AUG 2 8 2019
STATE #1-33 WELLNW/4 SEC 33-T25N-R3WGRANT COUNTY, OK
TERRITORY RESOURCES LLC
RESERVE REVIEWLOCATION EXCEPTION HEARING EVALUATION
APRIL 2019
CD# 201810341Exhibit #
Robert O. BerryPetroleum EngineerG.R.B. Resources, Inc.Tulsa, Oklahoma
State #1-33 LeaseReserve ReviewPage 2
EXECUTIVE SUMMARY
The State #1-33 well and lease, operated by Territory Resources, LLC, is located in the NW/4Section 33 — T25N — R3W in Grant County, Oklahoma. This well and lease along with the twoadjacent wells to the north (Kylie and Linda wells) make up the Kylie Field. The Wilcox sandsare found on a prominent structural anticline located by seismic data. Within the 1st Wilcox "A"section, the structural feature covers 53 acres above the oil-water contact. The 1st Wilcox "A"zone is uniformly 30' thick with good porosity and permeability. The reserves addressed in thisreport all come from this section. The underlying "B" zone is uniformly 22' thick with muchlower porosity and poor permeability. The water bearing 2nd Wilcox is present below.
The discovery well, Kylie #1-28, was completed in May 2017 (IP of 250 BOPD x 225 MCFD).Evidence indicates the 1st Wilcox "A" zone is a fairly strong water drive reservoir. The well hascumulative production of 89,619 BO x 87,231 MCF and is presently producing approximately 90BOPD with trace water. The second well, Linda #1-29, was completed in August (IP of 70BOPD x 11 BWPD x 58 MCFD). Cumulative production is 34,864 BO x 23,593 MCFD and ispresently producing approximately 35 BOPD x 29 BWPD x 33 MCFD. With the oil-watercontact present in this wellbore, the water cut has steadily increased from 9% to 45%. The thirdwell, State #1-33, was completed in December 2017 and is presently shut-in awaiting approval ofthe Location Exception application. The well has tested oil in the same zone.
Estimated recoverable reserves were calculated using volumetric reservoir analysis and also rate-time decline analysisquarter-section lease
from the two producing wells. Calculated volumetric reserves within theboundaries are as follows:Productive Acreaee Oil (bbls) Gas (mcf)
Kylie Lease (Sec 28) 37.25 ac 156,977 153,837Linda Lease (Sec 29) 10.16 ac 20,052 19,050State Lease (Sec 33) 3.10 ac 12,081 11,477Section 32 acreage 2.22 ac 6 655 6 322TOTAL 52.73 ac 195,765 190,686
Estimated Ultimate Recovery (EUR) from rate-time decline analysis shows:Oil (bbls) Gas (mcf)
Kylie #1-28 well 149,940 141,330Linda #1-29 well 49.990 34 430TOTAL 199,930 175,760
Conclusion: The Linda #1-29 well has already out-produced its estimated lease acreagevolumetric reserves and without any change it is estimated that it will over-produce and drainapproximately 25 acres. Conversely, without any change, the Kylie #1-28 well will under-produce its lease acreage volumetric reserves. The State of Oklahoma lease would be denied anequitable share of the estimated reserves.
Therefore, the pending Location Exception application should be approved immediately toallow for production to commence from the State #1-33 well. Production from the Linda#1-29 should be curtailed or shut-in to allow for the State #1-33 and Kylie #1-28 wells tocatch up to their estimated acreage contribution recovery.
A350532345900
TERRITORY RESOURCES LLCSTATE 1-33
SHL: NW NW NW NW 165 FNL & 165' FWLTWP: 25 N - Range: 3 W - Sec. 33
Datum=1062
@ 5684' MD 169' FNL & 191' FWL
350532345300
TERRITORY RESOURCES LLCKYLIE 1-28
SHL: W2 SW SW SW 330' FSL 220' FWLTWP: 25 N - Range: 3 W - Sec. 28
Datum=1062
@ 5658' MD: 349' FSL & 234' FWL
350532345400
SPECIAL ENERGY CORPORATIONLINDA 1-29
SHL: SE NE SE SE 860' FSL & 240' FELTWP: 25 N - Range: 3 W - Sec. 29
Datum=1054
@ 5727' MD: 853' FSL & 222' FEL
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350532345900
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TERRITORY RESOURCES LLC Exhibit #
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350532345400 CD# 201810341
• Exhibit #
SPECIAL ENERGY CORPORATIONLINDA 1-29
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Datum=1054
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CD # 201810341
Exhibit #
G.R.B. RESOURCES, INC.TERRITORY RESOURCES LLC; KYLIE FIELD REVIEW
GRANT COUNTY, OKLAHOMA
Electric Well Log Review and Reserve Estimates (from 4 sections)
Kylie #1-28
W/2 SW SW SW
28-25N-3W
1st WILCOX SAND
Top 1st Wilcox 5688'
(Subsea) (-4626')
Linda #1-29
SE NE SE SE
29-25N-3W
5718'
(-4664')
State #1-33
NW NW NW NW
33-25N-3W
5709'
(-4647')
Section 32
NE NE
32-25N-3W
TOTAL
Kylie Field
28/29/32/33
T25N-R3W
Overall Depth (ft) 5688-5738 5718-5766 5709-5760 5710-50
Net Height (ft) 28 18 26 20 25.6Porosity Avg. (%) 9.7 10 11.5 11.5 10.0Sw Average (%) 25 47 37 37 30.2
GOR (scf/stb) 980 950 950 950 970.0Bo (res bbl/stb) 1.5 1.5 1.5 1.5 1.53
Drainage Area (acres) 37.25 10.16 3.1 2.22 52.73
Recovery Factor (%) 40 40 40 40 40.0
VOLUMETRIC RESERVE TOTALS
Oil Reserves (est) - bbls 156,977 20,052 12,081 6,655 195,765Gas Reserves (est) - MCF 153,837 19,050 11,477 6,322 190,686
Cum Oil to 5/22/19 92,648 37,021
Cum Gas to 5/22/19 89,538 25,554
. % oil recovery to date 59.02% 184.62%
RATE-TIME RESERVE TOTALS
Oil Reserves (est) - bbls 149,260 49,100 * 198,360
Gas Reserves (est) - MCF 140,800 34,230 175,030
Cum Oil to 5/22/19 92,648 34,864
Cum Gas to 5/22/19 89,538 23,593
% oil recovery to date 62.07% 71.01%
* Note: Linda 1-29 appears to be draining approx 25+ acres
Case Name: Kylie #1-28 ProductionOper: Territory ResourcesMajor Phase: Oil
CDC,)
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Field: South LamontCounty,State: Grant,OK
CD# 201810341
Exhibit #
I I I I I I I I I
000000
00
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 ` 2027 2028Proj Oil Cum: 92.65 Mbbl Proj Gas Cum: 89.54 MMcf
Oil Rem: 56.61 Mbbl Gas Rem: 51.26 MMcf
Oil EUR: 149.26 Mbbl Gas EUR: 140.80 MMcf
Case Name: Linda #1-29 ProductionOper: Special Energy Corp.
Major Phase: Oil
ov
CDO
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Field: South Lamont
County,State: Grant,U
CD# 201810341
Exhibit #EoE.-:-.oE....com.9
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2017Proj Oil Cum: 37.02 Mbbl
Oil Rem: 12.07 MbblOil EUR: 49.10 Mbbl
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2018 2019 2020 2021 2022 2023Proj Gas Cum: 25.55 MMcf
Gas Rem: 8.68 MMcf
Gas EUR: 34.23 MMcf
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CD# 201810341
Exhibit #
