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Brownstone Received Resource Assessment on 2 Licenses

Source: www.gulfoilandgas.com 9/7/2011, Location: Middle East

Brownstone Energy Inc. announces that Adira Energy Ltd., its partner and the operator of its Israeli oil and gas properties, has received two independent reports (collectively, the Reports) disclosing resource estimates on each of the Gabriella License and Yitzhak License located offshore in Israel. Gustavson Associates LLC (Gustavson) of Boulder, Colorado was commissioned by Adira in April 2011, to independently evaluate the hydrocarbon potential of the Licenses using all data available as of an effective date of August 31, 2011 (the Effective Date).

Gustavson was provided with certain data by Adira including a new dual azimuth 3-D dataset recently acquired by Adira pertaining to the Licenses. The 3-D data was delivered in the form of a Quick-Look cube by WesternGeco (a division of Schlumberger Limited). The final processing of the 3-D data is scheduled to be completed in the first quarter of 2012 by CGG Veritas. Gustavson conducted an assessment of the gross contingent and prospective oil and gas resources on the Licenses as of the Effective Date. The Reports are limited to an estimation of the possible range of hydrocarbon volume that theoretically may be produced and does not include any economic modeling or valuation of the resources. Such estimations provided in the Reports have not been adjusted to reflect the Company’s working interest in the Licenses or any other encumbrances.

The Reports describe a probabilistic distribution of each of the Licenses’ “ontingent resources” in respect of oil on the Gabriella License and “prospective resources” in respect of gas for both Licenses and the oil on the Yitzhak License both terms as defined by the Canadian Oil and Gas Evaluation Handbook (COGEH) and do not represent an estimate of reserves.

- Gabriella License
The Gabriella License covers a total area of approximately 390 square kilometers (or 97,000 acres) and is in relatively shallow water with depths between 80 and 200 meters. Brownstone has a 15% participating interest in the Gabriella License. The primary prospect on this block is a Jurassic aged carbonate in a Syrian Arc structural trend that had tested oil from the Jurassic Zohar formation in the Yam-Yafo 1 well which is located in Block #378 / “Gabriella”, in 1994. The other prospects on this block are shallower and younger formations that are interpreted to be gas and condensate bearing. The review of well and test data revealed that there were a total of three Jurassic well penetrations on trend that had showed or tested oil. The evaluation includes a petrophysical analysis of the well log data from the Yam-Yafo 1 well and the Yam 2 well (south of the block) in the same Jurassic section along with a detailed fracture analysis of the oil-bearing zones in the wells. These two wells both tested 44 to 48 degree API light oil at rates in excess of 800 barrels per day.

Secondary prospects on this block are the Cretaceous and Miocene aged sections. Seismic interpretation has identified several prospects with potential hydrocarbon accumulations. The hydrocarbons in these sections are assumed to be predominantly gas with condensate. Only those prospects that are contained within the block boundaries have been included in the resource estimates. There may also be more Cretaceous, Miocene and even Pliocene prospects contained within the block as the final processed version of the recently acquired 3-D dual azimuth seismic data may show additional potential prospects.

- Gas
A probabilistic estimate of the prospective resources was made using the parameters from the available data. The following Table 2 shows the summary of the estimated prospective resources for the Cretaceous and Miocene of the Block #378 / ‘Gabriella’ in Billions of Cubic Feet of Gas (BCF) and Millions of Barrels of Condensate (MMBC).

- Yitzhak License
The Yitzhak License covers a total area of approximately 127.7 square kilometers (or 31,555 acres) and is in relatively shallow water with depths between 60 and 250 meters. Brownstone has a 15% participating interest in the Yitzhak License. The primary prospect on the Yitzhak License is the Jurassic aged carbonate in a Syrian Arc structure that had tested oil from the Jurassic Zohar formation in the Yam-Yafo 1 well which is located in Block #378 / ‘Gabriella in 1994. The Delta 1A well penetrated the Jurassic and is located on the Yitzhak block but it was not drilled deep enough to test the Zohar limestone. The other prospects on this block are shallower and younger formations that are interpreted to be gas bearing. The review of well and test data revealed that there were a total of three Jurassic penetrations on the Syrian Arc structural trend that had showed or tested oil. The evaluation includes a petrophysical analysis of the well log data from the Yam-Yafo 1 well and the Yam 2 well (south of Gabriella block) in the Jurassic section along with a detailed fracture analysis of the oil-bearing zones in the wells. These two wells both tested 44 to 48 degree API light oil at rates in excess of 800 barrels per day.

Secondary prospects on this block are in the Cretaceous aged section. Seismic interpretation has identified several prospects with potential hydrocarbon accumulations. The hydrocarbons in these sections are assumed to be predominantly gas with condensate. Only those prospects that are contained within the block boundaries have been included in the resource estimates. There may be more Cretaceous as well as Miocene and even Pliocene prospects contained within the block. The final processed version of the new 3-D seismic survey may show additional potential prospects. A probabilistic estimate of prospective resources was made using the parameters from the available data.

Sheldon Inwentash, Chairman and CEO of Brownstone stated, “We are pleased that the resource report delivered by Gustavson has reinforced our confidence that our offshore Israeli blocks hold similar hydrocarbon potential to recent discoveries made by Noble Energy and their partners in what is proving to be a very prolific hydrocarbon province. Given that previous wells drilled on and around our blocks have flowed significant volumes of light oil when originally tested has dramatically reduced the exploration drilling risk. The fact that our blocks are in shallow water, near shore, and close to oil and gas transmission infrastructure will mean tie-in of production should be relatively easy and economic. We echo our partner’s commitment to continue our efforts to develop energy in Israel, for Israel.”

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Related Categories: Formation Evaluation  General  Geological, Geophysical  Geophysical Contractors  Mud Logging  Reservoir Engineering & Recovery Methods  Seismic survey  Well Completion, Logging, Workover 

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