Well, that answers that question. Questerre Energy Corp. (TSE:QEC) and Crescent Point Energy Corp. (TSE:CPG) likely knew they had some shale-oil mining neighbors in the Bakken Shale neighborhood in Saskatchewan, Canada, but they hadn't seen much of that competition. That's about to change soon. Adequately funded and eager to begin laying its final mining plans, Centor Energy Inc. (OTCBB:CNTO) is going to officially own 55% of a 21,000 acre shale oil property that's anywhere from just a few miles away to just a few meters away from and Crescent Point Energy's and Questerre Energy's operations in one of the oil-richest known areas in the Bakken formation. And to be clear, it's not like Centor Energy is just getting the ball rolling; the planning for this project has been underway for months. Once the property-acquisition deal is inked in mid-February, CNTO will likely finish up its feasibility study and begin the approval process for its facility later in the year. That's pretty quick, but as was noted, a great deal of the legwork has already been done.
First things first. For those not familiar with it, CNTO is a junior oil and gas explorer. Its attention was recently turned to the Saskatchewan area, where the aforementioned Questerre Energy Corp. and Crescent Point Energy Corp. along with several other shale miners have been working diligently to maximize the region's full oil potential for a few years now. There's still plenty of opportunity left for a newcomer though, and Centor Energy has the numbers to back the idea up. The most important of those numbers: 1.1 billion. That's the number of barrels of oil Chapman Petroleum Engineering said was apt to be waiting to be extracted in its December-2013 evaluation report. At $100 per barrel, that's a little more than $100 billion worth of oil underneath the 21,000 acre property that CNTO will officially own a lease on as of February 16th. Eat your heart out QEC and CPG shareholders.
As impressive as the amount of oil apt to be squeezed between the property's sub-surface rocks, what's even more impressive is how easy most of that oil will be to get to. Not that it's just jumping out of the ground and into barrels waiting nearby, but at some points, Chapman believes oil could be as close as ten feet from the surface. Equally encouraging is that Centor Energy Inc. won't have to fight and scrap for every single drop of oil it extracts from the shale underground at this Pasquia Hills property. The same Chapman report (report 51-101, by the way, for those wanting the details) also believes the oil shale is about 75 feet thick in a lot of places, meaning the company can start one dig, and simply keep pushing lower in that same spot for a long while. It's more efficient than hunting and pecking for the biggest deposits, which means Centor will be able to spend less than neighbors like Questerre Energy Corp. or Crescent Point Energy Corp. to go into production.... $100 million less, according to some estimates.
So what's the big question that was answered today? In simplest terms, CNTO got the funding it needed to go ahead and sign the long-term lease that gives the company a 55% share of the property's output for years to come. It was only a $1.25 million loan, but it doesn't even need all of that to enter the land agreement. Some of that money is going to be used to continue laying out the drilling plan stemming from the feasibility study. Centor Energy can put some more serious boots on the ground and start drilling test holes and taking more samples as early as March 7th.
Bottom line? Centor has put the wheels in motion. There's no going back now, and there's no need to. From here, any good news can me taken at face value... as a sign of the march towards production.
For more on Centor Energy, visit the company website here, or review the SCN research report here.
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