Triangle Petroleum Corporation reports that the board of directors has reviewed the Company's portfolio of projects in detail and has elevated the 516,000 gross acre (806 square miles) Windsor Block in the Maritimes Basin to Triangle's primary shale gas project. The Company has also elected to sell its 10,400 net acres in Conway County in the Fayetteville Shale Project.
"I am cautiously optimistic we have discovered a world class unconventional gas reservoir," Dr. Stephen A. Holditch, P.Eng, director of Triangle, commented. "We have found the rocks we were expecting and the rocks contain substantial volumes of gas in place. We drilled two wells with minimal problems and successfully stimulated both wells. Both wells flowed back their fracs at very respectable productivity indices. One well is now producing gas, and we believe that once the formation is dewatered, we should be producing commercial quantities of natural gas."
Maritimes Basin - Nova Scotia Windsor Block
Vertical test wells
Both of the Kennetcook #1 ("KC #1") and Kennetcook #2 ("KC #2") test wells in the Windsor Block shale gas project have provided the Company with sufficient valuable technical information to conclude that this is a significant shale gas resource project. Based upon an estimated resource of 89 to 109 Bcf per section (mile) from Schlumberger's log analysis, this project has the gas in place to drive the Company's exploration program.
The Company continues to be encouraged by free gas flow of approximately 15 mcf/d at KC #2, particularly as field crews continue to pump previously-injected frac water out of the well. To accelerate water removal, the Company plans to install a larger, higher-capacity pump in the well. Management anticipates that KC#2 should demonstrate higher production rates after the limiting effects of water in the wellbore are removed. KC #1 continued to show production of dissolved gas, however free gas production has not yet been observed. Accordingly, after 90 days of testing operations this well has been shut-in. This well may prove useful in future drilling programs (micro seismic well monitor, fluid disposal, etc). It is important to note that KC #1 and KC #2 were purpose drilled as "test" wells to obtain scientific and geological data on which to base the Company's future drilling strategies. Management believes that these two wells were successful based on their initial objectives and the amount of quality technical data derived.
Joint venture partner
Subject to a confidentiality agreement, all of the technical data from the two test wells combined with the interpreted results of the seismic programs (25 square miles of 3-D plus 142 miles of both recently-acquired and purchased, reprocessed 2-D data) are being actively marketed to a select group of US and Canadian energy companies to join Triangle as a joint venture partner. A significant portion of the Company's resources is dedicated to this process and one or more partners are expected to participate in this summer's drilling program.
Arkoma Basin - Fayetteville Shale Project
Based upon escalating land prices in this basin and due to the lack of progress in accelerating its exploration program, the Company has decided to monetize its 10,400 non-operated net acres in this project. This acreage position will be sold through a publicly recognized brokerage firm, which has had recent success in selling acreage in the area at premium prices. The sale of this acreage is expected to be concluded before the start of the summer drilling program in the Maritimes Basin.
Western Canadian Shale Project
Triangle continues to actively evaluate various shale packages in Alberta and British Columbia. The Company's objective is to secure an initial land position prior to the end of 2008 and to commence an exploration program next year. This follows the corporate strategy in the Maritimes Basin of utilizing our US shale gas experience to secure early stage shale gas projects in Canada.
Maritimes Basin - New Brunswick Beech Hill Block
Triangle has the option to secure a 70% working interest on 68,000 gross acres in New Brunswick by shooting a limited seismic program this year and by drilling a test well next year. The timing and details of this early stage exploration program will be set after the Windsor Block drilling program has commenced.
The last oil prospect in this project has not yet been drilled. Given the activity levels in the Company's shale gas projects, and the operator's lack of progress in finding a partner for this project, Triangle is not actively pursuing this project at this time.
"We have concluded that the significant scope of the Maritimes Basin project provides our shareholders with an exceptional opportunity," Mark Gustafson, President & CEO of Triangle, said. "We are excited about the prospect of exploring for commercial quantities of gas in Nova Scotia."
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