BAKKEN PETROLEUM SYSTEM

The entire Williston Basin is spread across North Dakota, South Dakota, Montana and parts of southern Canada. The basin produces oil and natural gas from numerous producing horizons including, but not limited to, the Judith River, Charles, Amsden, Lodgepole, Bakken, Three Forks, Nisku, Madison and Red River formations. Commercial oil production activities began in the Williston Basin in the 1950’s with the first well drilled in 1953. An estimated 3.8 billion barrels have been produced from the basin, primarily from conventional oil accumulations, which can be found at depths ranging from 5,000-15,000 feet.

Lonestar’s operations in the Williston Basin are focused on the Roosevelt County, Montana. The leasehold is located in a part of the basin that has produced from conventional zones including the Judith River, Charles, Amsden, Nisku and Lodgepole formations; and unconventional zones including the Bakken and the Three Forks formations.

The management team originally targeted the Williston Basin because of its oil prone nature, multiple, stacked producing horizons, substantial resource potential and the management team’s previous professional history in the basin. The Williston Basin also benefits from:

  • established infrastructure;
  • access to materials and services and minimal regulatory delays due to fee ownership of properties and efficient state and local regulatory bodies; and
  • reasonable permitting requirements.

Lonestar’s owns a large prospective position in the Williston Basin in the form of its West Poplar asset, which spans 32,625 net acres in the Bakken and Three Forks plays in the Roosevelt County. Lonestar holds a 65.0% working interest in West Poplar.

The Williston Basin is renowned for the highly successful Bakken play, and Lonestar acquired the West Poplar acreage due to its proximity to the Poplar Dome, which could provide enhanced fracturing in the target zones. Positive drilling results have provided initial validation of the potential of West Poplar, including Clark Farms #29-10 well which was drilled in 2011 and tested light oil (41.2-45.8o API) from the Lower Lodgepole, Bakken and Three Forks formations. This comprised a 120-150 feet horizontal drilling target. Since Lonestar’s acquisition of its West Poplar acreage, approximately 1 million new acres have been subsequently leased in Roosevelt County.

Lonestar (65% WI) and its partners recently completed the acquisition and processing of 105 square miles of 3-D seismic data covering the Poplar West project area.  In May, 2014, Lonestar anticipates submitting the application for the establishment of the Stone Turtle Indian Exploratory unit to the Bureau of Land Management (BLM) and Bureau of Indian Affairs (BIA), covering 52,559 gross acres.  As currently contemplated, formation of the unit would establish a 5-year primary term on all leasehold in the unit, in exchange for drilling activity.  Based on its geological analysis, core evaluation, and production testing, the Poplar West project area is prospective for the entire unconventional resource "Bakken Petroleum System“, which includes the Basal Lodgepole, Upper Bakken Shale, Middle Bakken, Lower Bakken Shale and the Third and Fourth Benches of the Three Forks formations.  Further, Poplar West is highly prospective for the Amsden, Charles, Heath, Mission Canyon and Nisku formations.  Lonestar believes it has strong support for future development from all governmental regulatory agencies including the BIA, BLM and the Fort Peck Tribe.  Lonestar and its partners are also encouraged by recent industry activity, which has progressively moved closer to the Poplar West leasehold.  Currently, the 3-D seismic data is being interpreted and conventional and unconventional prospects are being mapped so that Lonestar and its partners can refine their concept of reserve potential prior to seeking partners to commence drilling activities at Poplar West.  To accelerate the appraisal of this leasehold with drilling activity, Lonestar anticipates commencing a process in the second quarter, intended to bring a farm-in partner into the project.