Western Standard Energy Corp. (WSEG.OB)

Posted: Thu Sep 04, 2008 9:27 am

Western Standard Energy Corp. (WSEG) is an independent oil and gas exploration company working towards providing domestic energy resources to the United States. The company is concentrating its exploration efforts to properties within the Bakken Formation region. Western Standard is currently working on two oil and natural gas projects: Starbuck East Prospect in Montana and Lodgepole Reef Prospect in North Dakota.

The U.S. Geological Survey (USGS) performed an initial assessment of the Bakken Formation in 1995. The USGS revisited the area and release its latest findings in April 2008. New analysis indicates that the Bakken Formation may represent one of the largest domestic oil and gas opportunities in U.S. history. The USGS report estimates that the U.S. portion of the Bakken represents 3 trillion cubic feet (TCF) of natural gas and up to 4.3 billion barrels of recoverable oil, which is the largest continuous type of oil accumulation the USGS has ever assessed.

Western Standard currently owns a 50% share in the 42,000 acre Starbuck East Prospect that contains two primary target sites. The Eagle site is found at a depth of 1100 feet and represents 127.5 billion cubic feet of reserve. The Philips site is found at a depth of 2300 feet and represents about 92.4 billion cubic feet of reserve. The total valuation of the prospect exceeds $2.2 billion, based upon a standard calculation of $10 per MCF. Western Standard could recognize up to $1.1 billion in returns on the site.

Western Standard owns a 100% working interest (WI) and 80% net revenue interest (NRI) until payout in seven Lodgepole Reef Prospects. Following payout of a 20% royalty to the land owner, the company will own an 80% WI and 64% NRI on the prospects. Estimates put the potential site reserves at 4 million barrels of oil per prospect. Based on a rate of $100 per barrel, Western Standard’s 64% NI could recognize up to $1.79 billion in returns.

As the state of international oil and fuel resources continue to be in question, Western Standard is already addressing how it can provide domestic resources to consumers. With its focus on the Bakken Formation, Western Standard could soon recognize the rewards of its effort.