Reply #2: Hunt Oil in Canada!

[Joanne98]

Details trickle out about potential gem
Puskwa Play; Paramount Is Canadian Partner For Light, Sweet Find
Jon Harding, Financial Post
Published: Thursday, September 13, 2007
http://www.canada.com/nationalpost/financialpost/story.html?id=3a46112e-1ba1-43dc-8d19-5d584fabeeb4&k=33598

With the dust settled following a furious 18-month battle to lock up land in what is likely Alberta's last untapped light, sweet oil gem, details of a closely guarded drilling success by Hunt Oil Co. are trickling out through Paramount Resources Ltd., Hunt's Canadian partner in the potentially massive oil find.

Hunt Oil, the largest private independent oil company in the United States, drilled a well in early 2005 in an area of the Peace River high arch known as Puskwa, due north of the city of Grande Prairie about 500 kilo-metres northwest of Edmonton.

Its flow tested at rates of 5,000 barrels a day, nearly double the size of a nearby well that Canadian intermediate Galleon Energy Inc. drilled in early 2006 --a find touted at the time for being one of Western Canada's largest conventional light oil discoveries in more than a decade.

Paramount, whose chairman and CEO is well-known Calgary oilman Clay Riddell, had farmed out the property to Hunt Oil while retaining a 22% interest in any successful well.

Privately held and secretive Hunt, meanwhile, kept the discovery quiet as the partners tried to lock up property in the region, jockeying with a handful of others including Duvernay Oil Corp., ProspEx Resources Ltd. and Galleon, which also hope to turn the Puskwa play into a cash cow as oil prices race toward US$80 a barrel.

Michael Rose, president and CEO of Duvernay, historically a gas producer, said his company is setting its sights on potentially adding Puskwa as a new core development area, with light oil as the prize next to the company's two current core regions in Alberta and British Columbia where it produces gas.

"We've had a discovery at Puskwa, we've found light oil but haven't ascertained how big the pool is yet," Mr. Rose said yesterday outside the Peters & Co. North American Oil & Gas Conference in Toronto.

Earlier in the day, the Alberta government cleared the way for Hunt and Paramount to start producing from their original well by granting a standard regulatory approval known as good production practice, which holds the companies to a commitment to seek the highest recovery possible using means that will not damage a reservoir.

Jim Riddell, Clay Riddell's son and Paramount's president and COO, said in an interview at the same investor conference that the Puskwa play could become a core development area for Paramount, which has also largely produced natural gas in the past.

"Does it have the potential to be a core area for Paramount? Yes," he said in Toronto.

"It wouldn't be on a highlight slide if it didn't have that kind of upside potential," he added. "How big could it be, I don't know. While we're a gas company traditionally, this is about finding whatever kind of hydrocarbons we can and getting the highest returns. It happens to be that we found oil in Puskwa and the price of oil today makes it very valuable."

Andrew Boland, head of research at Peters & Co., said the deep geological formation in the Puskwa play called the Beaver-hill Lake zone, in which companies are tapping, was largely overlooked in the past as an exploration target.

He said the "deceptive" sandy zone was known for good initial productivity followed by steep declines. "Which kind of cooled people," he added.

"As for today, lets face it, everyone in the basin has been so focused on gas that it's only now we're starting to scrutinize light oil opportunities. People are starting to dig up their light oil plays because they're looking at the prices and saying I can get better returns there."

Mr. Boland said a mad scramble has occurred for land near the discoveries by Hunt, Galleon and Duvernay.

"Most of the tussling has taken place and now I think this coming year we're going to see a lot more drilling," he said.

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