SilverWillow Energy
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Audet Lands

The Audet Lands are located in the North Eastern corner of the Athabasca Oil Sands Area approximately 30 kms north of Cenovus Energy Inc.’s Telephone Lake Thermal Project and 40 kms north east of Suncor Energy Inc.’s producing Firebag in situ project.  The Audet Lands were transferred to SilverWillow Energy Corporation on April 4, 2012 through a plan of arrangement involving SilverBirch Energy Corporation, Teck Resources Limited, 8071667 Canada, Inc., the purchaser, and SilverWillow Energy Corporation.

In early 2011, a preliminary exploration drilling program was conducted on SilverWillow’s two oil sands leases, 418 and 271, known as the Audet Lands.  The Audet Lands, which cover 23,040 acres of undeveloped lands in the Athabasca Oil Sands Area, are owned 100% by SilverWillow and are located 110 kilometres northeast of Fort McMurray, and are approximately 30 kilometres north and north-east of Cenovus’ proposed Telephone Lake project and Suncor’s Firebag project, respectively.

A total of 34 core holes were drilled to evaluate the reservoir quality and bitumen characteristics, to define the extent of the bitumen resource and to provide an initial indication of the caprock extent and integrity for assessment of potential recovery processes.  An initial review of the results from the drilling program, and subsequent detailed laboratory analyses of the core samples recovered, indicated that the oil sands deposit on the Audet Lands is of very high quality.  Results from all core samples exhibiting a minimum six mass percent bitumen showed an average porosity of 35%, an average bitumen saturation of 81%, and excellent permeabilities.

Based on this significant discovery, Sproule was engaged to provide a technical assessment of the original bitumen-in-place volumes in the Audet Lands.

Building on the success of the 2011 program, a second winter field program was undertaken during the first quarter of 2012.  This program comprised further resource delineation drilling; additional caprock evaluation, including mini-frac tests; hydrogeological evaluation and flow testing; and a 2D seismic acquisition program.  This field program was designed to address technical considerations to determine the development potential of the leases.  All components of the program were successfully completed.

During 2012, SilverWillow also engaged geo-mechanical engineering and reservoir engineering consultants to assist the Corporation in the assessment of the Audet Lands for the production of bitumen by SAGD methods.  The results of the technical work by the consultants indicate that the reservoir and caprock properties will allow production by SAGD methods at appropriate pressures without compromising the integrity of the caprock.  Additional studies will be undertaken to properly assess the spatial extent of the caprock properties and the requirement for a small-scale pilot test to demonstrate steam containment under operating conditions.

During the third quarter of 2012 SilverWillow initiated planning of a supplementary winter field program on its Audet Lands.  The program scope included the drilling of approximately ten core holes for caprock characterization exploration and delineation purposes.  Construction of winter access to the Audet Lands site commenced in mid- December 2012 with drilling of the first core hole in early February 2013.  

The above noted drilling program was completed by the end of March 2013.  SilverWillow acquired additional caprock data during the 2013 exploration program and is in the process of determining the cost of a small steam containment pilot test for the Audet Lands.  This will provide important field data regarding performance of the caprock, and will assist in the design of SilverWillow’s proposed 12,000 barrel per day SAGD development project.

SilverWillow’s primary goal for the 2013 field season was to gather additional caprock samples to confirm caprock extent, consistent mineralogy, and to add to the geomechanical data currently held.  An additional nine resource core holes were drilled and four overburden characterization core holes.  The Audet Land area has 81 resource core holes primarily focused around the initial project area.

SilverWillow is progressing the project towards commercial production having completed the Design Basis Memorandum (“DBM”) for a 12,000 barrel per calendar day bitumen production facility in the third quarter, and preparation and submission of a regulatory application for submission in the fourth quarter of 2013.  Assuming typical timelines for regulatory approval and facilities construction, it is anticipated that first oil from a SAGD project could be produced in late 2016 or early 2017. The following map contains a contour map showing estimate of oil sands thickness based on well log analysis in the Audet Lands.

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