Well Completion Activities
Three small fracs have been completed in the Frederick Brook shale formation in the McCully F-58 well. The well is currently flowing gas at a rate of approximately 320,000 cubic feet per day at a very low wellhead pressure following build-up of frac fluid in the wellbore. A total of only 520 cubic meters of frac fluids have been recovered from 1412 cubic meters placed in the formation during the fraccing operations. In early October, Corridor plans to perforate the production casing and perform an acid squeeze on three additional intervals in the Frederick Brook shale prior to putting the well on a long-term flow test in an effort to recover additional frac fluids and improve the rate of gas production from the formation.
At other McCully wells, a frac of the "A" sand at the D-66 well (please refer to the well location map below) placed 97 tonnes of proppant (sand) along with 642 cubic meters of frac fluids in the formation. The zone flowed gas at an initial average rate of approximately 430,000 cubic feet per day at a flowing wellhead pressure of 575 psi after recovery of 243 cubic meters of frac fluids. Gas flow from the "A" sand has been shut in and the overlying "B" sand was fracced, placing 30 tonnes of proppant along with 433 cubic meters of frac fluid. Initial flow performance of the "B" sand will be determined following flow-back of frac fluids.
At the H-76 well, a pre-frac test of the lower part of the "A" sand recovered over-pressured formation water, resulting in cancellation of the planned frac for that interval. A frac of the indicated gas-bearing upper "A" sand and lower "B" sands was successful in placing 70 tonnes of proppant (sand) along with 514 cubic meters of frac fluid in the formation. The initial flow performance of this interval will be determined following flow-back of frac fluids. The zone will then be shut in to prepare for a pre-frac test of the fluid content and a potential frac of the upper "B" sand. The presence of formation water in the lower part of the "A" sand suggests that the southwesterly limit of gas reserves in the lower "A" sand has been reached in the H-76 fault block.
At the P-76 well, a frac of the upper part of the Frederick Brook formation placed 13 tonnes of proppant (sand) along with 297 cubic meters of frac fluid in the formation. The zone flowed gas at an initial rate of approximately 150,000 cubic feet per day at a low flowing wellhead pressure due to loading up of frac fluid in the wellbore and following recovery of 133 cubic meters of frac fluids. Gas flow from this interval has been shut in to prepare for a pre-frac test of the fluid content of the "A" sand prior to conducting a frac completion of that interval.
Drilling Related Activities
The Nabors #86 rig is drilling ahead at the McCully J-76 well at a depth of 2150 meters. Corridor expects to complete drilling, logging and casing operations at the J-76 well in the latter half of October, prior to drilling the next location (to be determined) from the same well pad. The Nabors #4 (double) drilling rig has run and cemented intermediate casing at a depth of 1952 meters at the New Harmony #1 well. Corridor expects to complete drilling, logging and casing operations at New Harmony by mid October. Corridor is drilling the New Harmony well as part of a farm-in on lands held by PetroWorth Resources Inc. announced on May 11, 2007. If the well is successful in encountering natural gas, Corridor plans to frac and flow-test the well later in October.
Corridor has contracted a second 'triple' drilling rig (Nabors #58) and will be moving it to New Brunswick in late October to commence drilling a deep test at the E-67 location. The well is designed to evaluate the Hiram Brook and Frederick Brook formations and will attempt to reach the Dawson Settlement formation. E-67 will be a 50/50 joint well with Potash Corporation of Saskatchewan.
On Friday, September 21, 2007 Corridor received approval from the New Brunswick Energy Utilities Board to expand its gas gathering system to tie in the F-58, E-38 and J-38 wells to Corridor's gas plant. Tie-in of the P-76, H-76 and D-66 wells were previously approved last year as part of the initial gathering system approval received in October 2006. Construction has commenced on the tie-in of these wells and is expected to be completed by the end of December 2007 at an estimated cost of $6.5 million and two months later than previously projected.
As a result of the deferred tie-in of the new wells and gas plant efficiency factors, McCully gas production for the balance of 2007 is currently forecast to average 30 million standard cubic feet per day (mmscf/day), of which approximately 20 mmsfc/day is net to Corridor's interest. However, Corridor has recently received notice from Maritimes & Northeast Pipeline that all service on M&NP will be curtailed for two days in late October and could be available only for firm service for the balance of the period between October 16th and 31st. Corridor estimates that this could reduce gas sales for October by as much as thirty percent. The limitations on service planned by M&NP are a result of maintenance requirements on the US portion of the M&NP system. Consequently, previously estimated revenues for combined Quarters 3 and 4 will be reduced by approximately $12 million, including gas price and foreign exchange adjustments. Commencing in January 2008, and based on management's projected results for the current frac program, McCully production is forecast to increase to an initial rate of approximately 45 mmscf/day (30 mmscf/day net to Corridor) with the addition of the newly connected wells.
Corridor Resources Inc. is a Halifax, Nova Scotia based company focused on exploring and developing natural gas resources in the McCully Field and surrounding areas of southern New Brunswick. The Company has completed construction of a field gathering system, a gas plant, and a pipeline lateral connecting the McCully Field to markets through the Maritimes & Northeast Pipeline (M&NP). The Company initiated natural gas production to M&NP on June 28, 2007 and has a continuous development-drilling program underway to add reserves and production capacity as field development expands. Corridor also has a number of potentially high impact exploration projects planned in New Brunswick and elsewhere in eastern Canada.
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