Slide 1

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 2

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 3

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 4

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 5

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 6

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 7

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 8

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 9

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 10

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 11

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 12

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 13

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 14

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 15

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 16

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 17

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 18

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 19

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 20

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 21

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 22

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 23

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 24

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 25

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 26

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 27

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.


Slide 28

High Definition
Reservoir Geochemistry
A New Direct Hydrocarbon Indicator For the Oil & Gas Industry

Trading Information
• TSX Venture Exchange :

DIG

• 52 Week Trading Range:

$1.00 - $2.50

• Shares Issued & O/S :

9,349,035

• Options O/S :

1,275,000

• Fully Diluted O/S:

10,624,035

Corporate Information
• Head Office
12 Sierra Morena Way SW, Calgary, AB T3H 3E4

Telephone: 403 290-1913 | Fax: 403 261-7015
E-Mail:

[email protected]

Website: www.diggerresources.com

• Transfer Agent:
Pacific Corporate Trust Company,Vancouver, B.C.
• Auditors: PricewaterhouseCoopers LLP, Calgary,
AB
• Lawyers: Bryan & Company LLP, Calgary, AB

Directors
• Norman Yeo, B.A., LL.B., Calgary, AB
• John Burt Wilson, ACIB, TEP, Jersey, Channel Islands
• Len Burchell, FCMA, Capetown, South Africa
• Graeme Wallace, B.A., M.Sc., Ph.D., Toronto, ON
• Peter Colnett, B.Sc., P.Geol, Calgary, AB

Officers
• Norman Yeo, B.A., LL.B., President & CEO
• Peter Colnett, B.Sc., P.Geol., VP Exploration
• William Aldag, VP Engineering

• David Kinton, B.Ed., P.Land, VP Land
• Desmond DeFreitas, C.A., CFO
• Larry Dewar, VP Field Operations

High Definition Reservoir Geochemistry
(HDRG) The Principles
Mobile ions migrate vertically to
surface (like mineral deposits)
HDRG anomaly derived from two
sources:
1. Anomalous elements from
hydrocarbon accumulation.
2. Concentration of country
rock elements within reducing
area of vertical ionic path.
Result is strong multi-element
surface anomaly developed over
hydrocarbon accumulation.

High Definition Reservoir Geochemistry
(HDRG) The Theory
• When mobile ions
arrive at surface,
they have a limited
life as ‘mobile’ ions.
• Mobile ions (blue) do
not move from the
source due to limited
life before becoming
bound.
• HDRG measures
only the mobile ions.

HDRG Proprietary Leachant
Typical soil sample
B

C

C

A

B

HDRG leachant will not
extract bound elements like
conventional techniques
C

A

B
Mobile ion

B
C

HDRG leachant only
extracts mobile ions
(single elements)
A

A

A
C
C

Bound elements

B

B
A

HDRG - The Development of a Petroleum
Significance Index (PSI)
• Approximately 21 elements / species are analyzed
(proprietary).
• All lab results are normalized, creating individual
“Response Ratios” for each element.
• Response Ratios for all elements are benchmarked
against existing well control.
• Approximately five elements are chosen based on their
response over existing productive & non-productive
wells in the sample area.

• Response Ratios for each selected element are
combined to create the final Petroleum Significance
Index (“PSI”) map.

What Digger HDRG can do?
• Direct hydrocarbon indicator.
• Excellent in areas with established production – sample
hydrocarbon bearing versus non-hydrocarbon bearing
wells for HDRG template.
• Can be very definitive in established areas with complex
geology & where seismic results have been questionable.
• Can be used in challenging areas where seismic cannot
easily be acquired.
• Once an adequate HDRG data base is established in a
project area, HDRG can be used for exploration in
undrilled areas.

What Digger HDRG can’t do?
• Unable to define subsurface stratigraphy or structure
like seismic.
• Initially unable to distinguish between multiple zone &
single zone hydrocarbon potential.
• As with seismic, it cannot predict quality of
hydrocarbon reservoir (for example, what initial rate
new well will produce at).
• Not recommended to be used as a pure exploration
tool without some predefined geological areas of
potential & existing well control that can be sampled.

HDRG vs. Conventional Geochemistry
• Glauconite oil channel sand
at 1000m depth, SE Alberta.
• A strong, multi-element
HDRG anomaly correlated
directly to the thickest net oil
pay.
• No anomaly was present
using the highest resolution
conventional geochemical
analysis techniques.

Jumping Pound HDRG
Traverse PSI Plot
West

East

160

140

120

100

80

60

40

20

0

Morley West Jumping New Expl. 2 cased
North end W. Cochrane
Pound
Play T25 R6 wells Jumping Pound (undrilled)

Jumping Pound Survey
• Samples collected along 30 kms. of Highway 1A,
west of Cochrane, Alberta.
• A major oil company concluded the survey was
successful in delineating gas fields in the area.
Served as pre-qualification to significant frontier
HDRG program.
• The technology proved to be a cost effective
exploration tool.
• No special permitting was required & turnaround was
about two weeks.

HDRG: Commercial Validation
• A property in SW Saskatchewan was selected by Green
Dragon Investments in 2002 based on the results of
HDRG surveys at 4-13-14-19W3 location.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.
• The well drilled was a successful Roseray oil well (a
structural high) with a production capability of 120 BOPD
in a mature oil reservoir that, for reasons of reservoir
thickness & geological contrast, was beneath the ability
of seismic to resolve.
• Nine other wells were drilled since 2002, around the 4-13
well by third parties relying on seismic interpretation & in
all cases the wells have been either dry holes,
uneconomic to produce or marginal producers.

Green Dragon’s SW Sask. Oil Property
4-13-14-19W3M
3-D PSI Map

4-13 well drilled with
Digger’s HDRG Sept.
2002, potential of
+120 BOPD with wtr
cut of 92%

Exploration
lead

Exploration
lead

2-13 original well
drilled 1957,
+800,000 BO to
date, +97% wtr cut
3-13 well drilled with 2-D
seismic Jan. 2002, initial
production 25 BOPD at
+97% wtr cut & now shut in

Subsequent Drilling Near
4-13-14-19W3M Well
Nine other wells
have been drilled
since 2002, by
third parties
relying on seismic
interpretation & in
all cases the wells
have been either
dry holes,
uneconomic to
produce or
marginal
producers.

HDRG: 15-36 Sask. Oil Property

HDRG: 15-36-13-19W3M Well
• The 15-36 wildcat well was directionally drilled under a
slough by Green Dragon & has recently been put on
pump.
• HDRG responses at surface appeared to be reflecting
the zones of maximum hydrocarbon accumulation that
correspond to stratigraphic & structural traps.

• Drilling intersected a potential pay zone associated with
the Lower Shaunavon limestone at a depth of 1162m
that was difficult for seismic to resolve & actually shoot
because of wet surface conditions.
• The Lower Shaunavon Formation has not been a
primary exploration target for oil pay in this area.

Frontier Applications
GORE-SORBER Survey
• With $20-35 Million wells & 3D seismic costing more than
$45,000/km2 Devon Canada investigated cheaper
alternative exploration technologies to assist in its
ongoing evaluations of its Mackenzie Delta & Beaufort
Sea Exploration Licenses.
• Devon’s initial survey in the area of the Tuk oilfield was
with GORE-SORBER in 2001. The goal was to template
several oil & gas accumulations in the area to see if there
was significant geochemical signal at surface,
differentiate Paleozoic, Cretaceous & Tertiary-aged pools
on the basis of hydrocarbon type & to delineate the pool
boundaries.
• A templating survey of 221 stations in a grid & traverse
arrangement was undertaken. The survey ultimately
yielded inconclusive results.

Frontier Applications
Mackenzie Delta & Parsons Lake

2003
• Completed benchmarking surveys in
Mackenzie Delta: Unipkat SDL (oil)
and Parsons Lake SDL (gas)
• Samples subjected to a strict Chain
of Custody thus ensuring voracity of
survey results
• Clearly identified both fields including
details such as oil vs gas, fault
boundaries and upside potential
• Carried out extensive QA / QC
checks to ensure both accuracy &
repeatability of HDRG process

Frontier Applications
Mackenzie Delta

2004
• Completed Hydrocarbon
Prospectivity surveys of
potential exploration drilling
targets.
• Completed follow-up surveys in
& around Unipkat SDL.
• Results again were positive and
in keeping with results obtained
during 2003 survey program.

Frontier Applications
Offshore Beaufort Sea
• Based on the 2003 / 04 program results,
coupled with the successful application
of this technology in the mineral industry
in lake bed sediment sampling,
discussions on the application of HDRG
surveys in the offshore Canadian
Beaufort were held.
• Initial discussions revolved around the
shallow water (2-3m water depth) Adgo
SDL which could be easily & cost
effectively accessed from the landfast
ice.
• There was further interest from both
industry and government with regard to
a potential benchmarking program over
the Amauligak field (30m water depth)

Frontier Applications
Yukon
• An HDRG Hydrocarbon Potential
survey was conducted in the
Kotaneelee gas field prior to the
drilling of a in-fill development well.
• HDRG predicted a dry hole over the
proposed bottom-hole location of the
proposed well.
• The well was drilled and encountered
NO RESERVOIR at the proposed
bottom-hole location.

• The well was then plugged back and
the well drilled at a steeper intersect
angle and hydrocarbons were then
intersected.

Frontier Applications
Yukon – Kotaneelee Gas Field

Frontier Applications
Scientific Validation
• Digger’s HDRG was featured at the May 2006 CSPG –
CSEG – CWLS Convention held in Calgary, Alberta.
• The paper entitled "New Technology, New Thinking in
the BMB" was co-authored by Devon geologists.
• The thrust of the paper presented was that due to the
very high cost of drilling & 3D seismic, in the Mackenzie
Delta & elsewhere in northern Canada, oil & gas
operators are looking for new cost effective exploration
tools, such as HDRG, to assist with exploration for new
hydrocarbon reserves in support of the developing
Mackenzie Valley gas pipeline system.

Frontier Applications
Scientific Validation
 The paper confirmed that
Digger completed sizeable
HDRG sampling programs in
the Mackenzie Delta, Yukon,
& northern British Columbia
for Devon to template oil &
gas accumulations in the area
to see if there was a
significant geochemical signal
at surface.

 Devon was successful in
proving up HDRG surface
geochemistry, with limitations,
as a useful exploration tool for
the Canadian Frontiers.

Concluding Remarks
• The proprietary HDRG process has been derived from a
proven geochemistry technique utilized extensively in the
mineral industry in the search for precious & base metals as
well as diamonds.
• Digger has invested ~8 years in transitioning this
technology to the oil & gas industry via numerous field
studies through to the drilling of both successful
development & exploration wells – based solely on HDRG.
• HDRG’s record in the frontier is excellent for both oil & gas.
• This new form of Direct Hydrocarbon Indicator (DHI) is an
excellent adjunct to seismic & provides an important
additional tool for reducing both the risk & cost associated
with frontier exploration & development.