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August 29, 2013 at 12:00 PM EDT
SFD(R) Survey System Passes PEMEX Test

SOURCE:[Resource News Report] - With the cost of a single exploration well anywhere from $5-200 million, it is no surprise that oil companies are incentivised to reduce drilling risk. A dry well can bankrupt a junior company and cause heads to roll at a larger one.

PEMEX - the National Oil Company of Mexico – spent about $2 billion in 2012 on exploration. Pemex is negotiating with the government to increase its exploration budget by 20 billion pesos ($1.53 billion) due to the 30% decline of the peso against the greenback.

Revenues from the state-owned giant contribute 30% of the government’s total budget. Mexico’s economy contracted .7% in Q2, 2013. PEMEX is actively seeking technology partners to increase drilling efficiency and production rates.

NXT Energy Solutions (SFD-TSX.V, NSFDF-OTCBB) has developed a proprietary Airborne Survey Technology, which significantly reduces the cost and time of oil exploration.

SFD(R) (Stress Field Detection) technology locates trapped reservoirs at stage I of the exploration cycle. Airborne sensors detect orientation changes in the horizontal gravity field.

Image: http://www.accesswire.com/images/317/sfd1aug28.jpg

After PEMEX scientists reviewed the SFD(R) technology, the company signed a $5.8 million contract with NXT to verify conventional seismic data from onshore and offshore areas of the Gulf of Mexico and further blind test the known reserves.

On July 24, 2013 PEMEX and NXT presented a Joint Paper at an oil conference in Cartagena, Columbia, detailing the results of the NXT Energy’s Airborne Survey. The paper has opened a few eyes in the scientific and investment community. NXT’s stock price has surged 40% since the publication of the joint paper.

"The SFD(R) survey conducted late last year has succeeded in identifying a high percentage of the known oil and gas reservoirs in the targeted region of Mexico, on land and under sea," states the paper, "The integration results show significant correlation between SFD(R) anomalies and known hydrocarbon accumulations."

"The designed lines crossed a total of 64 know hydrocarbon accumulations of various sizes. PEMEX determined that SFD(R) successfully identified 47 of these known accumulations."

Image: http://www.accesswire.com/images/317/sfd2aug28.jpg

In fact, the 47 identified SFD targets contained 98% of the estimated total oil – giving SFD "elephant hunter" status. The technology ignored the smaller reserves and flagged the potential company-makers.

"The results demonstrate that SFD® technology is capable of detecting geological traps with reservoir potential, irrespective of lithology. Moreover, the proximity to or position of salt bodies or water depth, does not inhibit the capabilities of SFD(R)" states the joint paper.

NXT uses a Cessna 560 Citation jet, which cruises 500 km/h at an altitude of 3,000 metres to quickly survey large tracts of land.

"We want to be a standard tool in the tool box," stated NXT Energy CEO George Liszicasz, in an interview with the Calgary Herald, "All of these tools give you different information and when you have two independent technologies that are not similar in terms of their workings but they give you the same results, that’s what matters. We are all about risk reduction."

The fact that SFD recommendations also showed "significant correlation with PEMEX seismically interpreted structures in active exploration areas" should be regarded as the most promising outcome of the blind survey, since the PEMEX seismic programs cover extremely large areas and all data is owned by PEMEX exclusively.

Joint Paper Conclusions:

· Integration of PEMEX G&G data with SFD(R) anomalies shows significant correlation with known hydrocarbon producing fields.

· SFD(R) anomalies have significant correlation with PEMEX seismically interpreted structures in active exploration areas.

· In regions with little or no existing G&G data, new areas of exploratory interest were identified by SFD(R).

· SFD(R) is most effective at detecting anomalies with a linear extent greater than 2km.

· SFD(R) can detect geological traps which are prospective for storing fluids, regardless of the water depth or the presence of salt.

· SFD(R) is effective in both onshore and offshore environments.

· The SFD(R) system aids in rapid identification of prospect areas with potential trap, reservoir quality and seal integrity.

· SFD(R) helps focus and prioritize seismic programs.

The Pemex contract boosted NXT’s 2012 survey revenue by $5.8 million to $10.9 million and created $2 million net profit, compared with revenue of $145,000 and a net loss of $3.6 million in 2011.

The company also had survey revenue in 2012 from countries like Colombia and Guatemala, Belize and Argentina.

Current global geophysical exploration spending is around $12 billion per year.

NXT’s success with PEMEX could lead to lead to significant interest from other major National Oil Companies.

NXT is currently trading at $1.28 with a market cap of $53 million.

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