Freedom Oil & Gas Ltd provides an update on its Eagle Ford operations including, a change to its near-term drilling plans, and .

Since commencing the continuous drilling program in August of 2018, Freedom has successfully drilled fourteen lower Eagle Ford wells in Dimmit County, Texas. While drilling the fifteenth well, the Noroma 1 well, that well was impacted by high pressure frac water that entered the wellbore and impeded our ability to drill the well to the planned total depth. After several days of attempted recovery, it was determined that the wellbore could not be salvaged. The wellbore was then temporarily abandoned except for the top-hole section which will be reused at a later date.

The high pressure fluids encountered by the Noroma 1 well were the result of offset hydraulic fracturing of our recently drilled Persimmon wells. We have determined that waiting for the reservoir pressure to decline by beginning production from all of the newly drilled wells in the area before resuming drilling operations is the appropriate course of action and decreases the likelihood of similar drilling issues going forward.

Freedom has been approached by an offset operator who desired to use Freedom’s drilling rig for approximately 60 days. In light of current oil prices, and in order to allow additional time for the reservoir pressure to decline, Freedom agreed to the offset operator’s usage of the rig. This pause gives Freedom additional time to evaluate oil prices, well performance and production timing prior to resuming drilling. The rig will return to Freedom when reservoir pressure is expected to have declined as a result of initial production of the nearby wells. We will then resume drilling for the remainder of our six month drilling rig contract. We estimate we will drill four additional wells when the rig returns which will result in a total of 13 new wells being drilled during the six month drilling contract. Our remaining drilling under the current contract will focus on the lower Eagle Ford with one upper Eagle Ford well planned for an upcoming 4-well drilling unit. We are also continuing to evaluate the potential for additional upper Eagle Ford and Austin Chalk locations on our Dimmit County leasehold. The decision whether to extend the drilling rig contract beyond the first six month term will be made in late March or early April 2019.

Prior to the drilling issue with the Noroma 1 well, Freedom’s drilling performance continued to improve with a recent average of approximately 10 days to drill our lower Eagle Ford wells to total depth. Based on improvements in drilling performance along with minor adjustments to our frac design, current total anticipated drilling and completion costs are estimated to have improved by approximately 8 to 10 per cent for our most recent three wells.

Freedom’s completion program will continue as originally planned with the hydraulic fracturing of the three previously drilled Katherine Brown wells beginning immediately. The addition of the three Vega wells, which are currently in the initial stages of production and flowing back frac water, along with the three Persimmon wells that are already drilled and hydraulically fractured, will result in Freedom bringing nine new wells online over the next 60 days for a total of 15 producing lower Eagle Ford wells.

About Freedom Oil & Gas

Freedom Oil & Gas (FDM) has established a sizeable position in the liquids-rich region of the Eagle Ford shale in Dimmit County, Texas. In May of 2017, Freedom initiated its horizontal drilling program in the Eagle Ford. After successfully testing its acreage position through the drilling of six consecutive wells that achieved better than expected initial results, FDM has commenced a continuous horizontal drilling program with a dedicated rig targeting the Lower Eagle Ford shale formation.

Mid-year 2018 proved reserves, as of June 30, 2018, increased by 43% over year-end 2017 to 19.1 million barrels of oil equivalnt (MMBOE), as estimated by Netherland Sewell Associates, Inc (NSAI). Liquids represented 76% of proved reserves, of which 52% was crude oil. Driving the increase was six producing wells, of which four were placed on production in June 2018 in addition to FDM’s 61 proved undeveloped locations in its drilling inventory. The PV-10 reserve value of US$157.8 million represents more than a 98% increase from the year-end 2017 PV-10 reserve value of US$79.5 million. 

Leadership changes

Freedom also announced that effective January 14, 2019, J. Russell Porter joined the Company as President, Chief Executive Officer, and a member of the Board of Directors. J. Michael Yeager, Freedom’s Chairman of the Board, President and CEO will remain as non-executive Chairman.

Mr. Porter is an experienced oil and gas CEO with significant expertise in the U.S. shale development business, property acquisition, oil and natural gas marketing and energy finance. He has over 25 years of experience in the energy industry, primarily leading publicly traded upstream companies operating in the U.S. and also has five years of energy banking experience specializing in the natural resourcesindustry. From 2000 to 2018, Mr. Porter served initially as Chief Operating Officer and subsequently as President and CEO of Gastar Exploration Inc. for 14 years, which he led from an early stage company to it becoming a US $1 billion enterprise at its peak equity valuation. From 1994 to 2000, Mr. Porter served in various capacities including Executive Vice President of Forcenergy, Inc., a publicly traded exploration and production (E&P) company. Mr. Porter holds a Bachelor of Science degree in Petroleum Land Management from Louisiana State University and a MBA from the University of North Carolina at Chapel Hill.