More Information: Eden Energy Corporation

Highlights:

•Beginning in the early 1980’s Dr. Alan Chamberlain the founder of Cedar Strat Corp. acquired and began meticulously analyzing a proprietary $200 million stratigraphic database from Shell Oil. The data was reevaluated using state of the art surface gamma ray log analysis in a $25 million, multi-decade research effort that also involved extensive fieldwork, and was initially funded by Placid Oil and later, Chevron, Exxon and Texaco. Most recently, digitization of the data and its computer analysis has greatly aided in assembling a conclusive model. This most extensive-ever re-evaluation of Nevada’s geology found that, contrary to earlier tectonic and depositional models, thick, thermally mature, organic rich oil shales do exist along with ideal reservoir rock and over-thrust structures that have the potential to contain giant oil pools. Critically, this work pinpointed where these structures are.

•Eden Energy’s focus is the exploration and development of what this research concludes is one of Nevada’s most prospective hydrocarbon areas.

•On August 31st, 2004 the company acquired its Participation Agreement with Nevada based Cedar Strat and its initial 95,000-acre Noah Project, Nevada lease holdings. On October 30th, 2004 the company completed a US $3 million financing. On December 15th, 2004 a further 106,000 acres were acquired at a government auction, completing the company’s lease acquisition plans.

Independent Expert Reports:

Structural Geology
Palynology

The Noah Project

The Noah project is located in the Cretaceous Sevier thrust belt, which is part of the western North American Cordillera which extends from Alaska to Mexico. Where over-thrust folding and source rock coincide, this belt holds some of North America’s most productive oil and gas fields. Over-thrust structures such as these are estimated to hold a quarter of the world’s oil in such areas as the Canadian foothills, Wyoming, Iran, Iraq and the North Slope. Drilling off-structure by Apache and Exxon has also confirmed the Eden /Cedar Strat over-thrust model.

Eden’s Noah prospect is approximately 53 miles long and covers a linear anticline composed of folded Paleozoic rocks. Gravity surveys show anomalously high gravity features indicative of anticlinal folds while aeromagnetic results greatly reduce the risk that significant amounts of potentially hydrocarbon-destructive igneous intrusive rocks are present. Source rock is Mississippian lacustrine oil shales with organic content averaging between 3% and 6% and thousands of feet thickness. The targeted reservoir rock is a well-established 200 to 400 foot thick band of karsted Devonian dolomite. This reservoir rock is the producing formation in the 21 million barrel Grant Canyon field 60 miles to the south.

Eden’s Noah Project is located in the Diamond Mountain Range in north-central Nevada, USA. The principal oil reservoir targeted is over-thrust layers of Devonian karsted dolomite. The source rock is Mississippian shale. The structural trap is 53 miles long and seven miles wide.

This giant structure is a north-south trending over-thrust formation. It is analogous to the over thrust Ahwazi-Asmari dolomitic limestone formation in the Zagros fold belt of southwestern Iran. Asmari’s dolomitised limestones are among the world’s most important reservoirs and host super giant fields such as the Gachsaran and the smaller 2.4 billion barrel 30 mile by five mile Rag-e Sefid. Similar to the Noah this formation outcrops in numerous locations near the actual oil fields.

The Forgotten State

Oil seeps have been known since biblical times. In the Old Testament Noah uses tar from an oil seep to help build the ark. An oil seep near the Tigris River in Iraq, the locals note, has been smoldering for the past 1000 years. Seeps are known to exist near all of the world’s great over-thrust oil fields. In the Noah Project’s area, artesian water has for decades been reported to produce an oily residue during spring run off - a good indication that an oil seep is nearby. Shallow oil wells have also produced from these seeps. Despite this, Nevada is not widely known to contain oil seeps. Conventional wisdom had also discounted the idea that significant over-thrusting was present.

Much of Nevada’s geology remained misunderstood partly because a comprehensive regional survey had never been done. The USGS for example, gave two geologists only one year to analyze and map the geology of Lincoln County – over 11,000 square miles. The government organization had never conducted more than a cursory examination. Adding to the lack of understanding, most geologists in the state were of the hard rock - gold prospector variety instead of hydrocarbon hunting petroleum geologists. Of the relatively small number of wells drilled in the state, 90% were shallow and would not encounter deeper over-thrust shales. Because earlier geologists lacked a clear structural understanding, the few deep wells drilled were all off-structure.

One well drilled by Exxon in 1988 was only 12 miles north of the Noah’s anticline. It was called the Aspen well and was collared in volcanic rock and penetrated the upper Mississippian at 712 feet. The first upper Devonian layer, the Guilmette, was encountered at 4018 feet and the lower Mississippian at 7565 feet. Live oil shows were encountered and critically, because a second lower layer of Mississippian was encountered, the over-thrust model was again confirmed. Despite missing the anticline an Exxon memo regarding the well shows they were very pleased with the results and further drilling was expected. Following the Exxon Valdez disaster in Alaska, however, all Exxon’s US greenfield projects were stopped and the project was abandoned.

A well-entrenched theory that also discouraged exploration was that the apparent north-south structural grain of the eastern Great Basin was caused by Tertiary (roughly two to 65 million years ago) extension. As a consequence it was thought that structural traps in older structures would be compromised. This extension, the now discounted theory held, would pull apart the older structures creating faults from which previously trapped oil or gas could escape.

A closer look however, revealed many uncharted compressional features, i.e. bigger trapping structures, instead of extensional features. The latest detailed mapping shows the region underwent far more compression (read over-thrusting) than most assumed. Critically, many targeted features show no evidence of being broken by major Tertiary extensional faults.

Another reason a giant over-thrust belt was somehow missed is that it wasn’t obvious. Tertiary, lava flows concealed parts of the thrust-belt and sealed its surface oil seeps. The evidence, however, is now overwhelming. Shallow Tertiary oil fields such as the Grant Canyon, Blackburn, Trap Spring and Eagle Springs have been discovered and produced. Without exception, their oil has been chemically tested and shown to originate from Mississippian shales thousands of feet lower.

Gravity, drilling and extensive fieldwork has now established that the area’s layers of rock, including the Mississippian and Devonian have been over-thrusted. Aeromagnetic surveys, together with extensive hands-on surface work, also shows the volcanic activity is not a significant factor in the Noah area.

This greatly reduces the concern that the hydrocarbons may have been boiled away or cooked out by volcanic heat. Instead, tests of the Noah land’s Mississippian outcrops show them to be saturated with oil and to have an optimal thermal maturation and vitrinite reflectance.

In Place

While we have explained how Nevada’s oil producing potential could have been overlooked for so long and shown why it is prime petro-hunting territory, the following is a short discussion as to why the Noah project is one of the world’s premier oil exploration plays.

Source Rock

As stated earlier, the oil source rock is the underlying lacustrine Mississippian shales. The word lacustrine refers to the environment in which these shales were formed as evidenced by the lakeshore, and swamp inhabiting terrestrial fossils that are found in local shale outcrops. These include lycopods - terrestrial plants and lepidodendrons whose presence establish the shales as hydrocarbon prolific. Lacustrine shales are among the world’s richest sources of oil.

Measurements, from outcrop to the south and from drilling, have established that these shales are thousands of feet thick and have an average organic content in the 3% to 6% range. This organic content may be conservative as the Noah’s near-surface shale outcrops are more oil-saturated, so much so that at the turn of the century, the area’s miners used the shales as a reductant. Lab testing of these shale outcrops has found the organic content to be as high as 89%. In comparison the prolific Wyoming thrust belt source rocks average only 1% organic material and are around 200 feet thick.

Reservoir

The Noah project’s karsted Devonian dolomite is by any measurement a superb hydrocarbon reservoir. The Devonian portion of its name refers to the period during which the magnesium-rich dolomite was formed. Often called the age of fishes, the Devonian occurred 325 to 400 million years ago. Originally deposited as limestone, dolomite is produced when magnesium replaces the calcium, creating a porous formation. Dolomite dissolves relatively easily in fresh water. As a consequence, where fresh water is present, dolomite often erodes into a latticework of cavities to become karsted. It is not surprising that the area’s Devonian dolomites’ are cavity filled, considering the next geological phase, the area’s deposition of Mississippian shales, was a fresh water event.

Critically, karsted dolomite is what occurs along the Noah Project’s over-thrust fairway at depth and at outcrop. The reservoir formation lies right above the Mississippian and ranges from 200 to 400 feet thick. The formation’s exceptional oil holding capacity is more than proven worldwide. The nearby Grant Canyon field, where a mere 60 acres produced 21 million barrels of oil, is a good example of its reservoir quality. This clearly adds to the Noah project’s attractiveness as its 53-mile by seven-mile size dwarfs the Grant Canyon’s.

The Over-Thrust

Similar to what happens when the edges of a blanket are pushed together, the edges of Nevada’s many layers of sedimentary rock were pushed together by massive regional forces. The Cretaceous
period, which began 135 million years ago and ended as the Tertiary period started, was when these sedimentary layers folded completely over. This folding is how the older Devonian formation ended up on top of the Mississippian. Its occurrence is evident at outcrop and at depth. For example, lab tests of an off structure but deep Apache drill core containing Mississippian shales showed the shales were orientated upside down. Proof from the surface is glaringly obvious as at the Noah Project’s southern end. Devonian dolomite can be seen on top of younger Mississippian shales. Other formations’ layering has also been reversed. Similar to the Wyoming over-thrust, older Paleozoic carbonates are found on top of younger Jurassic sandstones.

This folding is part of what is known as the Sevier Orogeny. During the Orogeny, a mountain system and accompanying overthrust belt was created. In reality this overthrust fairway extends all the way from Mojave to Canada. The reason there is not an unbroken line of oil fields along the overthrust belt is that oil-rich source rock does not exist along its entire length. Where the oilrich source rock does exist, such as in Wyoming and Canada’s foothills, there are giant oil and gas fields.

Seal

At the Noah Project the seal which caps the Devonian reservoir is a higher layer of already oil-saturated Mississippian shales. This combination: oil shales capping a reservoir which contains oil generated from lower shales, is actually a classic structure often see in the Rocky Mountain Foothills and the giant Permian basin. At the Noah project these shales have already been tested and established as hydrocarbon rich. This adds to the volumes of evidence that the cavity-filled Devonian layer will be filled with oil. The sealing Mississippian shales are also interbeded with sandstone. These sandstones may also trap a significant amount of any still upward-migrating oil in the structure. One sandstone bed that is found within the upper Mississippian layer is called the Illopah. It outcrops 12 miles east of the Noah Project. It is 1000 feet thick and is near the top of the Mississippian. Test show it has an excellent 25% porosity and permeability up to one millidarcy where it outcrops.

Whereas the anticline is a trap that looks like an upside down cup, a syncline is the reverse. Unimpeded, oil will migrate from a syncline up to an anticline. It will not do the reverse. Prior to the Illipah outcrop the formation dips down steeply to form a syncline. Despite the syncline and a millions of years of weathering some oil staining is visible in the Sandstone outcrop, remnants of oil that, being on the east side of the syncline was not trapped.

Eden Energy reports - http://www.edenenergycorp.com/reports.html

•In March 2005 Eden Energy completed a US $6 million restricted share financing with a number of well respected institutions and funds, including US$ 2.7 million with RAB Special Situations LP, one of Europe’s top performing funds. Agents for the financing included Ocean Equities (London), Evergreen Capital Corporation (Geneva), Haywood Securities (Vancouver) and CK Cooper (Irvine, CA).

•In August 2005 Eden Energy completed a convertible note and warrant financing, for gross proceeds of US$ 9 million with several additional institutional investors. Combined with existing cash on hand, the company has approximately US$ 19 million available and is sufficiently funded to execute its planned activities in the coming year.