natural
forces and artificial simulation.
Ownership
MGX holds a 75% working interest in the Project with the
remaining interest primarily controlled by a private Utah
corporation (the “Paradox Partner”). The Paradox Partner has been
engaged by MGX as subcontracted operator of the Project.
Qualified Person
The technical portions of this press release were prepared and
reviewed by Andris Kikauka (P. Geo.), Vice President of Exploration
for MGX Minerals. Mr. Kikauka is a non-independent Qualified Person
within the meaning of National Instrument (N.I.) 43-101
Standards.
About MGX Minerals
MGX Minerals is a diversified Canadian resource company with
interests in petrolithium, magnesium and silicon assets throughout
North America. Learn more at www.mgxminerals.com.
Contact Information
Jared Lazerson
President and CEO
Telephone: 1.604.681.7735
Web: www.mgxminerals.com
Neither the Canadian Securities Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
Canadian Securities Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Forward-Looking Statements
This press release contains certain statements that constitute
forward-looking statements or information ("forward-looking
statements") including the volume of resources. Although MGX
believes that the expectations reflected in such forward-looking
statements are reasonable, such forward-looking statements have
been based on factors and assumptions concerning future events that
may prove to be inaccurate. Those factors and assumptions are based
upon currently available information available to the Company. Such
statements are subject to known and unknown risks, uncertainties
and other factors that could influence actual results or events and
cause actual results or events to differ materially from those
stated, anticipated or implied in the forward-looking statements.
As such, readers are cautioned not to place undue reliance on the
forward-looking information, as no assurance can be provided as to
future results, levels of activity or achievements.
MGX believes that the material factors, expectations and
assumptions reflected in the forward-looking statements are
reasonable but no assurance can be given that these factors,
expectations and assumptions will prove to be correct. The
forward-looking statements included in this press release are not
guarantees of future performance and should not be unduly relied
upon. Such information and statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking information or statements including, without
limitation: inaccurate estimation of MGX’s prospective resources;
risk associated with the Company having no history of operations or
earnings including, but not limited to, any oil and gas operations;
and certain other risks detailed from time to time in MGX’s public
disclosure documents including, without limitation, those risks
identified in this press release, and in MGX’s annual information
form, copies of which are available on the Company’s SEDAR profile
at www.sedar.com.
Furthermore, the forward-looking statements contained in this
document are made as of the date of this document and, except as
required by applicable law, MGX does not undertake any obligation
to publicly update or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise. The forward-looking statements contained in this
document are expressly qualified by this cautionary statement.
Resource Definitions
Resources encompass all petroleum quantities that originally
existed on or within the earth's crust in naturally occurring
accumulations, including Discovered and Undiscovered (recoverable
and unrecoverable) plus quantities already produced. "Total
Resources" is equivalent to "Total Petroleum Initially In-Place".
Resources are classified in the following categories:
Total Petroleum Initially In-Place ("TPIIP") is that quantity of
petroleum that is estimated to exist originally in naturally
occurring accumulations. It includes that quantity of petroleum
that is estimated, as of a given date, to be contained in known
accumulations, prior to production, plus those estimated quantities
in accumulations yet to be discovered.
Discovered Petroleum Initially In-Place ("DPIIP") is that
quantity of petroleum that is estimated, as of a given date, to be
contained in known accumulations prior to production. The
recoverable portion of DPIIP includes production, reserves, and
Contingent Resources; the remainder is unrecoverable.
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development but which are not currently considered to be
commercially recoverable due to one or more contingencies. Economic
Contingent Resources are those contingent resources that are
currently economically recoverable. Sub-Economic Contingent
Resources are those contingent resources that are not currently
economically recoverable, provided that there should be a
reasonable expectation of a change in economic conditions within
the near future that will result in them becoming economically
viable.
Undiscovered Petroleum Initially In Place ("UPIIP") is that
quantity of petroleum that is estimated, on a given date, to be
contained in accumulations yet to be discovered. The recoverable
portion of UPIIP is referred to as Prospective Resources and the
remainder is unrecoverable.
Prospective Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective Resources have both an associated chance of
discovery and a chance of development.
Unrecoverable is that portion of DPIIP or UPIIP quantities which
is estimated, as of a given date, not to be recoverable by future
development projects. A portion of these quantities may become
recoverable in the future as commercial circumstances change or
technological developments occur; the remaining portion may never
be recovered due to the physical/chemical constraints represented
by subsurface interaction of fluids and reservoir rocks.
The range of uncertainty of estimated recoverable volumes may be
represented by either deterministic scenarios or by a probability
distribution. Resources are provided as low, best and high
estimates as follows:
Low Estimate: This is considered to be a conservative estimate
of the quantity that will actually be recovered. It is likely that
the actual remaining quantities recovered will exceed the low
estimate. If probabilistic methods are used, there should be at
least a 90 percent probability (P90) that the quantities actually
recovered will equal or exceed the low estimate.
Best Estimate: This is considered to be the best estimate of the
quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater than or
less than the best estimate. If probabilistic methods are used,
there should be at least a 50 percent probability (P50) that the
quantities actually recovered will equal or exceed the best
estimate.
High Estimate: This is considered to be an optimistic estimate
of the quantity that will actually be recovered. It is unlikely
that the actual remaining quantities recovered will exceed the high
estimate. If probabilistic methods are used, there should be at
least a 10 percent probability (P10) that the quantities actually
recovered will equal or exceed the high estimate.
Certain resource estimate volumes disclosed herein are
arithmetic sums of multiple estimates of DPIIP or UPIIP, which
statistical principles indicate may be misleading as to volumes
that may actually be recovered. Readers should give attention to
the estimates of individual classes of resources and appreciate the
differing probabilities of recovery associated with each class as
explained under this Resource Definitions section.
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