Forest Oil Corporation announced well results and updated acreage information in its Canadian Deep Basin Nikanassin Play, provided information on recently completed Texas Panhandle and Haynesville / Bossier Shale wells, and announced leasehold acquisitions in the core Haynesville / Bossier Shale.
Canadian Deep Basin Nikanassin Play
Forest announced today the results from its initial 10-well program in its Canadian Deep Basin Nikanassin Play which had average 24-hour initial test rates of 14 MMcfe/d per well and the addition of 43,000 gross and net acres in the play. Forest now has 105,000 gross (64,000 net) acres in the Canadian Deep Basin Nikanassin Play, bringing its total acreage in the Canadian Deep Basin to 184,000 gross (105,000 net) acres. With 10 straight successful wells in the Nikanassin utilizing new fracture stimulation technology, Forest believes it has validated the repeatable nature of the play. This repeatability has allowed for the creation of an additional core development drilling program for the Company in the Deep Basin, targeting Cretaceous sand formations, with the Nikanassin as the anchor formation.
With the significant expansion of this play by Forest and others in the industry, increased infrastructure is needed to transport the additional natural gas volumes. As a result, Forest estimates it has 20 - 25 MMcfe/d of net production that is shut-in awaiting infrastructure project completions. These projects are expected to be completed and production is expected to be placed to sales in the fourth quarter of 2010. The infrastructure is designed to provide excess production capacity beyond Forest’s 2010 drilling program.
Craig Clark, Forest's President and Chief Executive Officer, stated, "Technology advancement and its successful application to our Nikanassin properties have yielded another repeatable drilling program for Forest with average gross 24-hour initial test rates of 14 MMcfe/d per well from a 10-well program to date. These results were far greater than previous results in the area and have even exceeded our original expectations. With our recent successful acquisitions of 43,000 net acres in the play, we have accumulated a total of approximately 64,000 net acres. The accumulation of the acreage has resulted in a significant non-proved inventory of approximately 481 identified gross locations with over 1.9 Tcfe of net unrisked potential.
"In addition to our highly successful drilling program in the southern section of our Texas Panhandle acreage we have recently validated the prospectivity of our northern acreage in the Panhandle through our most recent horizontal well that came on-line at a 24-hour initial production rate of 20 MMcfe/d in Lipscomb County, Texas. This well, along with the extensive knowledge we have achieved through our database of more than 600 well bores across our Panhandle acreage, continues to validate the entire acreage position in the Texas Panhandle as highly prospective.
"In total, the Company now has three growth engines which are the Texas Panhandle, the Haynesville / Bossier Shale, and the Deep Basin Nikanassin Play. As we move forward into 2010 and beyond, these plays will become the main component of our capital spending and organic growth."
Forest announced today initial 24-hour production rates for three additional wells in the Texas Panhandle
The results from these three recent Texas Panhandle Granite Wash wells brings Forest's total average 24-hour initial production rate from its horizontal Granite Wash program to 28 MMcfe/d, of which 57% of the equivalent rate is liquids. Forest will continue its three rig program in this area to focus on liquids-rich prospects in the current commodity price environment.
The first four wells of the Texas Panhandle Granite Wash program have performed in excess of Forest’s pre-drill decline curve, and have resulted in significant production and revenue realizations.
In addition to Forest's Texas Panhandle Granite Wash program, the Company has participated in two successful wells in the northern sections of its acreage, targeting the lower Morrow interval. Forest's first horizontal well in Lipscomb County was drilled and completed with a 24-hour initial production rate of 8 MMcfe/d, while its second horizontal well was drilled and completed with a 24-hour initial production rate of 20 MMcfe/d. These wells are significant as they confirm the prospectivity of Forest's northern acreage in the Texas Panhandle where it holds 47,000 gross (37,000 net) acres. Forest will continue its one rig drilling program in the northern area of the Texas Panhandle.
Haynesville / Bossier Shale
Forest recently acquired and farmed-in to a total of 25,000 gross (17,000 net) acres in Shelby County, Texas and Sabine Parish, Louisiana. The properties are located in the area where there has been recent industry success, including Forest's well in Sabine Parish that had an initial 24-hour production rate of 21 MMcfe/d. Forest has approximately 40,000 gross (28,000 net) acres in the core area of the Haynesville / Bossier Shale, which includes Red River and Sabine Parishes in Louisiana and Shelby County in Texas. The Company has a total of approximately 103,000 gross (72,000 net) acres prospective for the Haynesville / Bossier Shale within the defined limits of the play that exist today.
Based on 80-acre spacing, the properties add a substantial number of drilling locations to Forest's current inventory in the play. In total, Forest has 467 gross drilling locations, not including existing proved undeveloped locations, in Red River and Sabine Parishes, Louisiana and Shelby County, Texas and 776 locations in Harrison, Panola, Gregg, and Rusk Counties, Texas. Forest is currently running 3 rigs in the play, with approximately 15 wells planned in 2010. The first well in 2010, the fifth well since inception of the program, had an initial 24-hour production rate of 20 MMcfe/d, which brings Forest's total program average 24-hour initial production rate to 18 MMcfe/d.
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