Purchasing and site preparation will begin immediately, with construction completion expected in the third quarter of 2006. During the construction period, Canary expects to begin negotiating terms for marketing its gas with wholesale natural gas marketing companies. Southern Star Central Gas Pipeline, Inc. is a natural gas transmission system spanning 6,000 miles in the Midwest and Mid-continent regions of the United States, and is one of five major gas pipelines which cross through Canary's Area of Mutual Interest in Kansas and Missouri.
Access to its own pipeline tap allows Canary to accelerate its previously announced drilling program. In anticipation of reaching a successful tap agreement, Canary has already completed 6 wells in the immediate vicinity of the Southern Star tap. Initial indications are positive: all have good gas shows and are expected to be productive wells. The wells are presently shut-in pending pipeline connection, and Canary expects to commence commercial production in the fourth quarter of 2006.
"This is an important milestone because we need assured pipeline access to accommodate an aggressive drilling program. Our site on the Southern Star line gives us that assurance, so now we can really ramp up," commented William Chandler, Jr., President and Chief Executive Officer of Canary Resources Inc. "We expect to drill up to 20 wells a month on leases we own in the Eastern Forest City Basin."
Canary Resources Inc. is an independent Oil and Natural Gas Company engaged in the acquisition, exploitation, production and development of oil and natural gas properties. Canary has an active leasing program and farm-out agreements covering acreage in Johnson and Miami Counties, Kansas, and in Bates and Cass Counties, Missouri, for which it is the operator. It plans to drill numerous shallow coal-bed methane gas wells in these areas on 40 acre spacing or less. The gas wells are anticipated to be drilled to depths of between 600 and 1,000 feet. Canary has offices in Houston, Texas, and Stilwell, Kansas.
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