Nextraction to Develop Viking, Bakken Oil Properties

Nextraction to Develop Viking, Bakken Oil Properties

Tuesday, April 19, 2011
Nextraction Energy Corp.

Nextraction announced its 2011 plans to develop its light oil projects in Alberta and Montana. The development will include drilling two horizontal wells, the re-completions of existing wells in the Provost Field in Alberta, Canada, acquiring 22 miles of three dimensional (3-D) seismic data and the drilling of the initial well on the Saturn acreage located in the Williston Basin of eastern Montana, USA.

In addition, the Company reported completion of its initial well on the Pinedale Anticline produced at an average rate of 104 barrels of oil equivalent (BOE) while continuing to flow back frac fluids at year-end 2010.

Nextraction's President, Mark S. Dolar stated, "This is a very exciting time for Nextraction. We achieved our goal of establishing production and proving reserves at our Pinedale property and look to build on that base as we plan to increase daily production rates at Provost by drilling new horizontal wells and re-completing existing wells. We will follow the Provost drilling with development on the Saturn acreage. The Provost Field is known for short term payouts and impressive internal rates of return while Saturn contains potential for large scale, long life development." Mr. Dolar continued, "We remain debt free and we have the opportunity to generate significant cash flow and increase our net reserves while maintaining our current share structure."

Plans for development are as follows:

Provost Pool - Alberta, Canada

The Company plans to drill two, 810 meter Viking formation wells, off-setting existing wells with cumulative production of 665,000 barrels of oil. The wells are being licensed to drill horizontal legs of at least 900 meters in length each. The Company also plans to re-complete existing wells on the property to test a zone in the Viking formation that has yet to be tested by implementing new fracing technologies to the zone. Estimated cost for the project is $3 million (net to the Company).

The Company is a 50% interest owner in the project, but receives 100% of the revenue until it receives $1.4 million in production revenue or re-payment (as a loan to its joint venture partner). The Company will fund and operate the drilling of the first two development wells on the property and will receive 50% of the revenue from production. For all subsequent operations, the Company participates as a 50% interest owner.

Saturn Project - Montana, USA

The Company has completed permitting a 22 square mile area for three dimensional (3-D) seismic work and plans to acquire the data in the second quarter. A well is planned to be drilled based on interpretation of the seismic testing on the 35 section property. The Company's expected expenditures for the Saturn seismic program is $900,000 for the 22 square mile acquisition (a 15 square mile program was previously estimated to cost $500,000-$650,000) and estimated cost to drill, core and complete the 2,350 meter test well is $1.2 million.

The Company will look to develop the project as a multi-well program based on appropriate test well data. The properties are being developed under terms of a Seismic Option and Farm-out Agreement. Under the terms of the agreement, the Company will operate the project and fund 75% of the data collection costs for the seismic program. Prior to commencing the first core test well, its partner will have the option to participate as a 25% interest owner. Should the partner participate in the drilling of the well, the before payout interest will be shared 75% by Nextraction and 25% by the partner, after payout interests will be shared 52.5% by Nextraction and 47.5% by the partner. If the partner does not participate in the well, Nextraction will own 100% before payout and 70% after payout.

Pinedale - Wyoming, USA

After an initial 24 hour flow rate of 3 million cubic feet of gas per day from the upper 400 feet of net sand in the Lance and Tertiary formations from the Company's 100% owned Noble 6-24 well, the well produced and flared 8,074 MCFG, 28 Barrels of Condensate and 166 barrels of water/frac fluids from 11 days of production in December, 2010.

The Company became the operator of the project on February 1, 2011. In assuming operations, the Company will have the ability to develop the properties in a more efficient and cost effective manner and assist in lifting fluids from the well. The Company placed an electric compressor on location in mid-March to assist in lifting fluids that are known to produce with the natural gas and condensate on the Anticline. Nextraction predicts that with this compressor, daily production should average in the range of 800-1,000 mcfgpd and 20 barrels of condensate from the unconventional tight sands. Without compressor assistance, the well averages 400 mcfgpd and 8 barrels of condensate. The producing intervals in the well remain over-pressured, which indicates that the well should perform at the anticipated rates once completion fluids are drawn from the well.

To further enhance future drilling locations, the Company has also acquired 3-D seismic and plans to obtain 2-D seismic on the property in this year.

Mr. Dolar commented, "By completing the first well in Pinedale, we have taken great steps toward development of this project. As our knowledge of Pinedale increased, we realized that the use of artificial lift is essential for removing associated water production that flows with the gas and condensate. The decision to place an electric compressor on site to assist in drawing down the water levels and increase gas production from the well also lessens our carbon footprint and assists in our compliance with clean air requirements. As seismic is completed on Pinedale, we will determine the next strategy for development to enhance value to the Company."