Corridor Resources Inc. announced that it plans to accelerate the appraisal and economic assessment of the prospective Frederick Brook shale development in the Elgin area of southern New Brunswick. Corridor's Elgin licences cover an area of approximately 118,000 acres where the Frederick Brook shale is known to be very thick and covers an extensive area.
To commence the program, three widely spaced shale gas appraisal wells are planned to be vertically drilled at locations currently defined by 2-D seismic. Each well will be designed to penetrate and core the full Frederick Brook shale gas section, including a full suite of wireline logs. The logs and core data will be evaluated for lithology, porosity, permeability, organic content and thermal maturity in order to determine the most favourable intervals for shale gas production in this massively thick shale. Following evaluation of the cores, a well will be drilled horizontally into the most prospective part of the Frederick Brook shale for a distance of up to 1,000 meters.
The appraisal program includes multiple fracs in the vertical wells and the horizontal well and also includes a 65 square kilometer 3-D seismic program over the most prospective area. The program is anticipated to cost approximately $32 million, one half of which would be expended in 2008.
Corridor also announced that it plans to drill horizontal development and production wells in the thick upper Hiram Brook sands encountered in the northeast extension of the McCully Field. Corridor also plans to drill horizontal wells in the "A" sand of the Hiram Brook formation within the most productive part of the McCully Field, with the intention of significantly increasing the rate of production from the central part of the field. This program, which would include multiple fracs per well, is estimated to cost $14.4 million net to Corridor.
Corridor also announced that it has entered into an agreement, with a syndicate of underwriters including RBC Capital Markets, as sole bookrunner, and Jennings Capital Inc., as co-lead manager, pursuant to which such underwriters have agreed to purchase, on a bought-deal basis, 3,800,000 common shares of the Corporation at a price of $10.60 per share and 1,150,000 flow-through common shares of the Corporation at a price of $13.00 per share. Gross proceeds of the offering will be approximately $55 million.
The underwriters will have an option, exercisable for a period of 30 days from the date of closing, to purchase up to 570,000 additional common shares at a price equal to the offering price to cover over-allotments and for market stabilization purposes.
The share issue will be an underwritten public offering in all provinces in Canada, by way of a short form prospectus, and in the U.S. on a private placement basis pursuant to exemptions from the registration requirements pursuant to Rule 144A and Regulation D of the United States Securities Act of 1933, as amended.
The financing is scheduled to close on or about June 20, 2008 and is subject to regulatory approval and completion of definitive documentation. Net proceeds from the offering will be used primarily to fund the shale gas appraisal program and McCully drilling program described in this press release and for general corporate purposes.
Most Popular Articles