The U.S. Securities and Exchange Commission issued an order June 26 suspending trading of Norstra Energy’s securities until July 10 due to questions the SEC said “have arisen concerning the adequacy and accuracy of press releases and other public statements concerning Norstra’s business operations.”
The SEC’s order said, “It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Norstra Energy Inc.”
The suspension went on to say that “The commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of Norstra,” but the suspension notice provided no details. The suspension went into effect at 9:30 a.m. Eastern Daylight Time on June 26 and will remain in effect until 11:50 p.m. Eastern time on July 10.
“The commission cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by Norstra,” the SEC said in a separate June 26 statement.
First well announced
The suspension comes two days after Norstra announced that the company’s first well in the South Sun River Prospect, part of Montana’s Southern Alberta Bakken west of Great Falls in northern Lewis and Clark County, had been staked, notice of intent to drill had been published, and the company was expecting a drilling permit to be issued by July 2. However, the Missoulian reported on June 30 that the public notice filed with the Helena Independent Record on June 19 had a legal description of the drill site that is located in Pondera County, not Lewis and Clark County.
In its June 24 press release, Norstra said it had an excavation contractor ready to begin construction on the well pad immediately after the permit is issued, and the company said it expected the pad to be cut between July 8 and 10. Norstra said the drilling contractor is ready to move to the site and set surface casing.
Petroleum News Bakken contracted the Montana Board of Oil and Gas Conservation, the agency that issues drilling permits in Montana, and as of July 1 the board had not received any drilling application from Norstra. Petroleum News Bakken also requested additional information on the SEC suspension from Norstra, but the company did not respond.
Norstra’s reserves estimate
On June 17, Norstra issued a press release identifying the planned well as the 13-11 Milford Colony well. The well location is in a contiguous block approximately 3.5 miles east of a well that Dr. David Lopez used in his estimate of original oil in place, OOIP, in the prospect. As Petroleum News Bakken reported on June 16, Lopez estimated the OOIP ranging from 9.5 million to 16.7 million barrels of oil per section, for an average of approximately 13.7 million barrels per section.
However, in the June 17 press release, Norstra quotes Lopez as estimating the reserves at approximately 11.3 million barrels per section. Norstra then states that “Based on the above finding by Dr. Lopez, the unproven recoverable reserves within the immediate lease block surrounding the drillsite are estimated to be approximately 45 million barrels of oil.”
As Petroleum News Bakken reported on June 16, Norstra announced on June 10 that it entered into an agreement with its operator, Summit West Oil LLC, giving Norstra an option on 17,988 gross acres in the South Sun River prospect, which increased the company’s total available land position to nearly 30,000 acres.
What’s really the potential?
In May, Petroleum News Bakken reported that Bernstein Research, a Wall Street research firm, released a report on several emerging shale plays in Montana and Wyoming and found that the Alberta Bakken has very low potential and is currently highly uneconomic. The Bernstein report looked at results of wells drilled in Montana’s Alberta Bakken and found those results to be “disappointing.” The Bernstein report went on to say that the best well it found drilled in the Montana Alberta Bakken had a peak 30-day production of 200 barrels of oil equivalent per day and an estimated ultimate recovery of 70,000 barrels of oil equivalent, which the report said implied a finding cost of $100 per boe, and such a cost would require oil prices in excess of $200 per barrel for the play to be economic.
Tom Richmond, administrator of the board, echoed the findings of the Bernstein report, telling Petroleum News Bakken in May that a number of operators, including Anschutz, Newfield Exploration and Rosetta have explored the Montana Alberta Bakken on the Blackfoot Indian Reservation in Glacier County just south of the Canadian border, and he had not seen where any had found any prospects that were worth developing.
Primary Petroleum has Montana Alberta Bakken acreage in Pondera and Toole counties, north of Norstra’s South Sun River Prospect, and board records indicate the company has drilled a number of wells in those two counties, but only one is producing, and it is producing from the Lodgepole formation.
—Mike Ellerd
