Corridor Resources has reported that the South Branch G-36 exploration well is currently drilling ahead at a depth of approximately 2566 meters in the Frederick Brook shale.
The well encountered a thick Hiram Brook formation within the interval 1380 meters to 2194 meters containing 33 meters of net natural gas bearing sands and a further 46 meters of net reservoir sand with unknown fluid content, based on well logs and using a 4% porosity cut-off. The well is currently being deepened to evaluate the characteristics and natural gas potential of the Frederick Brook shale, including the cutting of full diameter cores. The current deepening of the South Branch G-36 exploration well is providing an opportunity to evaluate the shale gas potential of the Frederick Brook formation at that location, negating the need to drill and evaluate one of the previously planned shale gas evaluation wells at Elgin.
Once total depth is reached at G-36, the well will be cased to the base of the pay intervals within the Hiram Brook formation and the intervals of primary interest will be frac'ed and flow tested to confirm fluid content and productivity. Nabors Rig #86 will then be relocated approximately 20 kilometers to the east to drill the first Frederick Brook shale gas appraisal well in the Elgin area at the Green Road O-50 location.
Following completion of drilling operations at the horizontal McCully N-66 location, the Nabors Rig #58 has been relocated to the I-39 well pad where it has been placed in position to drill the McCully C-29 well. Drilling operations have been temporarily suspended at C-29 while Corridor assesses the pace of forward drilling operations in the context of the current economic downturn.
Corridor has a strong balance sheet with current working capital in excess of $20 million and no debt, and is in the process of planning its capital expenditure program for the remainder of the year and for 2009. Corridor expects to further strengthen its net cash flow from the McCully Field in 2009, partially dependent upon results from its 2008 frac campaign that is currently under way. Corridor also expects to benefit financially from having pre-sold a portion of its gas production for the coming winter season (November 1, 2008 through March 31, 2009). The forward sales are priced at Dracut, Massachusetts and consist of 5,000 MMBtu/day at a price of US $14.40/MMBtu and an additional 5,000 MMBtu/day at a price of US $15.49/MMBtu.
Fraccing operations at McCully have now been completed at the P-67, C-57, K-48 and C-48 wells and are nearing completion in the J-47 well. Fracturing of the N-66 horizontal well is expected to commence next week using the Packers Plus technology, followed by similar fracturing operations in the horizontal I-47 well in November. The results to date from fraccing operations in the vertical wells are encouraging, with frac water clean-up and testing operations in various stages of completion before more reliable production test rates can be determined and reported.
These reports will be forthcoming over the next number of weeks as these results are obtained and these new wells are added to the McCully production stream. Several changes to this year's frac program for the vertical wells appear to be contributing to these encouraging results, including conducting smaller fracs and including CO2 spears and larger concentrations of methanol in the frac fluids.
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