President's Message
Highlights
-
During the quarter, Sharon realized approximately $7.0 million from the sale of its Magnum Hunter investment. The fair value of the remaining investment of 546,195 shares was approximately $3.9 million at December 31, 2010 and approximately $3.7 million at the date of this report. To date, Sharon has sold 1,748,279 Magnum Hunter shares to realize approximately $9.2 million.
-
Late in the prior quarter, Sharon acquired a 25% interest in a property at Macklin, Saskatchewan. The property contained four shut-in oil wells, a water disposal well, 3-D seismic over the lease area, and 3,770 acres under lease. Sharon believes the property’s four wells can be reactivated. The wells were producing a combined 58 bopd when they were shut-in. The operator reactivated one of the wells late in
December 2010. To date, the reactivated well has been producing an average of 20 bopd (5 bopd net). The operator now plans to reactivate the remaining three wells after spring breakup. 
- Sharon continues to be in an enviable position, for a growth oriented junior exploration company, with a:
• Significant cash position.
• Substantial and highly liquid holding in Magnum Hunter Resources.
• Growing inventory of oil focused prospects.
• Joint venture program with two related junior exploration companies which will
allow Sharon to minimize overhead costs and maximize the amount of expenditure
used to grow its production and reserves base.
-
Highlights of the Company’s assets are:
- Magnum Hunter share holdings
-
Magnum Hunter is a fast growing US based exploration company focused primarily on Eagle Ford shale prospects in south central Texas and on the Marcellus fractured shale play in Ohio, West Virginia and Kentucky.
-
To date Sharon has sold 1,748,279 shares at an average price of $5.27 per share, realizing approximately $9.2 million. Sharon’s remaining share holdings have a market value of approximately $3.7 million at the date of this report. Sharon plans to continue to prudently sell a portion of these shares to fund its ongoing activities.
-
Canada Oil Prospects
- Sharon has participated in a joint venture in Alberta and Saskatchewan, with a related partner, for the past six years. Initially the joint venture focused on gas prone prospects in south central Alberta, but with changes in gas economics in early 2009, the Company has concentrated on the acquisition of heavy oil prospects.
- As a result the Company has acquired interests in oil prospects on lands, totaling over 22,000 acres (4,900 net acres). Many of the prospects have been identified from the interpretation of older wells logs, which indicate the possibility of bypassed oil play.
- Lloydminster, Alberta:
- The Company acquired a 20-25% working interest in 3,040 acres of land near an active
developing oil play at Lloydminster. The adjacent section to the north of 400 acres of
these lands is currently being developed. A well has been drilled, 250 meters north of
Sharon’s lease line, and is currently on production at a rate of 55 Bopd. This successful
well to the north has reduced the risk of the lands being unproductive and Sharon and
its partners are now planning to drill at least one horizontal well on the property during
this year. Horizontal wells in this area have commenced production at rates of 50 to
100 Bopd. - Sharon also has a 20% interest in approximately 1,600 acres on three other blocks of land, with potential for Lloydminster oil accumulations. The following map indicated the relative thickness of vertical wells already in the lands. The property next to a current development is Section 7-48-01 W4.
Shaunovan, Saskatchewan Prospects
Sharon has a 20-25 % working interest in 8,000 acres located in the Shaunavon oil fairway of west central Saskatchewan.
The following map of Sharon’s holdings in the Chambery area which are prospective in the Lower Shaunavon oil zone. The recent offset wells drilled for the Lower Shaunavon oil zone and their daily production rates are highlighted. The 13-19-7-18 W3 well has been drilled and completion operations are planned to commence before the end of March 31, 2011.
Birdbear, Saskatchewan Prospects
Sharon has a 14-25% working interest in 1,760 acres on the new Birdbear horizontal oil play in West Central Saskatchewan. Recently a number of horizontal wells have been licensed offsetting Sharon’s acreage. Sharon plans to monitor the offset drilling before finalizing a development plan.
Business Outlook
After the completion of the sale of the U.S. properties and the Parkman oil pool, Sharon has significantly increased its financial flexibility. Over the last few months oil prices have stabilized at relatively high levels while natural gas prices continue to weaken.
Sharon plans to use its strong financial base to focus its efforts on the development of oil prospects in Alberta and Saskatchewan.
On behalf of the Board,
R.W. Lamond, President and Chairman of the Board
March 1, 2011