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Analyst Note
By Éric Lemieux, MSc, P.Geo
Mining & Exploration Analytics
eric.lemieux@peartreesecurities.com
March 18, 2015
Junex Inc. (JNX-V)
Junex’s additional 14-day production test produces another landmark ~170 barrels of oil per day on Galt
No. 4 HZ
Event: Junex reported a production rate of over 206 barrels of oil per day at its Galt No. 4 horizontal well.
Impact: Slightly Positive. Latest phase of 14-day test suggests a robust production rate of nearly 200 barrels of
oil per day. Production capacity of the Galt oil accumulation in the Forillon reservoir continues to be confirmed
and indicative of an oil reservoir with good reservoir characteristics. Junex is complying with current government
regulations; spring breakup to allow pressure build-up and ~17-day future period of production testing remaining.
Analysis
• On March 17, 2015, Junex disclosed for its Galt No. 4 horizontal well that it had completed another
phase of oil production testing from February 26th to March 11th, 2015 that produced an average rate of
206 barrels of oil per day ("bopd") during the final 10 days of the test period. We understand that the Galt
No. 4 well is now shut-in such that the pressure build-up of the Forillon reservoir shall be measured over the
period of spring break-up. Following this 45 to 60 day period, the pressure gauges should be retrieved for
recorded data that shall be analyzed and interpreted by Junex and independent 3rd party industry specialists.
The pressure build-up data should complement technical information acquired as to the reservoir characteristics
of the Forillon reservoir in the Galt No. 4 Horizontal well and give indications as to the estimated ultimate
recovery (EUR) of the petroleum source and the optimal production rate. Production testing of oil wells in
Québec is currently limited to a maximum of 60-days. Junex has used-up ~43 days of this allotment and
maintains a sound amount of time to complete a future period of production testing (~ 17 days) after the spring
breakup constraints and in-line with regulations of the Québec Ministry of Environment.
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analysis herein reflect the views of the Analyst as at the date appearing above, and are subject to change without notice. The information contained in this document is
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• A total of 2,370 barrels of light, sweet crude oil was produced during this part 2 of production testing
and we estimate the 14-day production rate at ~170 bopd. Since the Galt No. 4 Horizontal well finished
drilling near November 2014, Junex has recovered a total volume of 7,211 barrels of light, sweet crude oil from
combined production testing operations in January, February 2015 and well cleanup/swabbing operations in
December 2014 (see Exhibit 1). Junex had previously disclosed on February 23, 2015 a steady production rate
of 316 bopd during five days of a 14-day production test phase (production volume of 2723 barrels) that had
started on February 9, 2014 (maximum oil production rate over a 24-hour period attaining 396 bopd) and a
steady production rate of 161 barrels of oil per day during the final six days of its 14-day production test in
January 2015 (production a total volume of 2,017 barrels of light (42% API) sweet crude oil) that was limited by
the configuration of the surface oilfield pumping equipment at the well. We estimate that a 42-day production
profile of over ~170 bopd can be inferred.
• Junex intends to move ahead the delineation program that includes the drilling of the Galt No. 5
Horizontal well, starting in June 2015, followed by completion of a detailed 3D seismic program and eventually
the drilling of the Galt No. 6 & No. 7 Horizontal wells. The planned Galt No. 5 HZ well should effectively be drilled
at ~180 degrees to the Galt No. 4HZ horizontal leg within the same targeting criteria and reservoir model and
hence perpendicular to the open vertical fractures in the Forillon (see January 28, 2015 Analyst Note). Recall
that the Junex Galt oil property is located in a sparsely populated area approximately 20km west from the town
of Gaspé in eastern Québec and that Junex holds a 70% interest on the Galt property (16,645 acres) (Junex's
partner, Mr. Bernard Lemaire, holding the remaining 30% interest) and 100% interest in the adjacent Galt 2
acreage (36,233 acres). Junex also holds exploration rights to over 4.9 million net acres of land located in the
Appalachian basin and the Saint Lawrence Lowlands in Québec within the heart of the Utica Shale gas play as
well as in the Gaspé Peninsula and strategically on Anticosti Island.
• Junex applies its expertise diligently: We highlight that Galt No. 4 HZ is one of the first successful
horizontal oil exploration well completed by the oil and gas industry anywhere in Québec, making it one of the
most advanced oil projects in the province. Junex created in 1999 by Mr. Jean-Yves Lavoie, petroleum engineer
has strived to maintain focus in the Belle Province oil and gas nascent industry. Junex with over 40 employees
continues to nourish expertise by the development and confirmation of the Galt No. 4 oil discovery thru the
expertise in the cost-effective installation and operation of drilling and oilfield pumping equipment (see Exhibit 2).
Junex thru its 100% owned drilling division Foragaz, acquired in 2004, has used its 3,000m-capacity Foragaz
No. 4 drilling rig to spud Galt No. 4 HZ total measured depth of 2,400m, of which 1,503m was drilled within the
Forillon oil reservoir which is estimated to contain petroleum resources that stand at 36 million barrels of
contingent recoverable oil (Netherland, Sewell & Associates, Inc., 2013) within only the 70% owned Galt 16,645
acres land package.
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