Transcript NICARAGUA - Black Star 231

Nicaragua
Sleeping Oil Giant?
October, 2007
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Overview
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Brito Energy, a unit of Black Star 231 Corp.,
presents an attractive petroleum project in
Nicaragua (The Brito block).
Nicaragua is located in Central America
south of Honduras and north of Costa Rica.
Data on Nicaragua is presented at the end of
the presentation.
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Geographic Map of Nicaragua
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Brito Energy - Exploration
Program
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Brito Energy presents a three phase petroleum
exploration program.
Phase One – Black Star 231 Corp owns a
10,000 acre block in SW Nicaragua, do 2D
seismic work on the block and prepare for
Phases Two and Three.
Phase Two - Complete exploration and drill a
well(s) on the Brito Block.
Phase Three - Expand our operations by
aggressively pursuing projects in Nicaragua and
Central America.
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Phase 1 - Brito Block
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Brito Energy owns 10,000 acres in SW
Nicaragua.
The Brito block is in a checker-board
20,000 acre block with Norwood
Resources Ltd. holding the other 10,000
acres.
The data indicates 10-13 thousand feet of
sedimentary section on the Brito block.
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Phase 1 - Brito Block
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Norwood Resources Ltd, of Canada, has
reported a frontier, wildcat discovery of oil,
gas, and condensate some 30 miles north
of Brito’s block.
The Brito block has a mapped surface
anticline some 12-15 km. long. This
structure was mapped by photo geological
mapping and verified by geological field
work.
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Picture shows strong SW dip of the Brito formation. The rocks cropping
out are medium-grained, well-sorted sandstones. The sandstone
has been weathered.
Pictures showing
outcrop of Brito
sandstone. Several
local faults are seen.
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Picture of long linear
stream valley. We
believe that this valley
was formed by a
major NW-SE fault
trending parallel to
the linear anticline.
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Phase 1 - Brito Block
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The Norwood strike encountered oil/gas in
the Masachapa and Brito formations. A
very thick oil/gas saturated reservoir was
logged and cored.
In the Brito anticline, we will spud in the
Brito formation and will drill through the
Rivas Formation.
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Phase 1 - Brito Block
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The Brito and Rivas formation have both
reservoirs and source rocks—data from wells
and surface work.
The Rivas and Loma Chomico formations have
very good source rocks with 57% TOC reported
in the shale. TOC is Total Organic Compounds.
TOC is a common method of evaluating the
richness of a source rock. 10% TOC is
considered to be a very good source rock.
As the Brito anticline is a closed structure, we
have reservoir rocks, structure, source rocks and
seal, all of the main ingredients for an oil field.
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Phase 1 - Brito Block
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The Brito block is located in the Sandino
Basin.
The Sandino Basin encompasses SW
Nicaragua and most of the Pacific offshore
out to the Cocos Plate.
The Brito formation and the Rivas
formation are both marine deposits with a
significant amount being turbidite deposits.
The porosity in both formations is 17-20%.
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Brito Block - Phase 1
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The Brito formation is of Paleocene age.
The Brito formation lies, unconformably,
on the Rivas formation which is
Cretaceous age.
Permeability in both formations appears to
range from low to very good.
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This slide demonstrates our concept of the Brito anticline. A NW-SE
fault parallel to the anticline is suggested. Strong SW and NE dip is well
exposed on the NE and SW side of the anticline. The Brito anticline is a
long, linear structural feature possibly caused by pressure from the
offshore Cocos plate being sub-ducted under the Nicaraguan plate.
Many volcanoes are present in SW Nicaragua
Phase 1 - Brito Block
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Norwood released the following press release:
”Norwood has drilled the San Bartolo well to a
TD 2680 meters, encountering gas, condensate
and light oil in various turbidite sands from the
Brito formation. Eight separate zones were
logged…….core analysis indicated 17-21%
porosity……it is reported that the pressure is
high and the liquids are of superior quality of 54
degrees API gravity….the structure is believed
to encompass about 20 sq. km.…….. “
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Phase 1 - Brito Block
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The Norwood well is reported to be on a fault
block with a large, down-to-the-east fault on the
eastern side of the block..
Norwood drilled what they believed to be a large
surface anticline. The anticline was not found but
Norwood still had a trap for oil. This trap was
formed by strike slip faulting where the lateral
movement of sediments effectively sealed off the
reservoir. Norwood maps strike slip faults in
many areas of their acreage.
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Diagram of Norwood’s Structure
The large NW-SE fault forms a seal for the eastward closure. The two strike
slip faults, A & B, form the reservoir trap to the north and south. The well
had excellent shows of oil/gas, but heavy mud and lost circulation material
caused all permeability to be sealed off. If the well had no damage, it could
have been completed at a flow rate of at least 1,000 BOPD.
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Cross Section of Norwood’s
Drilling Location
Norwood believed that on the east side of the anticline, that the rocks
would all dip downward as the surface anticline indicated. But, the
smaller associated fault caused only a thin surface section to dip to
the east.
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Norwood Expected Reserves
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Norwood’s wells could have been completed
as 1000 BOPD wells. Norwood has a large
area with abundant strike slip faults resulting
in traps of oil/gas. Clearly, Norwood ultimate
reserves of recoverable oil could be in the
high hundreds of millions of barrels of oil or
gas equivalent.
Exploration in the Norwood block is just
commencing.
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Brito Expected Reserves
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Brito expected reserves of oil/gas are
substantial.
Brito’s anticipated reserves of oil/gas are
between two hundred million barrels and
four hundred million barrels.
Brito has a series of strike slip faults similar
to Norwood.
If the strike slip faults yield an array of
structures, this figure could be much higher.
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Strike slip fault
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Phase 1 - Brito Block
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Thus, the Brito block is an excellent prospective
area. Brito has a large structure, plus all the
other elements necessary for an oil field.
The Brito block is on trend with, and exhibits the
some of the geological attributes as the potential
frontier discovery announced by Norwood. The
Norwood well will open up extensive exploration
in the Sandino basin.
The Loma Chomico shale with some 57% TOC
is one of the richest source rocks that have ever
been recorded.
The geochemistry report has good results.
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Strike slip fault
Phase 1 - Brito Block
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This is an exciting oil play. We have
enough information to strongly suggest
that this basin will develop into a major oil
province.
The long anticline together with the
regional fault on the NE side of the
anticline suggests that the structure is big
enough to be a major oil find.
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Phase 1 - Brito Block
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We recommend that about 250 line km. of
2D seismic data be acquired over the Brito
Block.
1 km grid over block with regional extensions
 Mob and De-mob expenses higher due to lack
of local service companies
 Seismic processing and interpretation
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Budget - Phase 1
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Brito Block (SW Nicaragua)
Purchase acreage
 2D Seismic work
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Acquisition, processing,
and interpretation
General/Admin.
$ .25 MM
Total Phase 1
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$ 3.25 MM
$ 2.50 MM
$ 6.00 MM
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Phase 1 - Recommendation
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The Brito block is highly recommended. As the structure
has already been mapped, only a minimum of seismic
lines must be shot. Thus, drilling can start at an early
stage. The technical evaluation of the regional geologic
framework is now completed.
The Brito block is part of the same complex of structural
features all owing their origins and existence to the same
tectonic events that have given rise to the thick oil
saturated section in the Norwood discovery wells.
The Brito anticlinal structure is located down trend from
Norwood’s potential discovery. The Brito structure has
good reservoir rocks and superior source rocks, which
together with the geochemical survey indicates an
exceptional prospect.
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Phase 2 - Brito Block
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We recommend that three wells be
drilled on the Brito Block, each to a
total depth of 9,000 feet.
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first three wells on the Brito block
can be drilled and tested in one year.
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Budget - Phase 2
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Brito Block - SW Nicaragua
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Drill three wells
$14.2 MM
- Includes overhead & G&A
- If any of the first three wells are
commercial, we would strongly
recommend development drilling
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3D Seismic acquisition
Total Phase 2
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$ .6MM
$14.8 MM
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Picture of local people living on a small farm. The farm is located near
the crest of the Brito anticline. The people appeared to be content in
spite of their barely subsistence living standard. It was good to see the
obvious affection of the parents to the children.
Operational Risk
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Operational risk is low. Lack of good roads in the
Brito block may slow down drilling operations
slightly.
Lack of drilling rigs and petroleum infrastructure
suggests that practically all equipment will have
to be imported into Nicaragua.
Intensive training will be required for local labor
especially in preventative maintenance and
safety.
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Phase 3
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Phase 3 is to aggressively pursue,
additional specific projects:
Project A:
This acreage is offshore from the Brito block
in SW Nicaragua.
 The area is prospective and we can exploit
our knowledge of the contiguous onshore
Brito block.
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Phase 3
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Project B:
 Onshore
Nicaragua - NE area.
 Large well defined surface prospects
with abundant oil seeps.
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Project C:
 Offshore
Nicaragua - Atlantic side.
 The Atlantic side has great possibilities
and is greatly under explored.
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Budget - Phase 3
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Onshore Block - NE Nicaragua
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$ 5.0 MM
$ .2 MM
$ 4.0 MM
Offshore Block - SW Nicaragua
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1000 km Seismic
Surface geology
Drill Well
500 km Seismic
Drill well
$ 2.5 MM
$ 8.0 MM
Total Phase 3
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$19.7 MM
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Composite Budget
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PHASE 1
$ 6.0 MM
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PHASE 2
$14.8 MM
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PHASE 3
$19.7 MM
Total of three phases
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$40.5 MM
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Time Line - Phases 1 & 2
Phase
Activity
2D Seismic &
Gravity Meter
Data
1
2
3
4
5
6
Year 1
7
8
9
10
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Shoot & Interpret
data
(2D - 250 km)
1
Location
Preparation
Well #1
Well #2
Prepare Drilling
locations as
needed
Drill Well
(9,000 ft)
Test
Well
Drill Well
(9,000 ft)
Test
Well
2
Drill Well
(9,000 ft)
Well #3
3D Seismic &
Gravity Meter
Data
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Test
Well
Shoot & Interpret
data
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Time Line - Phase 3
Phase
Activity
1
2
3
4
5
Continued
Development of
Brito Block
Onshore NE Nic
2D Seismic and
Gravity Meter
Onshore NE Nic
Surface Geology
3
Onshore NE Nic
Prepare Drilling
Locations
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10
11
12
Shoot & Interpret data
(2D - 1000 km)
Field Work
Prepare Drilling
locations as
needed
Drill Well
(9,000 ft)
Test
Well
Shoot & Interpret data
(2D - 500 km)
Offshore SW Nic
Drill Well #1
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Assuming success
Onshore NE Nic
Drill Well #1
Offshore SW Nic
2D Seismic and
Gravity Meter
Year 2
6
7
Drill Well
(9,000 ft)
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Test
Well
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Tentative Economic Analysis
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Assumptions:
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Drill 80 wells, 40 in year one and 40 in year two
Well costs: $160MM first year, $160MM second year
Field facilities: $30MM year one, $10MM year two
Pipeline: 10 inches X 25 miles X $50,000/inch diameter mile
= $12.5MM
Tankage: $15MM ($5MM year one, $10MM year two)
Buoy and sea lines: $2MM
Note: Cost of Managua office etc. rolled into well costs
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Tentative Economic Analysis
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Case 1:
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Oil Production 300 bopd/well
Net revenue income to working interest $20/bbl
Results: Payout in 4 years, ROR 50%+
Case 2:
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Oil production 3000 bopd/well
Net revenue income to working interest $40/bbl
Results: Payout in second year, ROR 100%+
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Tentative Economic Analysis
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Case 3:
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Oil Production 1000 bopd/well
Net revenue income to working interest $30/bbl
Results: Payout last quarter of year 2, ROR 100%+
Even under the worse case scenario of 300
bopd/well the economics are still attractive
These economics were run to see if wells which
are high cost and with low production rates
would be economic.
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Nicaragua & Central America
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Brito Energy suggests that, in general,
Central America and Nicaragua in
particular will see a great expansion in
petroleum exploration.
Brito Energy’s goal is to is to be a major
player in this expansion.
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References
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The results of the geochemical analysis to the Loma
Chumico are in a range 10 to 55 % TOC, kerogene type
I y II; made by Simon Petroleum Technology Ltd.
Reference: D.R. Clowser, I. Cutler, M.H. Girgis, J.F.
Laing, D. Wall from SIMON PETROLEUM
TECHNOLOGY LIMITED, 1993.
Biostratigraphic and geochemical studies of outcrop
samples, INE-RECOPE Project. Humble Geochemical
Services confirmed that the Loma Chumico formation,
the kerogene is II - S type (rich in sulfurs) and generated
hydrocarbons under termic pressure below that the
kerogene type II.
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Geography and People
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Population:
Area:
Capital:
Terrain:
Climate:
People:
Literacy:
Language:
Religion:
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5.7 million
49,998 sq. miles
Managua (1MM pop.)
Mountainous
Tropical/subtropical
69% Mesitzo (mixture of Indian
and European)
68.2%
Spanish, English (2nd language)
Roman Catholic, Protestant minority
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