Triangle Petroleum Corp. has issued an operational report for the second quarter of the fiscal year ended January 31, 2009.
The farm-in agreement on this Block was entered into in May 2007 and covers approximately 516,000 gross acres in the Windsor Sub-Basin of the Maritimes Basin located in the province of Nova Scotia, Canada. During fiscal 2008, Triangle earned a 70% working interest in the block by drilling and completing a vertical test well. In July 2008, Triangle's farm-in partner elected to maintain their 30% working interest instead of converting to a 5% gross overriding royalty.
Also in July 2008, Triangle entered into a partnership with Zodiac Exploration Corp ("Zodiac"), a private Calgary-based exploration company, to drill as many as six new delineation wells on the Windsor Block. The joint venture provides for an initial commitment by Zodiac to pay 50% of drilling costs, up to $7.5 million ($15 million gross), to earn a 12.5% working interest in the entire Windsor Block. Within thirty days of fulfilling this expenditure commitment, Zodiac has the option to commit another $7.5 million ($15 million gross) for an additional 12.5% working interest. Based upon Zodiac spending the entire $15 million, Triangle would retain a 45% working interest and would continue as operator, and Zodiac would have earned a 25% working interest in the Windsor Block.
In July 2008, Triangle started the second stage of its Windsor Block program. Triangle has contracted for Nabors rig #4, which has a depth rating of 3,600 meters (12,000 feet), for the balance of 2008 to drill the second stage wells that are expected to test the gas content and productivity of the Horton Bluff shales in various locations across the Windsor Block, and also to evaluate potential overlying conventional oil and gas reservoirs.
The first vertical exploration well of this second stage, N-14-A, was spudded in mid July 2008. N-14-A is located approximately five miles north of the two original vertical test wells, Kennetcook #1 and Kennetcook #2. N-14-A has been drilled to a depth of 8,500 feet (2,600 meters). The well encountered Horton Bluff shale at a depth of 3,600 feet (1,100 meters), and drilled through a total of 4,900 feet (1,500 meters) of shale and interbedded sands before drilling was terminated in the lower Horton Bluff.
An extensive suite of open hole logs has been obtained over the entire shale interval. Core was taken in the shale over a 60 foot (18 meter) interval at a depth of 5,800 feet (1,700 meters), and cuttings samples were retrieved throughout the drilling operation. Log and lab analyses are currently underway in Calgary and Houston. The highest gas response was observed while drilling the interval between 4,200 and 8,200 feet (1,300 to 2,500 meters).
Preliminary analysis of the shales below 8,200 feet (2,500 meters) indicate higher thermal maturity and diminished gas response, so the decision was made to suspend drilling at 8,500 feet (2,600 meters) and to set 7-inch intermediate casing. By setting the large intermediate casing, Triangle retains the option to either deepen or drill out horizontally, depending on formation evaluation and completion results in the vertical well.
Triangle's second vertical exploration well in 2008, O-61-C, was spudded in late August 2008. This well is located approximately 14 miles (22 kilometers) west of N-14-A, and is located in a separate fault block from N-14-A, extending the trend from the two Kennetcook test wells Triangle drilled in 2007. Planned total depth is 9,900 feet (3,000 meters). This well has been positioned using seismic to test the Horton Bluff shales and to evaluate potential conventional reservoirs in the uphole Windsor group.
Beech Hill Block
The farm-in agreement on this Block was entered into in March 2007 and covers approximately 68,000 gross acres in the Moncton Sub-Basin of the Maritimes Basin located in the province of New Brunswick, Canada. Triangle is entitled to earn a 70% working interest in the block subsequent to the acquisition and evaluation of a minimum $250,000 seismic program and then electing no later than December 31, 2008 to drill a test well by mid-2009.
In June 2008, the Company entered into a partnership with Zodiac on this Block. Zodiac agreed to incur the first $250,000 of costs for the seismic program for the option to earn a 25% working interest in the Beech Hill Block after paying 50% of the test well costs. Based upon Zodiac participating in the test well, Triangle would retain a 45% working interest and would continue as operator.
During June and July 2008, approximately $280,000 gross ($30,000 net) expenditures were incurred to complete the acquisition phase of approximately 18 miles (30 kilometers) of 2-D seismic on the Beech Hill Block. The Company now has until the end of this year to interpret this data and decide whether or not to drill a well by mid-2009 in order to earn a 70% working interest (net 45% should Zodiac elect to participate). Zodiac paid $250,000 towards the seismic program, thereby earning the option to participate in the drilling of the first well. The Beech Hill Block is covered by leases and licenses to search for oil and natural gas with the New Brunswick government which expire between February 2009 and June 2011.
Howard Anderson, Triangle's President and Chief Operating Officer stated, "We welcome our new partner, Zodiac Exploration, who will be working with us in the ongoing exploration of the Windsor Block, and the initial exploration on our Beech Hill Block in New Brunswick. We are encouraged by the results from the N-14-A well in Nova Scotia and look forward to seeing the results from the O-61-C well. For the next several months, we will focus on analyzing the technical data from the wells drilled, pursuing additional drilling locations, and most importantly, determining the appropriate completion program, all of which should indicate signposts toward commerciality of the Windsor Block."
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