Armour Engages Drilling Contractor for 2013 Campaign

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Armour Energy revealed Tuesday that it has entered into a contract with Silver City Drilling for a series of wells in the onshore McArthur, Isa Super and South Nicholson basins.

Under the agreement, Silver City will supply a Schramm TX130XD drill rig, equipment, a drilling crew and a management team to carry out Armour's 2013 exploration program in North Queensland and the Northern Territory.

Armour noted that the contract with Silver City has been designed with set criteria to avoid previous problems encountered during its drilling program last year. A statement posted by Armour Sep. 5, 2012, revealed that the company was forced to terminate its drilling contract "on the basis that the contractor was unable to satisfactorily remedy matters relating to the performance of its obligations."

Armour's exploration program is slated to start in late April, with the drilling of three vertical wells and one lateral well at the company's recently granted ATP 1087 permit. These wells target the target the highly prospective shale gas potential of the Lawn Hill Formation, where exploration by Comalco in 1991 encountered gas shows of up to 390 units from a continuous 410 foot (125 meters) shale gas column.

Armour aims to define up to nine trillion cubic feet of resources and reserves in the Lawn Hill Formation; the company said that, if proven, this is a sufficient resource to supply a six million tonne liquefied natural gas facility for more than 20 years.

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