The Birch Mountain Lands are comprised of nine leases, leases 03, 469, 471, 513, 514, 611, 614, 615 and 915, that were acquired at Crown land sales over a two-year period between September 2006 and November 2008 by UTS Energy Corporation (“UTS”) and Teck. UTS transferred its 50% ownership to SilverBirch Energy as a result of the plan of arrangement between UTS, Total E&P Canada Ltd. and SilverBirch. The leases were subsequently completely transferred to SilverWillow as a result of the Arrangement, resulting in 100% ownership by SilverWillow. The Birch Mountain Lands comprise 94,080 acres and are immediately west of Teck’s Frontier Oil Sands Mining Project.
During the 2006/2007 and 2007/2008 winter seasons, a total of 25 oil sands evaluation core holes were drilled on the Birch Mountain Lands. Of these, 18 core holes were shallow evaluation holes which were drilled in the lower elevation sections of the leases, within the Athabasca River valley. Sixteen of the 18 shallow core holes encountered oil sands, and seven of these encountered oil sands with thicknesses between 10m and 25m and within a depth interval of 35m to 200m below surface. The oil sands occur in both the Wabiskaw and McMurray formations, and are not continuous intervals. Additional exploration drilling and evaluation will be required to determine the extent of the resource and potential recovery methods.
In early 2008, a preliminary exploration program on the higher elevations of the Birch Mountain Lands was conducted. This program consisted of field acquisition of approximately 100 kilometres of 2D seismic data and the drilling of a total of seven core holes on leases 471, 513, 614, 615, and 915. Based on core analysis, all seven of these core holes encountered oil sands with gross thickness ranging from six metres to 30 metres. However, current well control is very sparse and additional exploration programs, comprising both seismic and drilling, will be required to identify prospective areas with sufficient in-place bitumen volumes and reservoir continuity and quality, necessary for in situ production potential.
Bitumen resources in the Birch Mountain area are contained within the Lower Cretaceous McMurray Formation and the overlying Wabiskaw Member of the Clearwater Formation. The depth to the Wabiskaw and McMurray Formation oil sands in the area varies from 150 metres in the Athabasca River Valley in the east to 550 metres on the top of the Birch Mountain area in the west. The nearest producing in situ development project to the Birch Mountain Lands is Suncor’s MacKay River project, which is located approximately 85 kilometres south of the Birch Mountain Lands and which uses SAGD to produce from the McMurray Formation.
Since 2008, no additional exploration activity has been carried out on the Birch Mountain Lands, which are at an early stage of evaluation. At this time, no resource estimates have been attributed to this property.
In the second quarter of 2012, SilverWillow completed a desktop geological study of the Birch Mountain area in order to identify locations for a 2D seismic program. The data from the program will provide the information required to design a future oil sands exploration drilling program. Planning for the seismic program was completed in late 2012 and field work commenced in January 2013. SilverWillow completed the field component of the program in the first quarter of 2013, with results from interpretation of the data expected in the third quarter of 2013. Based upon these results, we plan to conduct an exploration drilling program on these lands in early 2014.