The participants in the play are presently consolidating their lease positions and plan to drill the first wells in late Q4 of 2006. It is estimated that each well will be drilled at a cost of approximately $2 million, or $200,000 net to the interest of the Company. The horizontal wells will likely be drilled on 80-acre spacing; fracture stimulated and, if successful, will produce natural gas. There is a major (16") gas pipeline within close proximity.
The Fayetteville Shale in Arkansas is now actively being developed for shale-gas analogous to the successful development of the Barnett shale, as many mid-continent gas producers consider this region to be the next promising unconventional shale-gas play. The Fayetteville Shale Play is currently being explored and developed by, among others, SouthWestern Energy ("SECO") (with 880,000 acres), Chesapeake (1 million acres), Shell (100,000 acres), Maverick (100,000 acres) and Hallwood (with 100,000 acres). SECO recently announced an increase their daily net gas production for the Q2 period of 50 MMCF per day, up from 20 MMCF in Q1. SECO now is producing from 148 wells (94 being horizontal) and it plans to drill 175-200 additional wells through 2007 (for a total investment of $325 million).
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