On its third well, the Mitchell #3-H, Terax has drilled through the Barnett Shale Formation and into the Ellenburger Formation, reaching a total vertical depth of approximately 4,500 feet on Jan. 10, with no encounter of water. Terax expects to reach total measured depth of approximately 6,785 feet on the Mitchell #3-H well by the fourth week in January. Terax spudded the well on Dec. 30, 2005.
The Barnett Shale Formation in the Mitchell #3-H is approximately 140 feet thick compared to approximately 130 feet in the company's Mitchell #1-H well. The FMI log on the Mitchell #3-H well indicates natural gas in place of approximately 30.1 billion cubic feet ("BCF") per square mile, which compares favorably to a natural gas in place calculation for the Mitchell #1-H well of 27.6 BCF. Terax did not run a FMI log on the Mitchell #2-H well, due to its close proximity to the Mitchell # 1-H well. In addition to the gas in place calculations, the FMI log is used to identify potential faults and the direction of stress fractures.
"We are pleased with the result of the log analysis on the Mitchell #3-H well, as well as our drilling progress to date, and look forward to bringing our first three wells online, early in the first quarter of 2006," said Lawrence Finn, Terax chief financial officer and interim chief executive officer. "Since our initial pilot well, the Mitchell #1-H, we are having success in reducing the number of drilling days required and expect to see a reduction in cost on the Mitchell #3-H well. We owe this improvement to the experienced drilling team Terax has assembled."
Terax is finalizing the completion and frac design with BJ Services and other contractors, and plans to complete the Mitchell #1-H and the Mitchell #2-H wells by mid February, pending completion of the gathering system.
Terax has agreed to terms to sell its gas to Louis Dreyfus Energy Services, and has begun construction on its gathering system, which will connect both existing and planned wells in the Erath drilling project. Terax expects to tie into the Louis Dreyfus pipeline by mid February.
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