Samson Oil & Gas Advisory

Sun Dec 30, 2012 8:00pm EST

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DENVER & PERTH, Australia--(Business Wire)--
Samson Oil & Gas Limited (ASX: SSN)(NYSE MKT: SSN) provides an advisory. 

North Stockyard Oilfield, Williston Basin, North Dakota

Samson has owned an equity position in the North Stockyard Oilfield for several
years and has participated in the drilling of six Bakken Formation wells along
with a Mission Canyon Formation well. The six Section area, (three Sections are
designated as the Northern Tier, and three Sections the Southern Tier) has been
developed with a 640 acre spacing utilizing 5,000 foot laterals. Standard
industry practice has evolved and the norm is to develop the Middle Bakken and
the First bench of the Three Forks Formation at 160 acre spacing. Samson has
been keen to develop the North Stockyard field to this drilling density;
however, several of the other working interest owners in the field, including
the Operator, do not wish to accelerate the development of this field at the
optimal acreage spacing. 

As a consequence, Samson and the Operator group have negotiated an acreage swap
for the Middle Bakken/First Bench of the Three Forks (MB/TF), whereby Samson
will acquire these parties` undeveloped acres in the Northern Tier and will
divest undeveloped acres in the Southern Tier. After the swap, Samson will own
64% and 57%, respectively, in the two overlapping 1,280 acre spacing units
located in the Northern Tier. Samson will become Operator for the entire
Northern Tier. Samson will retain its existing equity in the seven producing
wells and the deeper benches of the Three Forks in both the Northern Tier and
the Southern Tier. The formal agreement documenting the swap has been completed
and was executed by Samson and the Operator today. 

Samson has appeared in front of the North Dakota Industrial Commission (NDIC)
and requested a 160 acre spacing order in the Northern Tier. Samson expects that
this request, which was unopposed, will be approved and that the NDIC will
consent to the drilling permits that have already been lodged. This
administrative step will then allow Samson to drill an additional 14 wells in
the Northern Tier to develop the MB/TF to a 160 acre spacing. 

Proved Developed Producing Reserves (PDP)

The PDP reserve of the North Stockyard Oilfield have been assessed by Ryder
Scott as at June 30 2012, at a gross EUR of 1.8 MMSTB valued at $7.5 million net
to Samson using the NYMEX forward curve as at June 30th. Representing $86 per
barrel for the second half of 2012, $88 for 2013, $87 for 2014 and 2015, $86 for
2016, and thereafter. 

Probable Reserves

Samson has completed an internal estimate that suggests the MB/TF in the
Northern Tier will recover a gross EUR of 7.1 MMSTB (net 3.4 MMSTB) valued at
$42.4 million net to Samson. 

Given the administrative status of these wells, these reserves are currently
classed as Probable. At such time as the NDIC approves the requested spacing
order the designation of these reserves is expected to move from Probable to
Proved Undeveloped. 

Samson has also completed an estimate of the Probable Reserves of the deeper
Three Fork Benches (TF) and has estimated that these Probable Reserves, at a
gross EUR of 24.5 MMSTB (net 6.1 MMSTB), valued at a $49.8 million net to
Samson. 

These estimates are set out in the following table:

                                      Gross EUR MMSTB        Net EUR MMSTB        Net NPV#  
           MB/TF Northern Tier        7.1                    3.4                  $42.4     
           TF Both Tiers              24.5                   6.1                  $49.8     
           Total                      31.6                   9.5                  $92.2     


NPV is calculated at a 10% discount rate, using $80 per barrel for Bakken crude.


Development Plan

Samson is planning to mobilize the Frontier Rig 24 to the North Stockyard Field
early in 2013 to drill an initial 6 development wells. These wells will be
drilled from two pads utilizing the skiddable platform available on Frontier 24.
As previously advised, Samson contracted for the use of this new build rig for
an 18 month period at a contract cost of $14.2 million, although the drilling
rig contract, as amended, caps the liability for cancellation during the term at
$5 million. The development wells are designed as 5,000 horizontals in either
the Middle Bakken or the First Bench of the Three Forks. The wells will be
"batched" drilled which are expected to result in considerable cost savings. 

Samson has the majority equity in a recently completed Salt Water Disposal well
in the Northern Tier, as well as a water disposal pipeline system, that will be
utilized to dispose of the water produced from the development wells in an
economic manner. Existing gas gathering infrastructure is also already in place.
Samson therefore expects that a relatively high net return will be extracted
from the development of the Northern Tier. Samson`s ability to complete the
development plan is contingent on its completion of a planned debt financing or
another capital raising program. 

South Prairie 3-D Project, Williston Basin, North Dakota (SSN 25% WI)

Acquisition of the South Prairie 3-D seismic survey has been completed as
planned and the initial processed seismic data was received on schedule in early
December. That seismic data is currently in the process of being mapped and
evaluated. 

Samson has a 25% working interest in 23,879 net acres within the South Prairie
3-D survey. Potential reservoirs include the Mississippian Mission Canyon
Formation and the Devonian Nisku Formation. After the 3-D data has been
evaluated, the first well is planned for the 1st quarter of 2013. 

As previously disclosed, the leads identified on the existing 2-D seismic data
appear to be similar to the oil field immediately adjacent to the north of the
project area. Wells in this other field have demonstrated recoveries of between
260,000 and 450,000 barrels of oil for wells drilled at the crest of the
structure. Additional Mission Canyon fields along trend have demonstrated that
some wells can recover as much as 900,000 barrels of oil per well when located
on the crest of the structure. The 3-D seismic is expected to deliver excellent
structural control, such that the wells can similarly be located at the crest of
any structures. Given that the wells are presently expected to be drilled for
approximately $1.1 million, Samson believes that the return on its investment
will be attractive. 

Samson`s Ordinary Shares are traded on the Australian Securities Exchange under
the symbol "SSN." Samson's American Depository Shares (ADSs) are traded on the
New York Stock Exchange MKT under the symbol "SSN." Each ADS represents 20 fully
paid Ordinary Shares of Samson. Samson has a total of 1,996 million ordinary
shares issued and outstanding (including 231 million options exercisable prior
to December 31 2012, at AUD 1.5 cents). As at December 28th, total issued
ordinary shares was 1,908 million (equivalent to 95.4 million ADSs) and 88
million outstanding 1.5 cent options. Accordingly, based on the NYSE MKT closing
price of US$0.645 per ADS on December 28th, 2012 the Company has a current
market capitalization of approximately US$62 million. (Excluding the value of
the outstanding options) Correspondingly, based on the ASX closing price of
A$0.031 on December 28th, 2012, the Company has a current market capitalization
of A$59 million (Excluding the value of the outstanding options).

 For and on behalf of the board of  
 SAMSON OIL & GAS LIMITED           
                                    
 TERRY BARR                         
 Managing Director                  


Statements made in this release that are not historical facts may be forward
looking statements, including but not limited to statements using words like
"may," "believe," "expect," "calculate," "anticipate," "should" or "will." 

Actual results may differ materially from those projected in any forward-looking
statement. There are a number of important factors that could cause actual
results to differ materially from those anticipated or estimated by any forward
looking information, including uncertainties inherent in estimating the methods,
timing and results of exploration activities, including exploratory wells,
development wells and workovers. Estimates of contingent recoverable volumes of
oil or gas from planned but undrilled exploration projects are inherently
uncertain and dependent on various contingencies that are outside the control of
Samson. 

A description of the risks and uncertainties that are generally attendant to
Samson and its industry, as well as other factors that could affect Samson`s
financial results, are included in the Company's report to the U.S. Securities
and Exchange Commission on Form 10-K, which is available at
www.sec.gov/edgar/searchedgar/webusers.htm. 

The reserves quoted in this release were estimated based on the definitions and
disclosures guidelines contained in the Society of Petroleum Engineers, World
Petroleum Council, American Association of Petroleum Geologists and Society of
Petroleum Evaluation Engineers Petroleum Resources Management Systems. 

The PDP Reserves estimated by Ryder Scott were the responsibility of Richard J.
Marshall a Colorado Registered Professional Engineer. 

The Probable Reserves estimated by Samson Oil and Gas Limited were the
responsibility of Terence M. Barr their CEO, a Petroleum Geologist with 37 years
of industry experience.

Samson Oil & Gas Limited
Terry Barr, CEO
303-296-3994 (US office)
970-389-5047 (US cell) 

Copyright Business Wire 2012
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