"We believe this geologic analysis will help accelerate our drilling activities in the Overthrust project," said George S. Young, CEO of Fellows. "The company will use this analysis to formulate a drilling program for additional wells, which should help refine and advance our activities in this promising area."
Fellows will immediately run an RST log suite in the Crane 13-8 well to correlate with the cores recovered from the Crane 6-7 and to correlate it with the Murphy Ridge 1-32 well. Following the geological study and RST log evaluation, Fellows and its partner on the project, Quaneco LLC, will determine the placement of a pilot well program in the northern portion of the project and a location for coring in the southern portion. During the period from September 16, 2004 to July 31, 2005, the Phase I Drilling Program will include the expenditure of an additional $1.5 million on the geology, logging and drilling.
Fellows spudded its first well, the Crane 6-7 Well, on March 25, 2004. The Crane 6-7, located in Township 6 north, Range 8 east, Section 7, Rich County, Utah was a core test of the Spring Valley coals of the Frontier formation, and was successfully completed on May 12, 2004. The well reached a total depth of 4280 feet, and coring of coals and carbonaceous shales was conducted over a combined interval of 556 feet. The core tests of the Spring Valley coals of the Frontier formation and the coals in the Bear River formation are still pending in the laboratories of consultants hired by Fellows. This core analysis, combined with information from three wells previously drilled by Quaneco, LLC in the vicinity will provide the basis for formulation of total gas in place estimates. While awaiting the results from the lab, Fellows has now mobilized to the geologic analysis and logging work described above.
Fellows entered into a Purchase and Option Agreement on March 16, 2004 with Quaneco, L.L.C., an Oklahoma limited liability company, to acquire a 65% working interest in the Overthrust Project. Following the drilling of the Crane 6-7 Well, Fellows and Quaneco have agreed to amend the agreement to extend the time for Phase I and Phase II drilling to July 31, 2005 and April 30, 2006, respectively. Three identified coal seams that run through much of the area. Quaneco previously drilled seven exploratory wells that identified multiple coal seams of Tertiary and Cretaceous age that appear to be prospective for coal bed methane. Some of these coals are of similar age and depositional condition to other productive coal bed methane fields. The geologic and logging analysis, combined with information from three wells previously drilled by Quaneco, LLC in the vicinity will provide the basis for formulation of total gas in place estimates. The characterization of the reservoir will also allow for detailed pre-completion stimulation studies to be performed in order to increase the chances for successful completion and production of methane from this new coalbed methane horizon.
In addition, Fellows is continuing its aggressive acquisition program, and has a number of quality exploration projects under review, including projects submitted by third parties and projects presented under its agreement with Thomasson Partner Associates of Denver, Colorado ("TPA"). The agreement calls for TPA to present to Fellows an average of eight (8) projects per year with an area of interest of 10,000 to 80,000 acres per project with a reasonable potential of at least two hundred (200) billion cubic feet of natural gas reserves (200 BCF) or twenty (20) million barrels of oil reserves (20 MMBO). Fellows has the right under the agreement to acquire a 50% interest in each project presented, with the other 50% to be offered to a major industry partner.
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