Corridor has provided an update today on its exploration, development and production operations in southern New Brunswick. Twenty-six McCully Field gas wells are expected to be on production prior to the end of December, resulting in a projected 2008 exit gross natural gas production rate of 32 mmscf/day (23.8 mmscf/day net to Corridor), less than previously projected. The new 2008 production wells include the McCully P-67, C-57, K-48, C-48 and J-47 wells which have been successfully frac'ed and are currently being placed on production.
Two horizontal wells drilled in 2008 at the McCully I-47 and N-66 locations have encountered problems which have prevented them from being completed and achieving their production potential prior to the end of this year.
Initial attempts to install and pressure test a casing patch at I-47 to correct a leak in the well have taken longer than expected as a result of a recent failure of a down-hole hydraulic setting tool. A new set of tools are being mobilized to install the casing patch in early 2009 and once the casing patch has been successfully installed and pressure tested, Corridor plans to conduct a multi-stage frac in the well and place it on production.
The frac equipment which Corridor has been contracting this year will be returning to western Canada prior to the end of this month to undertake winter work there, and will not be available to resume work at McCully until after break-up in the early spring. Alternatively, Corridor is evaluating contracting frac equipment from another region that may be available to frac I-47 in early 2009.
At N-66, new evidence indicates the well has frac'ed into an over-pressured 'perched' water zone underlying the "heel" of the horizontal part of the wellbore. Formation water has accumulated in the heel, which Corridor believes is restricting the flow of natural gas to the surface. Corridor is preparing to install a sliding sleeve in the production tubing which, if successful, will permit gas flow to by-pass the water restriction and produce at rates expected to be in the range between 2 and 3 mmscf/day by early January.
Corridor is currently coring part of the Frederick Brook shale formation at a depth below 1900 meters in the Green Road G-41 well located approximately 4 kilometers north of the village of Elgin in southern New Brunswick. The vertical well is expected to be drilled to a total depth of approximately 2500 meters prior to being logged and cased in preparation for conducting a minimum of 2 fracs in the Frederick Brook shale once frac equipment is next available in the region (as discussed for I-47).
Corridor has completed the drilling and logging of a core-hole that cored the entire (thinner) Frederick Brook shale interval at the Mapleton N-11 well, located approximately 8 kilometers northeast of Elgin. The extensive amount of continuous core will assist significantly in evaluating the geological, mineralogical and organic nature of the shale at this location. The well reached a total depth of 810 meters in red beds (basement rocks) prior to logging and is currently being abandoned. The coring rig will be mobilized in early January to drill 2 core holes in the Sally's Brook area (approximately 15 kilometers north of the McCully Field). These core holes are designed to evaluate the Hiram Brook and Frederick Brook stratigraphy in this northern part of Corridor's licences.
Initial processing of the 3D seismic surrounding the South Branch G-36 oil-well discovery is now completed and interpretation of the data will commence next week. The new data will be critically important in mapping the potential extent of the Caledonia oil field and in identifying the most favourable locations for drilling follow-up wells to determine the potential size of the oil field.
Corridor expects to end the 2008 fiscal year with approximately $11 million working capital and has no debt. Cash flow for 2008 is expected to meet our previous projection of $55 million. The capital budget for 2009 is expected to be approved and released by mid January, 2009.
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