Sherritt Oil and Gas in Cuba

Established in 1992, Sherritt's Oil and Gas operations in Cuba have grown from a modest oil recovery program to an intermediate exploration and production business that contributes significantly to the success of the Corporation. Over the years, Sherritt has demonstrated its ability to find, develop and produce oil and gas in the challenging environment of Cuba's complex fold and thrust belt reservoir. Currently accounting for approximately two-thirds of Cuba's domestic oil production, Sherritt has produced over 150 million barrels of oil, drilled more than 160 wells and carried out over 320 workovers.

Average gross working-interest production in 2009 for Oil and Gas in Cuba was approximately 21,707 barrels per day.

Sherritt believes that there is potential for growth in Cuba's oil and gas industry, and its primary focus will be to continue investing in its Cuban production and reserve base. The Corporation plans to grow its production through ongoing development drilling and by implementing heavy oil recovery technologies proven in western Canada and other jurisdictions.

To date, Sherritt's operations have used natural reservoir pressures and conventional pumping technology and estimates that its recoverable reserves represent less than 2% of the original oil in place, which currently stands at over seven billion barrels. These low recovery factors are due to the viscous quality of the crude oil produced and the nature of the fractured carbonate reservoirs. Typical Cuban oil fields are believed to contain large accumulations of hydrocarbons and individual fields may contain more than one billion barrels of original oil in place.

To access this oil, Sherritt is pursuing strategies to enhance recovery from existing oil fields utilizing proven technologies such as CO₂ injection. The Corporation believes that modest improvements in these low recovery factors would significantly increase its reserves and add to current oil production rates.