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High Definition Reservoir Geochemistry A New Direct Hydrocarbon Indicator For the Oil & Gas Industry.

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Presentation on theme: "High Definition Reservoir Geochemistry A New Direct Hydrocarbon Indicator For the Oil & Gas Industry."— Presentation transcript:

1 High Definition Reservoir Geochemistry A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

2 Trading Information TSX Venture Exchange : DIG 52 Week Trading Range: $ Shares Issued & O/S : 9,349,035 Options O/S :1,275,000 Fully Diluted O/S: 10,624,035

3 Corporate Information Head Office 12 Sierra Morena Way SW, Calgary, AB T3H 3E4 Telephone: | Fax: Website: Transfer Agent: Computershare,Vancouver, B.C. Auditors: PricewaterhouseCoopers LLP, Calgary, AB Lawyers:Bryan & Company LLP, Calgary, AB

4 Directors Norman Yeo, B.A., LL.B., Calgary, AB John Burt Wilson, ACIB, TEP, Jersey, CI Len Burchell, FCMA, Capetown, SA Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON Russell Birrell, B.Sc., M.Sc., Perth, Australia

5 Officers Norman Yeo, B.A., LL.B., President & CEO Russell Birrell, B.Sc., M.Sc., VP R&D David Kinton, B.Ed., P.Land, VP Land Desmond DeFreitas, C.A., CFO Larry Dewar, VP Field Operations Bill Aldag, VP Engineering

6 High Definition Reservoir Geochemistry (HDRG) The Principles Mobile ions migrate vertically to surface (like mineral deposits) HDRG anomaly derived from two sources: 1. Anomalous elements from hydrocarbon accumulation. 2. Concentration of country rock elements within reducing area of vertical ionic path. Result is strong multi-element surface anomaly developed over hydrocarbon accumulation.

7 High Definition Reservoir Geochemistry (HDRG) The Theory When mobile ions arrive at surface, they have a limited life as ‘mobile’ ions. Mobile ions (blue) do not move from the source due to limited life before becoming bound. HDRG measures only the mobile ions.

8 HDRG Proprietary Leachant C B B C C B B A A C A B C A HDRG leachant only extracts mobile ions (single elements) HDRG leachant will not extract bound elements like conventional techniques Typical soil sample C B A A Bound elementsMobile ion

9 HDRG - The Development of a Petroleum Significance Index (PSI) Approximately 21 elements / species are analyzed using proprietary technology. All lab results are normalized, creating individual “Anomaly to Background” (Response) Ratios for each element. Response Ratios for all elements are benchmarked against existing well control. Key elements are chosen based on their response over existing productive & non-productive wells in the sample area. Response Ratios for each selected key element are combined to create the final Petroleum Significance Index (“PSI”) map.

10 What HDRG can do? Target hydrocarbon accumulations at depth. Provide an elemental fingerprint for hydrocarbon bearing versus non-hydrocarbon bearing wells - Excellent in areas with established production. Be very definitive in established areas with complex geology & where seismic results are ambiguous. Provide rapid collection of valid data in challenging areas where seismic acquisition is difficult. Once an adequate HDRG data base and fingerprint is established for a project area, HDRG can be applied as the primary exploration tool in undrilled areas.

11 What Digger HDRG can’t do? Unable to define subsurface stratigraphy or structure like seismic. Currently unable to distinguish between multiple zone & single zone hydrocarbon potential. As with seismic, it cannot predict quality of hydrocarbon reservoir or quantify potential flow rates. Currently not recommended as the primary exploration method without some predefined geological or existing well control for fingerprinting.

12 HDRG vs. Conventional Geochemistry Glauconite oil channel sand at 1000m depth, SE Alberta. A strong, multi-element HDRG anomaly correlated directly to the thickest net oil pay. No anomaly was present using the highest resolution conventional geochemical analysis techniques.

13 Jumping Pound HDRG Traverse PSI Plot West East Morley West Jumping Pound New Expl. Play T25 R6 2 cased wells North end Jumping Pound W. Cochrane (undrilled)

14 Jumping Pound Survey Samples collected along 30 kms. of Highway 1A, west of Cochrane, Alberta. A major oil company concluded the survey was successful in delineating gas fields in the area. Served as pre-qualification to significant frontier HDRG program. The technology proved to be a cost effective exploration tool. No special permitting was required & turnaround was about two weeks.

15 HDRG: Drilling Validation A SW Saskatchewan property was selected by Green Dragon Investments in September 2002 based on the results of HDRG surveys at W3 location. Surface HDRG responses appeared to reflect zones of maximum hydrocarbon accumulation that corresponded to stratigraphic & structural traps. The well drilled was a successful Roseray oil well (a structural high) with a production capability of 100 BOPD in a mature oil reservoir that, for reasons of reservoir thickness & geological contrast, could not be resolved by seismic programs.

16 Green Dragon’s SW Sask. Oil Property W3M 4-13 well drilled with Digger’s HDRG Sept. 2002; 100 BOPD 3-13 well drilled with 2-D seismic Jan. 2002, initial production 25 BOPD at +97% wtr cut & now shut in 2-13 original well drilled 1957, +800,000 BO to date, +97% wtr cut 3-D PSI Map Exploration lead

17 Subsequent Drilling Near Green Dragons W3M Well Since the 4-13 was drilled, 9 other wells have been drilled within a 1 mile radius of the 4-13 by operators relying on seismic & in all cases the wells have been either dry holes or marginal wells. 1957, 2-13 Well 800,000 Barrels of oil produced Green Dragon 4-13 Well 100 bopd

18 HDRG: W3M Well The outpost well was directionally drilled under a slough by Green Dragon. HDRG responses at surface again reflected the zones of significant hydrocarbon accumulation that had no corresponding geological or seismic indications for hydrocarbons. Drilling intersected a pay zone associated with the Lower Shaunavon limestone at a depth of 1162m with 5m of pay. An offsetting horizontal well utilizing new fracturing technology is planned for The Lower Shaunavon Formation has not been a primary exploration target for oil pay in this area.

19 Drilling W3M Well The 1-17 wildcat well was directionally drilled 3km from any existing wells in January Drilling intersected 4m of gross well log oil pay in the McCloud Member & 5m of gross well log oil pay in the Lower Shaunavon formations. These formations have not been exploration targets for oil pay in this area.

20 Frontier Applications of Surface Techniques – Gore Sorber With $20-35 Million wells & 3D seismic costing more than $45,000/km 2 Devon Canada investigated cheaper alternative exploration technologies to assist in its ongoing evaluations of its Mackenzie Delta & Beaufort Sea Exploration Licenses. Devon’s initial survey in the area of the Tuk oilfield was with GORE-SORBER in The goal was to template several oil & gas accumulations in the area to identify any significant geochemical signal at surface, differentiate Paleozoic, Cretaceous & Tertiary-aged pools on the basis of hydrocarbon type & to delineate the pool boundaries. An orientation survey of 221 stations using grids & line traverses was undertaken. The survey ultimately yielded inconclusive results.

21 Frontier Applications of Surface Techniques – HDRG Mackenzie Delta & Parsons Lake Completed HDRG benchmarking surveys in Mackenzie Delta: Unipkat SDL (oil) & Parsons Lake SDL (gas). Samples subjected to a strict Chain of Custody Protocol thus ensuring voracity of survey results. Carried out extensive QA / QC checks to ensure both accuracy & repeatability of HDRG process. Clearly identified both fields including details such as oil vs. gas, fault boundaries & upside potential.

22 Completed Hydrocarbon Prospectivity surveys of potential exploration drilling targets. Completed follow-up surveys in & around Unipkat SDL. Results again were positive & in keeping with results obtained during 2003 survey program. Frontier Applications Mackenzie Delta – 2004

23 Based on the 2003 / 04 program results, coupled with the successful application of this technology in the mineral industry in lake bed sediment sampling, discussions on the application of HDRG surveys in the offshore Canadian Beaufort were held. Initial discussions revolved around the shallow water (2-3m water depth) Adgo SDL which could be easily & cost effectively accessed from the landfast ice. There was further interest from both industry and government with regard to a potential benchmarking program over the Amauligak field (30m water depth). Frontier Applications Offshore Beaufort Sea

24 An HDRG Hydrocarbon Potential survey was conducted in the Kotaneelee gas field prior to the drilling of a in-fill development well. HDRG predicted a dry hole over the proposed bottom-hole location of the proposed well. The well was drilled & encountered NO RESERVOIR at the proposed bottom-hole location. The well was then plugged back & the well drilled at a steeper intersect angle & hydrocarbons were then intersected. Frontier Applications Yukon

25 Frontier Applications Yukon – Kotaneelee Gas Field Surface location of L 38 well

26 Frontier Applications Scientific Validation Digger’s HDRG was featured at the May 2006 CSPG – CSEG – CWLS Convention held in Calgary, Alberta. The paper entitled "New Technology, New Thinking in the BMB" was co-authored by Devon geologists. The thrust of the paper presented was that due to the very high cost of drilling & 3D seismic, in the Mackenzie Delta & elsewhere in northern Canada, oil & gas operators are looking for new cost effective exploration tools, such as HDRG, to assist with exploration for new hydrocarbon reserves in support of the developing Mackenzie Valley gas pipeline system.

27  The paper confirmed that Digger completed sizeable HDRG sampling programs in the Mackenzie Delta, Yukon, & northern British Columbia for Devon to benchmark oil & gas accumulations in the area to identify any significant surface geochemical response.  Devon was successful in confirming HDRG surface geochemistry as a useful exploration tool for the Canadian Frontiers. Frontier Applications Scientific Validation

28 Concluding Remarks The proprietary HDRG process has been derived from a proven geochemistry technique utilized extensively in the mineral industry in the search for precious & base metals. Digger has invested ~9 years in transitioning this technology to the oil & gas industry via numerous field studies through to the drilling of both successful development & exploration wells – based solely on HDRG. HDRG’s record in the frontier is excellent for both oil & gas & provides an important tool for reducing both the risk & cost associated with frontier exploration & development.


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