Nextraction announced the successful completion of the Mountain Minerals #5 well located in its Appalachian Basin project. The well is now in production and sales have commenced as of May 29.
Dr. Paul D. Trost, Company Director and VP or Operations, who spearheads the Appalachian Basin play, reported, "We are very pleased that the first vertical test well has been a success. These initial results are important to our proof of concept program, and give incentive for us to move forward with our strategy of combining production from overlying conventional reservoirs with production from the unconventional Chattanooga Shale zone."
The well was frac'd on April 29, 2010 and in mid-May flowed back at an extrapolated rate averaging 270 MCFGPD while frac fluids were being lifted back to the surface. The well was completed with two isolated fracs in the Chattanooga (Devonian) shale, and one in each of the overlying conventional Mississippian age reservoirs which include the Ft. Payne Limestone, Knifely calcareous sand, and Big Lime Limestone formations. After shutting in the well for two weeks to allow for pipeline connection and production equipment, the well was placed back on line May 29th and flowed at a rate of 124 MCFGPD while maintaining a higher than normal wellhead flowing pressure of 125 psi. Nextraction will conduct sustained flow tests for two-four weeks to finish recovering the frac fluid and establish a normalized gas flow production rate. The well is currently bucking pipeline pressure of 75 psi, which should decrease to 20-25 psi as the pipeline compressor runs continuously and frac fluid recovery is complete. The Company anticipates increased daily production rates as the well continuously produces. Dr. Trost adds, "These are typical results in the completion cycle of unconventional gas resources plays like the Chattanooga Shale. A full evaluation of the production results of this frac design on a vertical well will aid in the design for frac'ing a forthcoming horizontal well.
The Mountain Minerals #5 well (see news release dated March 22, 2010) was drilled to a depth of 2,521 feet (788 meters), and is the first proof of concept well for the Company on its 70,130 acre farm-out agreement with Vinland Energy. Vinland also acts as the Contract Operator for the project. The approximate cost to drill and complete the well is US $320,000.
The completion of the Mountain Minerals #5 well follows the NI 51-101 resource valuation study conducted by MHA Petroleum Consultants. The report estimates volumes of undiscovered Original Gas in Place (OGIP) range from 0.419 to 2.5 trillion cubic feet (TCF) of gas.(i) The Company's in house analysis suggests solid returns of more than 20% Internal Rates of Return even in today's modest gas market. If the play passes this test the Company plans to continue its development by completing a minimum of three additional wells in 2010 and a minimum of 25 wells by the end of 2011.
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