Passport Energy - Successful Well & Farmin!

Hello Valued Readers,

I should have waited one more day I guess!

After the market closed, Passport Energy released news, and big news!

Editorial Picks Update:

Passport Energy ( PPO CNSX ) was picked at .10 on April 5th, 2010, close today @.20 up another 3 cents on 214,000 traded. High since pick: .40

Web Site: http://passportenergy.com/

Well I'm happy to report that they are one for one with their first Bakken horizontal well being a success!

"Operational Update

In the second quarter the Company’s first development well, Hardy S HZ 1A4–16-4B4-09-004-21W2, was completed utilizing a 28 stage multi fracture stimulation and placed on production on September 8th, 2011. With this well the Company has earned a 25% working interest in 2 ¼ sections from surface to basement.

Following an initial 14 day clean up and optimization phase and, based on information provided by the operator, Eternal Energy Corp (Eternal), the 1A4-16 well produced an average gross daily oil rate of approximately 164 barrels per day of 38 degree API oil from September 22nd to October 5th, 2011. During this period, the well produced at a stabilized average measured oil cut of approximately 30% (of total produced fluid) and maintained a high stable fluid level.

The well was shut in on October 6th due to wet weather and to facilitate a clean out of the horizontal leg. Operations took longer than expected due to the lack of service rig availability and weather conditions. The well was placed back on production in early November.

Given the well’s higher than expected productive rate, the current surface and down hole equipment configuration is insufficient to allow the well to produce at a consistent high rate for extended periods of time. As a result, the well is currently producing at a stabilized average gross daily oil rate of approximately 120 barrels per day (with an average oil cut of approximately 30% of total produced fluid).

With current production rates lower than the wells maximum productive capability the operator is currently reviewing the well’s equipment configuration and is considering upgrading the production equipment to allow the well to produce at a higher rate."

Passport also announced a Farmin Agreement with Large Independent Canadian Oil and Gas Company! Who is it? I guess the major wanted their name kept out of it for now. Is it the major with land next to theirs?

"Farmin and Option Agreement

The Company has also executed a Farmin and Option Agreement with a large independent Canadian oil and gas company covering 34 sections of land in close proximity to its Hardy property.

The agreement provides for Passport, as operator (50%) and its partner, Eternal (50%) to pay 100% of the drilling and completion costs of two Bakken horizontal wells to earn a 100% BPO interest (50% each) and a 65% APO interest (32.5% each) in ten contiguous sections (5 sections per well) from surface to the base of the Three Forks zone, subject to the payment of Crown royalties and GORRs. Passport and Eternal have the option to drill five additional rolling option wells to earn the same interest in the balance of the unearned 34 sections.

Passport expects that drilling of the first well will commence sometime in the first quarter of 2012, subject to rig availability. The drilling of the second commitment well will be commenced within 60 days of rig release of the first well. The drilling of the first of the five option wells shall be commenced within 90 days of rig release of the second commitment well and each successive well shall be commenced within 90 days of rig release of the preceding option well until all option wells are drilled or the option to drill has expired.

The gross estimated costs of drilling and casing, completing or abandoning a 3500 metre (measured depth) Bakken horizontal well in Hardy is approximately $3,200,000.

The Company is a junior natural resource exploration company focused on the acquisition, exploration, and development of economically viable natural resources, with a focus on Bakken oil projects."

There is also an updated presentation that is a must read. You have to wrap your head around how big this could be for Passport. The whole presentation can be read [ Here ]. From page 19 and remember there is a lot of forward looking statements and estimating:

"Saskatchewan Hardy Project Overview – Key Points

- First horizontal well, 4-16, showed the potential deliverability of the Bakken in the Hardy area

- 30 vertical wells with a full log suite over the Bakken interval within the immediate area show the consistency of the reservoir across the entire land base and it's potential for resource-type development

- Full conventional development at 4 wells/section yields 159 gross (50 net) locations (average working interest is 31.5%)

- Internal estimated OOIP: 300 million barrels of oil

- With enhanced oil recovery (EOR) estimated recovery factors can be greater than 30%"

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Check out the full 22 page presentation with the link above and watch this stock. Management is executing a plan and so far so good. I own a large position and paid for every share.

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Again these are my personal thoughts on the markets. I am NOT an adviser and I suggest you consult your adviser. This is not a recommendation to buy or sell stocks, it is my personal blog and treat it as such. These small caps are volatile and high risk, I choose to invest/speculate in these stocks, but this is not for everyone.

Good luck in all your investing!

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