Rock Energy Inc.


Our Assets

South West Saskatchewan

Rock has focused on building a production platform in South West Saskatchewan for these reasons:

  1. Lighter Oil: As one moves south toward the U.S. border, the oil density generally gets lighter (changing from 10°-12° API to 14°-16° API) which requires less diluent and attracts a higher price.
  2. Lower Viscosity: Lower viscosity = higher recovery factors = lower decline rates. In addition to becoming lighter, the oil also becomes significantly less viscous. Let’s use this analogy. If the oil in Lloydminster has the viscosity of molasses, the oil in Mantario is more like corn syrup, and Viking oil at Onward is even lighter - like milk. Since it is easier to produce oil that is less viscous, the recovery factors are higher. As our recovery factors improve, decline rates also improve.
  3. Lower Operating Cost: Lower operating cost = higher netbacks. The production practices in South West Saskatchewan are much more conventional, since we do not need to deal with high sand production. This in turn leads to better economics.
  4. Running Room: Unlike the Lloydminster area where most the mineral rights are held by a few major oil companies, in the Southwest Saskatchewan core area the rights are held mainly by the Crown. As a result, there is ample opportunity to acquire the drilling rights on new pools that we discover.
  5. Shallow Targets: Shallow targets mean a company like Rock can afford to explore here. Rock has identified numerous exploration targets in this area. The prospective formations are generally 800-1,000 metres deep so it only costs about $500,000 to test each lead. A $5 million drilling budget means Rock can test 10 ideas. We expect to achieve a one in five chance of success so with a little luck we should be able to discover a new pool or two.
  6. Sizable Prizes: Though the targets are generally shallow, the size of the prize is still significant. At Mantario, for example, we believe our pool may contain 40-45 million barrels of oil on only 1.5 sections of land.


Mantario continues to be the foundation block of Rock’s production base. Currently the pool produces over 3,000 boe per day.

Rock spent $65.4 million at Mantario/Laporte in 2014 to drill 21 (21.0 net) oil wells, construct processing facilities and install the EOR water/chemical injection equipment. At year-end the proved plus probable reserve booking for the pool had increased by 32% from the prior year to 5.6 mmboe. The value of the asset using our independent reserves engineers (“GLJ Petroleum Consultants” or “GLJ”) January 2015 Price Forecast was estimated to be approximately $115 million, up 62% from last year. At this time GLJ is forecasting the pool (with an original oil in place (“OOIP”) of approximately 40 million boe) to achieve a total recovery factor of 20% with the EOR scheme, and to begin receiving the Saskatchewan EOR royalty relief in April 2015 until payout of the project at which time the average royalty rate for the project will move from 1% to approximately 10%.

Polymer injection for the pool began on March 11, 2015, the Company has received all the approvals from the Saskatchewan government for the EOR royalty treatment and we are scheduled to begin receiving the 1% royalty treatment effective April 1, 2015. The Company is forecasting production from the pool to remain relatively flat (3,000 – 3,200 boepd) for one - two years as the polymer flood is implemented and the typical production decline (in a pool of this type) is arrested.

Mantario Battery 1 Mantario Battery 2 Mantario Battery 3 Mantario Battery 4 Mantario Battery 5 Mantario Future Battery Site


Viking: During 2014, Rock spent $48.0 million at Onward on the Viking program to drill 39 (39.0 net) wells and construct a clean oil processing facility. This activity was strategic in defining the extent of the play to the northwest, de-risking the play on 28 sections of land (as per GLJ). Based on mapping of offset vertical wells and the production results achieved to date, Rock’s management believes the gas oil contact extends to the northwest and the play is present on 40 sections, which could yield up to 600 drilling locations (based on 16 wells per section). During the year Rock continued to add prospective Viking land in this area and we now have over 47 net sections of land.

The reserves booked for the Viking at year-end 2014, on a proved plus probable basis, have increased 139% from last year to 3.2 million boe. The value of this asset is now estimated by GLJ to be approximately $58 million. The engineering report only assumes that there are 55 locations to be drilled, most of which are deferred until 2016 and 2017 given our approved capital spending program, and current price forecasts. Recent completion techniques have resulted in initial production rates from the wells being 35% better than previously achieved. We anticipate this higher production rate will improve the net present value of these wells. Though the initial production rates were much better there was limited long term production data available at year-end, so no increase in the ultimate recoverable reserves (relative to the 2013 reserve report) from the wells was recognized.

Production from the Onward light oil Viking play has increased from approximately 200 boepd early in the year to over 1,200 boepd by the end of the year. Rock continues to produce over 1,200 boepd from the Viking today.

Mannville: Rock entered the Onward area in 2012 through the acquisition of two producing Mannville pools (North, South). At the time of the acquisition the pool was producing 200 barrels of oil per day from the Lloydminster Formation. As of year-end 2014, the heavy oil production in Onward was primarily made up of three Mannville pools (south, north, and west). The south pool is on a pressure maintenance scheme consisting of 10 (10.0 net) producing heavy oil wells, 1 (1.0 net) shut-in oil well, 4 (4.0 net) suspended oil wells, and 3 (3.0 net) water injection wells. The north pool waterflood project consists of 10 (10.0 net) producing heavy oil wells and 5 (5.0 net) water injection wells. The new west pool is on primary depletion and consists of 7 (7.0 net) producing heavy oil wells. During 2014 Rock drilled 1 (1.0 net) heavy oil well in the north pool waterflood and 4 (4.0 net) heavy oil wells in the recently discovered west pool. Rock also produces oil from the Bakken heavy oil zone and has Bakken production from two (2.0 net) wells. During the last quarter of 2014 Rock shot a 30 section 3-D Seismic survey to help delineate the west pool but also to identify new pool leads.

Onward Lightoil Battery 1 Onward Lightoil Battery 2 Onward Lightoil Battery 3