Latest surveys A large-scale reconnaissance Geochemical survey (completed January 2014) of the hitherto unsurveyed lease area indicate large potential hydrocarbon seepage anomalies and multiple faults and traps. Anomaly groupings were of 500 acres, 400 acres and 4,400 acres respectively. The latter was the largest anomaly so far identified. The circular character of the geochemical anomalies is consistent with those at the productive Railroad Valley, and the anomalies exhibit many of Railroad Valley's geological relationships.
Eblana #1 well The Eblana #1 exploration well, drilled by U.S. Oil's wholly owned subsidiary Major Oil International LLC, identified nine large potential porous oil reservoir intervals and associated high fracture zones before reaching its target depth of 8,550 feet on 26th May 2012. Testing confirmed two producer zones, approximately 150 feet cumulative net pay, and identified oil of 33 and 28.5 API. This was the first discovery of light, sweet crude in Nevada in approximately 30 years.
Competent Person's Report On May 23, 2013, the Company announced the findings of an independent Competent Person's Report prepared by Forrest Garb & Associates. Total Prospective Recoverable oil for full acreage (P50) = 57.2 million barrels. Contingent Recoverable oil for immediate area of Eblana #1 (P50) = 19.256 million barrels.
Results can be summarised as follows:
Hot Creek Valley, Tertiary Volcanics, Estimated Net Recoverable Resources (units = MBbl= 'thousands of barrels')
Low Best High Resource Category Estimate Estimate Estimate (P90) (P50) (P10) Eblana #1 Area Contingent Recoverable Oil 8,636 19,256 33,513 Oil-In-Place 45,301 107,344 165,286
20 sq KM Core Area Prospective Recoverable Oil 11,873 20,189 45,049 Oil-In-Place 61,120 132,060 222,919
Total Prospective 88 sq KM Prospective Recoverable 20,138 57,200 683,646 Oil-In-Place 102,342 282,818 3,342,163
In addition, on a 50% probability ('P50') for the Paleozoic Dolomites, FGA estimate the net recoverable prospective resources at 22 million barrels ('MMBbl').
Net Present Value is estimated at $588 million based on a 50 well project with 15 year cash flows discounted at 10%.
Note: Probabilistic aggregation of prospective resources in multiple areas, not arithmetic summation. Note: Net figures reflect adjustment downwards for 12.5% government royalty.
The objective of the latest CPR was to update the resource categorization, hydrocarbon volume estimates and financial model, and to make recommendations for future exploration of the Hot Creek Valley concession incorporating the results from Eblana #1.