Paramax Resources announced the following operational update on its Idaho project.
Paramax, along with its joint venture partner, have drilled five exploratory wells in the Western Idaho Basin during March through May, 2010 and made three gas discoveries. The three gas discoveries have identified two distinct project areas, Willow and Hamilton.
The Hamilton project area, which is based upon the results of the Espino 1-2 and the State 1-17 discoveries has shown gas bearing sands at 2,000 feet. The Hamilton project area encompasses approximately 30,000 acres. The Hamilton area is intersected by the Williams Northwest Pipeline, thus providing an early production opportunity. The permitting of the 5 well development program has begun and it is expected that drilling will commence prior to August 1, 2010.
The Willow project area which is anchored by the ML Investments 1-10 discovery at a depth of 4,100 feet, tested at 4.5MMCF per day of sweet high calorific value gas and 12 Bbls/Mmcf condensate, has a development plan that includes both seismic and drilling. A 2D seismic program which covers approximately a 6,000 acre parcel is being permitted. Shooting is expected to begin in early July. This seismic information along with the previously shot data and well information will be the basis for the planned development drilling program. It is expected that the 5 well program will begin prior to October 1, 2010.
The Corporation has estimated that the capital budget for the next 6 months will total approximately $6.0M. This total includes the seismic, development drilling and continued land leasing activities. At present time the Corporation has working capital of approximately $7.5M. It is expected that gas production and cash flow from that production will commence during this period which will supplement the working capital position.
Discussions with midstream companies for infrastructure construction and with downstream companies for gas purchase have begun. In addition to potential gas purchasers in Idaho, the Williams Northwest Pipeline has 1.3 Bcfd spare capacity for gas sales to West Coast consumers.
With the continued land leasing activities, the Western Idaho Basin lands now total greater than 110,000 gross acres, with significant additions in the Willow area. The planned development activities in the Willow and Hamilton project areas encompass a total area of approximately 36,000 gross acres, or approximately 1/3 of the total land base. The Company intends to continue to evaluate the remaining acreage and plans to commence further exploration drilling on other prospect areas upon completion of the above noted development programs.
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