Triangle Petroleums CEO Outlines Corporate and Exploration Progress
Over the past 18 months, Triangle Petroleum Corporation has progressed from a raw startup company to a thriving exploration company that has drilling programs planned in four core project areas. Two of these projects are in shale gas areas (Barnett in Texas and Fayetteville in Arkansas) which we believe will provide us with a strong and repeatable base of drilling opportunities. Another project area in the Rocky Mountains allows us to drill wells in areas that could generate significant production and financial success. Our final project area in Western Canada should generate additional drilling and production opportunities from our base in Calgary, Alberta.
The Company now has a very capable management team and an experienced board of directors with a clear mandate to establish and grow production and cash flow.
Management Team
The Company started with the combined skill sets of Ron Hietala and Mark Gustafson.
Ron Hietala spent nineteen years at Canadian Hunter Exploration Ltd. (“Canadian Hunter”) as Vice President, Manager of Reservoir Evaluation. As a Petrophysicist, he was a key contributor to several of Canadian Hunter’s multi-TCF natural gas discoveries. Canadian Hunter was acquired in 2001 by Burlington Resources Inc. Ron is the President of both of the Company’s operating subsidiaries and his past Canadian Hunter contacts have led the Company to all four of its current project areas. Many of the Company’s consultants also have a strong connection to Canadian Hunter.
Mark Gustafson spent seven years as a Chartered Accountant with Price Waterhouse, then became the CFO of EnServ Corporation (acquired by Precision Drilling), followed by President of Total Energy Services Ltd. and President of Torrent Energy Corporation. He is the CEO of the Company and was responsible for securing $31 million US in funding for the Company to date.
The management team has been strengthened with the addition of Troy Wagner as the COO/VP Engineering (10 years with a large Canadian company producing 36,000 BOEPD) and Aly Musani as CFO (Chartered Accountant with a progressive oilfield service company). In addition the Company has appointed Andy Prefontaine as Land Manager (Landman for a large independent operating in Canada and the U.S.). This team is complemented by a core group of consultants with extensive geological, geophysical and engineering experience.
Board of Directors
Besides Mr. Hietala and Mr. Gustafson, Triangle has two additional board members.
Dr. Steve Holditch is a Houston-based petroleum engineer who built a very successful production and reservoir engineering company over a 20 year period (S.A. Holditch & Associates Inc.) then sold the firm to Schlumberger Technology Corporation. Dr. Holditch is currently the Head of the Petroleum Engineering Department at Texas A&M University and actively consults to clients around the world.
John Carlson is a Calgary-based petroleum engineer who spent 16 years with Sproule Associates Ltd., a well respected reservoir engineering firm. He is currently the President and CEO of Torrent Energy Corporation, a coalbed methane exploration and production company.
The Company intends to recruit additional independent directors as it considers moving to a more established exchange or marketplace.
Core Project # 1 – Barnett Shale Program
We believe that a major shift is unfolding in the recognition and commercialization of unconventional gas reservoirs. Specifically, commercial shale gas production in the United States is emerging as a cornerstone of the overall North American gas supply. We have successfully initiated a business relationship with a focused shale gas company, Kerogen Resources Inc. (“Kerogen”) of Houston, Texas. The principals of Kerogen and Ron Hietala have experienced a long history of working together and developing new opportunities. We believe that the Kerogen team has a well established track record in shale gas and unconventional reservoir development.
Triangle has acquired a 30% working interest position in a five county joint venture program with Kerogen. The five counties are located in the South Fort Worth Basin and include Johnson, Hood, Hill, Sommerville and Bosque. To date, approximately 13,000 gross acres have been leased. One new ten square mile 3-D seismic survey has been shot over an acreage tract in Hill County. A suitable drilling location is currently being reviewed along with pooling strategies to include other companies in the area.
The Company has participated in four lower working interest (approximately 6%) horizontal wells (1 Johnson County and 3 Hill County). The four wells which are all currently producing had initial gross production rates of between 400 mcf/day (million cubic feet per day) and 2,800 mcf/day. These initial production rates should stabilize at lower levels over the next six to twelve months. The Kerogen joint venture plans further drilling over the next three to six months which will be a combination of traditional Barnett programs and new opportunities which have been identified by recent industry drilling and the proprietary 3-D seismic acquired by the joint venture.
In addition to the Kerogen joint venture, Triangle plans to expand its presence in the Barnett through additional drilling participations in established areas of production. A key goal for the Company is to increase our initial production base by identifying acreage tracts that can be acquired with near-term drilling commitments and also to pursue drilling opportunities that result from leases nearing their expiry period. Our plan is to participate in at least 10 new Barnett Shale wells over the next twelve months, subject to raising additional funds.
The key considerations for the Barnett in the established areas are related primarily to operational and engineering issues (completion methods, production infrastructure, etc). Unless there is strong technical evidence, we are planning on investing only in the established production areas in the Barnett. A particular focus will be given to selecting projects that have short pipeline connection timeframes. The working interests achieved will vary depending on the acreage tracts available and the business risks attributed to each project.
Core Project # 2 – Fayetteville Shale Program
Triangle has committed an initial $16 million to a joint venture with Kerogen. Mr. Hietala worked with two of the main principals of Kerogen at Canadian Hunter previously and the opportunity to participate in an emerging shale gas project at this early stage with Kerogen was very attractive. We believe that the Fayetteville Shale of the Arkoma Basin has the ability to deliver similar results to the trend setting Barnett Shale of the Fort Worth Basin. Triangle and Kerogen have an equal 50% working interest position in approximately 17,000 gross acres leased to date in Conway and Faulkner Counties. A measured pace of additional leasing is planned to complement the 2007 drilling program. Based upon strong initial drilling results from major oil and gas companies just north of our land position, the Company believes that the Fayetteville Shale program has the potential to be a major growth.
The first test well of the Fayetteville joint venture has commenced drilling through an acreage pooling arrangement with another area operator. Concurrent with the first drilling operation, a new state-of-the-art, multi-component 3-D seismic survey is in the planning and permitting phase. The seismic acquisition phase is expected to commence by the end of this year. A second 3-D seismic survey, on another acreage block, should be initiated during the first part of 2007. Once the seismic program has been completed and interpreted, the Company plans on drilling at least four vertical test wells in order to gather additional sub-surface data.
The experience gained on the initial test wells will guide the drilling and completions planned for the overall 2007 drilling program. It is recognized that there will be unique formation properties that require well by well analysis to determine the optimum horizontal well planning and fracture stimulation programs.
Triangle’s strategy is to establish commercial production from the Fayetteville in the joint venture controlled areas that will be capable of accessing current and expanded pipeline connectivity. Expectations are to participate in the drilling of between five and ten wells during the next twelve months. Working interests will vary for the joint venture as a combination of pooled and 100% joint venture lands will be drilled. The key business issues associated with the Fayetteville include optimizing drilling and completion costs in the area as the service industry matures along with assessing the optimum multi-stage stimulation programs in the horizontal wells.
One of our longer term objectives is to capitalize on the technical and business experience gained in the United States by selecting the most favorable shale gas areas in Canada and establishing an early land position in those areas.
Core Project # 3 – Rocky Mountain Program
The Rocky Mountain region of the Western United States presents opportunities that bear many of the positive attributes of the Alberta Deep Basin. The Rocky Mountain core area strategy for Triangle has been to identify higher-risk, large growth potential projects that have low to moderate acreage costs which can also be readily leased.
Triangle has embarked on a joint venture with Hunter Energy LLC (“Hunter”) of Denver, Colorado. Hunter has developed an extensive project inventory based on the successful exploration track record of John Masters, co-founder of Canadian Hunter. John Masters, along with his team of geo-scientists and engineering specialists, has analyzed each of the Western United States’ sub-basins and selected those which demonstrate key indicators for major new hydrocarbon accumulations. In turn, Triangle has made an initial commitment to participate in the drilling of three new projects, each of which are anticipated to require multiple wells to evaluate the acreage positions currently held by the joint venture. Each of the three Hunter Energy exploration prospects is believed to have the potential to contain significant quantities of recoverable oil or gas.
Triangle Petroleum USA has a 25% working interest in the three new Hunter Energy projects. The project areas are geographically located in north-western Colorado, south-western Wyoming, and northern Montana. The gross acreage position in the three areas is approximately 91,000 acres.
An initial exploration test well was drilled on the north-western Colorado project. Production has not been established to date from this first well. Plans for the north-west Colorado project include working with area operators to continue the exploration program, which management believes should be very active. Drilling on the south west Wyoming project and the Montana project are anticipated to commence in the first half of 2007 with consideration being given to service industry equipment availability and prevailing short-term winter weather conditions.
The re-evaluation of the Rocky Mountain basins has identified significant opportunities which were not the prime targets at the time of previous and deeper drilling by the industry. The predominant issues associated with the shallower Rocky Mountain project areas are reservoir permeability and the occurrence of local fresh waters being present.
Core Project # 4 – Western Canadian Program (Alberta Deep Basin)
As a direct result of Triangle’s experienced Deep Basin team, the Company’s first exploration program was in this area. The Alberta Deep Basin is a long-term gas exploitation area located primarily in northwestern Alberta. Some of the early wells drilled by Canadian Hunter resulted in very prolific wells during the 1970′s and 1980′s. Since then, over 6 TCF (Trillion Cubic Feet) of gas has been produced by the key industry producers in this Basin.
There are three new conditions which should generate new production for companies committed to a long-term strategy in the Deep Basin. The first significant development is the co-mingling of gas from a variety of the possible seventeen separate geologic horizons in the Deep Basin. The co-mingling of these multiple productive zones greatly improves the economics of a project. The second significant development is the downspacing from one well per section (640 acres) down to four wells per section which provides a more efficient recovery of the resources. The third significant development is the availability of extensive 3-D seismic data covering multiple townships of the Deep Basin. The Company has licensed a 120 square mile seismic data set to assist in the generation of the most prospective drilling sites.
Two controlling factors that influence the development of new drilling locations are land availability and increasing costs of placing a well on production. Access to land has improved and completion costs appear to have peaked. To date, Triangle has access to thirty-one sections of land (approximately 20,000 gross acres), which are in various stages of earning with the joint venture partners.
The Company has participated in six Deep Basin wells. In addition, one well is currently drilling. Of the six wells, three are waiting on completion, two wells tested gas at rates lower than economic for pipeline connections and one well tested fresh water. The well currently being drilled is the first location to combine both shallow and deep exploration targets.
Triangle’s strategy is to participate in drilling opportunities at a working interest of between 20% and 35%. The multi-horizon Deep Basin area provides improved financial returns to companies that plan, and execute, multi-well programs which reduce geologic risk and individual well costs. The Company currently has a strong inventory of drilling locations and the focus will be to appropriately access the land and create a multi-well program.
Future Projects
The management team at Triangle is actively searching for and reviewing projects that will complement the four core project areas. Priority is being given to joint venture or acquisition opportunities that require minimal outlays for land positions leading to near term drilling and completion programs. Management plans include raising additional capital to pursue these projects. Production and cash flow performance are now the key drivers for the next twelve to twenty-four months.
About Triangle Petroleum Corporation
Triangle is an exploration company focused on the Barnett Shale project in Texas, the Fayetteville Shale project in Arkansas, resource plays in the Deep Basin area of Western Canada and in select areas of the western United States. An experienced team comprising technical and business skills has been formed to optimize the Company’s opportunities through its operating subsidiaries, Triangle USA Petroleum Corporation in the United States and Elmworth Energy Corporation in Canada.
For more information please visit www.trianglepetroleum.com.
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 press release, such as probable, possible and potential, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-KSB, File No. 0-51321, available from us at Suite 1110, 521 – 3 Avenue SW, Calgary, Alberta T2P 3T3 Canada. You can also obtain this form from the SEC by calling 1-800-732-0330.
On behalf of the Board of Directors,
TRIANGLE PETROLEUM CORPORATION
Mark Gustafson, President
Safe Harbor Statement. This news release includes statements about expected future events and/or results that are forward-looking in nature and subject to risks and uncertainties. Forward-looking statements in this release include, but are not limited to, the amount of funds the Company may receive, the Company’s proposed acquisition and development of properties, including drilling projects. 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 possibility that additional investments will not be made or that appropriate opportunities for development will not be available or will not be properly developed. For additional risk factors about our Company, readers should refer to risk disclosure contained in our reports filed with the Securities and Exchange Commission.
Contact:
Contacts: Triangle Petroleum Corporation Jason Krueger, CFA Corporate Communications (403) 374-1234 Email: info@trianglepetroleum.com
Website: http://www.trianglepetroleum.com
Source: TRIANGLE PETROLEUM CORPORATION
