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Sample Issue -- December 27, 2007
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Silverwing Completes Tomahawk Drilling Commitment
Effective Dec. 17th, Silverwing Energy Inc. rig
released the 22nd and final well of its intermediate depth drilling program at
Tomahawk, Alberta, completing its drilling commitment of 22 Mississippian and
Belly River wells that was to occur before Dec. 31, 2007.
The company has cased 21 out of the 22 wells drilled and expects to commence
in 2008 a program of further evaluation and testing of the multi-zone oil and
gas potential uncovered through drilling. Silverwing also announced that with
the completion of this drilling commitment, it has secured the escrow funds of
$11.1 million that was held back by the farmor against Silverwing completing the
initial farm-in agreement.
As of Dec. 20, 2007, $6.25 million remains the undrawn balance in the escrow
account.
The Tomahawk farm-in provides Silverwing access to over 51,000 net acres of
undeveloped freehold land in the Tomahawk area of central Alberta. The area is
known for its under-explored multi-zone oil and gas potential along with highly
prospective formations including a Nisku interior patch reef oil trend, a zone
of primary interest to Silverwing.
The Tomahawk farm-in agreement requires Silverwing to drill 29 wells,
including up to seven Nisku wells in the initial earning phase, with an option
to earn additional land with additional drilling commitments.
An initial commitment of drilling 22 intermediate depth wells to evaluate the
Mississippian (1,700 metres drilling depth) and Belly River (800 metres drilling
depth) potential was required to be completed no later than Dec. 31, 2007.
Silverwing expects to commence drilling of its Nisku program during the first
quarter of 2008.
Over the course of 2007 Silverwing said it has noted a significant increase
in 3-D seismic activity adjacent to its Tomahawk project by firms targeting the
Nisku formations.
Drilling success rates in the Nisku in recent years have significantly
improved over historical experience due to the use of 3-D seismic.
In addition, there has been a marked increase in the prices paid for the
acquisition of crown mineral rights and well licensing activity by a number of
known Nisku players.
Four new Nisku well licenses have recently been announced within the
Silverwing Tomahawk project area by competitors. Silverwing believes this recent
activity validates its business plan and in particular the value of its Tomahawk
land holdings, once these are earned.
The Nisku interior patch reef oil wells being targeted by Silverwing can
produce at rates of over 2,000 bbls of oil a day and recoveries range in the
750,000 to one million bbls of oil. The company said it has five high-graded
Nisku oil prospects in the Tomahawk project, all of which are defined by
high-quality 3-D seismic.
In addition, Silverwing has a sixth high quality 3-D seismic-supported Nisku
oil prospect at Easyford, Alberta, several kilometres northwest of Drayton
Valley, Alberta, and only about 1.5 kilometres from existing Nisku oil
production.
With the completion of Silverwing's 22-well Mississippian and Belly River
drilling program in 2007, the company said next year it will focus on exploiting
the multi-zone potential that has been uncovered at Tomahawk. The junior
producer expects to commence oil and gas production from Tomahawk in the third
quarter of 2008.
In addition, the company expects to focus its exploration drilling effort on
its high potential Nisku oil prospects on freehold lands at Tomahawk and on
Crown lands at Easyford, Alberta.
Finally, Silverwing expects to maintain its Prespatou, BC gas production
assets in 2008 and prepare for a new phase of development as gas commodity
prices strengthen.
The company also intends to evaluate its strategic options on its Bakken and
Midale play at Torquay, Saskatchewan.
The company also announced that, pursuant to its stock option plan, it has
granted options to acquire up to 8.19 million common shares of Silverwing, of
which 6.34 million options were granted to officers and directors.
Each of the options is exercisable for a five year term expiring on Dec. 19,
2012, and exercisable until that time at a price of 20 cents per common share,
being the market price of the common shares issued in its last private placement
financing closed in August of 2007.
Any common shares issued upon exercise of the options will be subject to a
hold period expiring on April 20, 2008.
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