2011-03-11-2011-03-10-2011-03-16

Acquired certain Viking oil assets in the Provost area of eastern Alberta, gaining 30 BO/d.

Magnum Energy Inc. (Toronto Venture: MEN), together with Nextraction Energy Corp. (Toronto Venture: NE), has purchased certain Viking oil assets in the Provost Area of Eastern Alberta from an undisclosed company for $2.8 million on a 50/50 joint-venture basis. The deal value was previously undisclosed.

The Viking oil assets are currently producing approximately 30 barrels of sweet light crude per day from four 100% owned and operated vertical wells on approximately three sections of largely undeveloped land. The 100% owned infrastructure includes a battery, disposal well, and pipelines.

Preliminary technical evaluations indicate the potential to develop an inventory of a minimum of 12 to a maximum of 40 low-risk horizontal drilling locations. Westfire Energy Ltd. has applied to the ERCB for four wells per quarter section down spacing in immediately adjacent lands.

Under terms of the JV agreement, Nextraction has loaned Magnum its share of the acquisition costs and will receive all production revenue until Magnum repays Nextraction for its share of the investment. Nextraction and Magnum will then participate in expenditures and revenue on a 50/50 basis.

Nextraction shall also pay 100% of the costs to drill and complete the first two horizontal wells, with revenue being shared on a 50/50 basis from first production. The preliminary estimated cost to drill and complete each well is $1.5 million.

Mark S. Dolar, president and chief executive of Nextraction, reports, "We believe, using our in-house expertise, that we have the opportunity to add 10 to 15 horizontal oil wells in this defined pool. The Viking 'A' sand is known for porosity values of approximately 20% and two vertical wells on the property have already produced over 240,000 barrels of oil each. Properly designed horizontal completions should greatly increase production volumes. We will progress quickly towards recompleting wells on the leasehold and the drilling of two horizontal wells this summer."

The effective date was Feb.1. The deal was scheduled to close by March 15.