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Blog: Why Strata Oil’s reservoir is ideally suited for near-term production
December 12, 2012

posted by Ron Daems, President

Several days ago one of our investors asked "What makes Strata's oil reservoir worth more than $1 billion?"

Quick answer: We acquired the "fairway tract" of land, before anyone else could. In other words, we got one of the very best land positions in the entire play.

In fact, let me relate an interesting fact. You may know that the "carbonate triangle" is located in Alberta, and contains more crude than Saudi Arabia. But the challenge has always been extraction --- getting the bitumen to flow from the highly-porous rocks it's contained in.

Therefore, the more homogeneous and porous the rocks, the more readily the crude can be produced.

And here's the exciting part. Strata Oil's reservoir is extremely homogeneous --- unlike many of our competitors whose reservoirs are several miles away, in the Grosmont formation.

You see, our land is in the Peace River region of the carbonate triangle, and our reservoir is (according to some geologists) far more attractive because the formation is consistent over extremely large areas. That's good news for Strata shareholders.

You see, the "uniqueness" of our discovery has allowed us to use "cyclic steam stimulation" as our production method in all our project plans. This technology is very simple, very old, and very proven. It's called CSS for short.

The quick description of how CSS works is this:

You basically inject steam into the reservoir for several weeks. Once the reservoir is filled with steam, you let it "soak" for a few more weeks. Pretty soon, the bitumen begins to melt, move, and flow through the pores of the rocks. Cracks and openings develop, through which the bitumen flows back into the well. The bitumen then is pumped up the same well through which the steam was injected.

The technology has been successfully used for decades, it's nothing new --- which makes Strata even more valuable to investors, because we're not relying on some risky unproven technology to bring our discovery into production.

So why haven't we rushed to bring our 100% owned, billion-dollar asset into production already?

Simple. The markets have been weak, and therefore if we had gone out and raised the capital to take this project into production, our existing shareholders would have been diluted excessively. So instead, we said "Let's wait until the markets heat back up. We'll let our competitors go out and dilute themselves to pieces." That strategy has allowed us to remain intact, and the interests of our shareholders well taken care of.

And here's the other good news. As long as the markets remain weak, our investors are able to buy shares at a phenomenal discount to what we believe is our proper valuation.

In fact, if you take all our recoverable barrels of crude, and divide it by the number of outstanding shares in Strata --- you get about 6 barrels of recoverable crude per share. At today's stock price that works out to approximately 2 cents per barrel.

As Wall Street's leading firms pour money into the carbonate triangle (including Warburg Pincus, Blackstone Capital, and Goldman Sachs) --- together with large Asian investors, we're confident in saying that Strata Oil shareholders are well positioned to benefit.

Strata Oil's recoverable resource of 517 million barrels and 56,000 barrels-per-day over a project life of 25 years, puts our project in the position of being a world-class asset.

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