Canadian Quantum reported that Netherland, Sewell & Associates, Inc., an independent reservoir engineering firm based in Texas, has provided their "Best Estimate" of the Prospective Original Gas in Place Resources ("OGIP") volumes for the Utica Shale on the Company's Nicolet Permit in the St. Lawrence Lowlands at 8.67 Trillion Cubic Feet ("TCF"). Canadian Quantum's 50% interest of this Prospective Resources OGIP volume is 4.33 TCF.
Netherland Sewell, a world renowned independent reservoir engineering firm was commissioned by Canadian Quantum and partner Junex Inc. to complete a resources assessment ("the Report") of the Utica Shale on the Nicolet Permit following the drilling of the Junex St-Gregoire No. 2 and the Junex St-Gregoire No. 3 wells in 2009. Using their expertise in evaluating other shale gas plays, Netherland Sewell's evaluation includes detailed petrophysical and geologic analysis including a review of the available core and lab analysis data. All results have been prepared in accordance with the regulations pursuant to National Instrument 51-101, Standards for Disclosure for Oil and Gas Activities of the Canadian Securities Administrators. The evaluation does not include any evaluation of the jointly held shallower Lorraine Formation or the deeper Trenton Black River formation underlying the Nicolet Permit.
The Netherland Sewell evaluation focused on the Company's Nicolet Permit and its Utica Shale potential. The Report's findings are detailed as follows:
In the Report Netherland Sewell evaluated 97% of the 59,090 acre Nicolet Permit and subdivided it into segments:
Prospective Undiscovered Resources OGIP for the combined segments range from a Low Estimate of 6.95 TCF to a High Estimate of 10.52 TCF, with a Best Estimate of 8.67 TCF for the joint 100% interest. For the joint 100% interest, on an acreage basis, the Best Estimate of Prospective Resources OGIP is 126 Billion Cubic Feet per square mile ("126 BCF/section") in the Deep Segment of the Nicolet Permit, with a Low Estimate of 102 BCF/section and a High Estimate of 153 BCF/section. The weighted average Best Estimate over the entire Permit is 97 BCF/section. Canadian Quantum's company gross unrisked prospective resources range from a Low Estimate of 147 BCF to a High Estimate of 1,307 BCF over the entire Nicolet Permit. A Best Estimate of a net 436 BCF to Canadian Quantum's 50% interest using a 10% recovery factor was made.
Mr. Douglas Brett, P. Eng., Canadian Quantum's President and Chief Executive Officer, commented, "The Netherland Sewell evaluation quantifies the multi-TCF Prospective Resources OGIP potential on our jointly held Nicolet Permit, embracing both Netherland Sewell's experience and the proprietary data obtained in our two vertical wells drilled in 2009. It is important to note that this evaluation and the Prospective Resources estimates did not include the other three permits that Canadian Quantum owns with Talisman Energy and Questerre Energy Corporation. With the completion of the Netherland Sewell Report, we are now in the process of finalizing a 2010 work program with Junex over our jointly held Nicolet Permit. In the coming months we look forward to demonstrating the commerciality of the Utica Shale on our lands in the emerging Utica Shale play."
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