Southern Star Shines with Second Haynesville Discovery


Southern Star's Cotton Valley Project
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Southern Star has successfully drilled and logged the targeted Haynesville interval in its Burt 20-1 Well, with positive results. This well is strategically located in the southwest section of the Company's Sentell Field in Bossier Parish, Louisiana.

As previously announced, the well successfully encountered its targeted Cotton Valley interval in this location before the Company drilled ahead to further evaluate its Haynesville potential. The Burt 20-1 Well reached a total depth of 11,220 feet on November 27, 2008. This is the third well in the Company's 2008 development program, and the second of two Haynesville Shale vertical test wells in the Sentell Field planned this year.

Wireline logging and mud log shows indicate the Burt 20-1 Well encountered 312 feet of highly laminated, silty, and naturally fractured Haynesville Shale with shale-corrected porosity indications averaging over 12 percent and resistivity readings ranging between 20 and 70 ohm-meters. Mud logs indicated abundant gas shows throughout the interval, ranging from 600 to 1800 units with trip gas as high as 3,800 units. The Company recovered over 120' of conventional core samples over key intervals within the Haynesville Shale, which have been sent to Houston for detailed analysis.
 
The results of the Burt 20-1 location are consistent with the Company's earlier Cotton Valley locations, as well as the successful Haynesville test previously announced at the Atkins-Lincoln 17-2 location. As previously announced, the Company is a member of the Core Laboratories ("Core Lab") Integrated Reservoir Solution's regional Haynesville Shale Study. Data from both the Burt 20-1 and the Atkins-Lincoln 17-2 are being incorporated into the regional database. The Company will use the results from its two successful Haynesville Tests, coupled with industry expertise available through Core Lab's Haynesville Shale Study, to evaluate and design optimal completion techniques.
 
The Burt 20-1 is the Company's eighth consecutive successful Cotton Valley well in the Sentell Field, and the second well to positively evaluate the Haynesville Shale. Each of the Company's eight Cotton Valley wells has similar log characteristics, and five of these wells are currently flowing into sales lines. The sixth well is awaiting a pipeline connection. Both the Burt 20-1 and the Atkins-Lincoln 17-2 will be completed in the Haynesville Shale, pending thorough analysis and completion design.
 
The Company has moved the drilling rig and spud the fourth well in the 2008 development program, the Moore 20-1. This well is being drilled directionally from the same surface location as the Burt 20-1 and is targeting the Cotton Valley interval.
 
David Gibbs, Southern Star President and Chief Executive Officer, said, "The petrophysical results from the Burt 20-1 Well confirm earlier evidence that the Sentell Field is right in the middle of the Haynesville play. The new Haynesville well discoveries at both the Burt 20-1 and Atkins-Lincoln 17-2 locations should be additive to our reserve base. We will release initial production rate information once we have completed the extensive analytical work required at both of our Haynesville locations."
 
Gibbs continued, "We are carefully evaluating the implications of these new discoveries on our total financial position, capital budget, drilling program, and strategic growth plans, given that we demonstrated further evidence of the quality and viability of our Haynesville position. The Cotton Valley trend and Haynesville Shale plays enjoy compelling well economics, as a result of excellent well productivity and favorable regional pricing differentials among other factors. Both plays lie within our existing Sentell Field acreage, strategically positioning the company for building shareholder value even in challenging market conditions. We remain positive in our outlook in moving the company forward."
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