passport energy ltd (PPO) Snapshot

Passport Energy Ltd. filed its Annual on Jan 29, 2013 for the period ending Sep 30, 2012. In this report its auditor, Collins Barrow Calgary LLP, gave an unqualified opinion expressing doubt that the company can continue as a going concern.

Passport Energy Ltd. provided an operations update on its drilling, completion and production results in the Hardy area of SE Saskatchewan. The company's first development well in the Hardy Bakken pool, HARDY S HZ 1A4-16-4B4-09-004-21W2 (4-16) has produced over 33,000 gross barrrels of oil (bbbls) from September 2011 to the end of December, 2012. The well continues to produce above company expectations, averaging approximately 50 bopd gross and 12.5 bopd net (38.5 degree API oil) with an average oil cut of approximately 28% for the month December, 2012. GLJ Petroleum Consultants has updated the company's reserves assessment and evaluation report (effective September 30, 2012) and has assigned initial recoverable reserves (Total Proved plus Probable Producing category) of 119,000 gross bbls (29,750 net bbls) to the 4-16 well. The GLJ assigned number of 119,000 barrels represents a 33% increase from GLJ's original reserve report (effective September 30, 2011) for the well. The company completed and placed on production its first operated horizontal Bakken Oil well, PASSPORT MINTON HZ 1C11-32-3A-16-33-3-21W2M (11-32) in August 2012. The company has a 50% working interest in the well. The rock quality of the Middle Bakken sandstone found in the 1,874 m lateral of the horizontal 11-32 well was consistent with what was observed at the 4-16 well in Hardy North. Comprised of a porous (10-12%) and relatively high permeability sand with oil staining on samples and good gas response on the gas detector, the Middle Bakken in the 11-32 well continues to prove up the geological model for the area. The well was completed utilizing a 32 stage multi fracture stimulation program which requires the use of specific down hole tools to perform fracing operations. During completion operations, one of these tools became lodged in the lateral section and the Company was unable to retrieve the tool. Conventional fishing operation methods were unsuccessful in retrieving the tool and the company was forced to mil the tool which added considerable cost and delayed the planned start-up of the well. The tool was eventually milled and the lateral section cleaned out allowing completion operations to resume. The well was placed on production in mid-August, 2012. After an initial clean up and optimization period, the 11-32 well produced an average gross daily rate of approximately 97 bbls/d (48.5 bbls/d net), of 38 degree API oil over an eight day period with a peak rate of 130 gross bbls/d (65 bbls/d net) of oil and an average oil cut of approximately 20%. GLJ has assigned initial recoverable reserves (Total Prooved plus Probable Producing category) of 70,000 gross bbls (35,000 net bbls) to the 11-32 well. Well performance indicated that a potential clean out of thhe lateral section may be required to recover what was thought to be fragments and solids left over from the milling operation. The well was shut- in mid-September to facilitate the work over. During operations, the clean out of the lateral section recovered over 15 tonnes of frac sand along with fragments from the previous milling operation. The well was placed back on production in October, but again showed signs that another potential clean out of the horizontal section may be required. The well remains on production and continues to produce at a stabilized rate, averaging over 36 gross bbls/d (18.0 bbls/d net) of oil with an average oil cut of approximately 20% for the month of December 2012. The company anticipates that if a second clean out is successful in recovering additional frac sand there is the potential for an increase in production. The company plans to drill up to 3 additional horizontal Bakken wells in the Hardy South area in 2013, one of which has already been licensed and approved by the SEM (Saskatchewan Energy and Mines). Operations are expected to begin in the 2nd quarter, with al three wells planned to be on production before the end of the year.

Passport Energy Ltd. announced that a resource assessment of the company's land holdings in the Hardy Area of SE Saskatchewan by GLJ Petroleum Consultants has been completed. The study covers 1,774 net hectares of the company's interests in the Hardy Area along with an additional 2,189 net hectares of lands subject to a farm-in agreement. Operational update: Hardy North Area of SE Saskatchewan: The Company's first development well in the Hardy Bakken pool, HARDY S HZ 1A4-16-4B4-09- 004-21W2 has cumulative production of over 27,000 gross barrels of oil (bbls) in its first year of production. The well continues to produce above expectations averaging over 60 barrels of oil per day (Gross) and 15 bopd (Net) of light sweet (38.5 degree API) oil for the month of August, 2012. Hardy South Area of SE Saskatchewan: The company recently completed and placed on production its first operated horizontal Bakken oil well, PASSPORT MINTON HZ 1C11-32-3A-16-33-3-21W2M (the 11C11-32 well). The well was completed utilizing a 32 stage multi-fracture stimulation program and is currently in its initial cleanup and optimization phase of production. The 1C11-32 well represents the first of a 2 well commitment program on the farm-in agreement with Canadian oil and gas producer which encompas es 32 contiguous sections of land. With this well, the company has earned a 32.5% working interest (APO) in 5 sections. The company plans to drill, complete and place on production the second horizontal commitment well on or before the end of the fourth quarter, surface conditions permitting. Following the 2 wells, the companies have the option to drill 5 additional wells under the same terms and conditions to earn the balance of the 32 section block.