Questerre Energy Corporation has entered into a seismic and farm-in agreement with a senior Canadian exploration and production company covering 54 square miles in the Greater Sierra region of northeast British Columbia.
"This play is a perfect fit with our existing assets. It combines a well-developed primary target in the Jean Marie with several high potential secondary zones," Michael Binnion, president and CEO of Questerre, commented. "We are very excited to be working with one of Canada's leading Jean Marie producers. I look forward to the spud of the first well before year-end and the commencement of our 3-D seismic program in early 2008."
The primary target on this land is sweet natural gas from the Devonian Jean Marie formation at a depth of approximately 1,400 meters. The Jean Marie is an established resource play in northeast British Columbia with estimated cumulative production of 1.37 Tcf and more than 1,500 producing wells.
Subject to the results from a 3-D seismic program and based on drilling in the surrounding acreage, Questerre expects to develop this horizon with, on average, two long-reach horizontal wells per square mile. Typical Jean Marie wells recover between 0.8 Bcf (133,000 barrels of oil equivalent (boe)) and 1.7 Bcf per well (283,000 boe) with initial rates between 1mmcf/d (166 boe/d) to 2 mmcf/d (332 boe/d). The land is also prospective for natural gas from both shallow and deeper horizons.
Pursuant to the farm-in agreement, Questerre will fund the acquisition of a 46-square-mile 3-D seismic survey. Questerre will also finance the drilling, completion and testing of two wells targeting the Jean Marie formation this winter. Upon completion of its earning commitments, Questerre will have a 50% interest in all the acreage. The majority of these costs are expected to qualify as Canadian Exploration Expenditures and will meet the company's flow-through commitments for 2007 and 2008.
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