Western Potash Corp (C-WPX) - News Release

Western Potash's Milestone shows hydrocarbon potential

2010-02-17 17:23 ET - News Release
Shares issued 103,036,383
WPX Close 2010-02-16 C$ 0.475

Mr. J. Patricio Varas reports

WESTERN POTASH IDENTIFIES HYDROCARBON POTENTIAL AT MILESTONE, SECURES PRIVATE LAND RIGHTS

Western Potash Corp. has received a very encouraging report from an oil and gas consultant commissioned to evaluate drill hole data collected during the company's definition drilling program at its Milestone project in Saskatchewan. A total of nine wells have been drilled at Milestone while defining the new potash resource (link to news release), which was reported previously in Stockwatch Feb. 2, 2010. The downhole geophysical logs have indicated the presence of neutron-density crossovers (neutron capture) in two zones in all nine wells. A close inspection of the neutron capture, combined with data on lithology and porosity, indicate the presence of hydrocarbons. The wells along this indicated hydrocarbon zone span a distance of 18.5 kilometres in strike length.

These data were evaluated by J.R. Britton, PGeol, PEng, a petroleum geologist with over 40 years experience in the basin. Mr. Britton's interpretation shows that two of the formations have significant areas of possible natural gas. In his report, further work is recommended including the completion of additional test wells to collect pressure, gas quality, and deliverability data in order to reduce investment risk and assess the natural gas production potential of this area.

The company wells were drilled to hydrocarbon industry standards where lithology and downhole logs, including resistivity, sonic, neutron density and caliper logs, were recorded for all the formations drilled from surface casing to just below the potash beds.

Patricio Varas, chief executive officer of the company, commented that, "The possibility of having sizable natural gas pools sitting on the door step of our potash deposit would represent a significant advantage to any future plans to develop the Milestone potash resource." The supply of natural gas is key to the economics of potash resource extraction as solution mining and the subsequent refining processes are energy intensive. The company contemplates that should production of hydrocarbons be possible and viable, that any production in excess of Western's energy needs to run its potash operations would be sold into the existing gas pipeline infrastructure. The TransCanada pipeline lies adjacent to the potential natural gas zone.

Management is excited about this prospect and is formulating a strategy to move forward with this opportunity. The first step in this strategy has been to secure all the available private oil and gas rights in the Milestone area. To this effect, the company has been actively acquiring the PNG (petroleum natural gas) rights from private landowners as part of its potash land acquisition strategy at Milestone, which covers 65 per cent of the prospective area. The Crown PNG rights are currently unavailable as they are located within the company's currently active potash exploration permits, and are not subject to provincial PNG land sales.

The next step will be to drill and test the interpreted hydrocarbon zones. The company is investigating doing this on a 100-per-cent basis or through a joint venture with an oil and gas third party, using standard hydrocarbon industry joint venture and option agreements. The company will keep the right to extract the natural gas for potash production at cost, whichever strategy is chosen.

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