Peace River Project Well Tested at 1.7-2.7 Mcf/d

Canada Energy announced the successful results of the horizontal Montney test located on its Peace River Project in northeast British Columbia.


  • The Portage c-20-E was completed with four fracture stimulations over a 1000 meter horizontal section and tested at 1.7 to 2.7 million cubic feet per day with 579-1450 psi flowing casing pressure over an eleven day test;
  • The c-20-E results of 420 mcf/d per frac treatment compares very favorably with the Talisman completions on their Farrell Project 5 miles to the north where the fracture treatments from the Upper Montney have averaged 540 mcf/d per fracture treatment;
  • Sproule Associates Limited have estimated 171 BCF per section total-gas-initially-in-place ("TGIIP") in the Upper Montney and Doig formations combined in the c-20-E well and 207 BCF per section in the Company's Portage 9-23-81-26 well;
  • The Company's Joint Venture Partner on the Peace River Project has licensed the next horizontal well and the spud date is expected by mid-July;
  • The Company has expanded its deep rights land base by 14 gross and 7 net sections via recent land sales. This increased the Company's deep rights land base by 20%.

Operations Review

The Portage c-20-E well on the Peace River Project was drilled and completed in the Upper Montney formation. The well tested at variable rates of 1.7 - 2.7 million cubic feet per day, with 579-1450 psi flowing casing pressure, over an 11 day period from a 4-stage, non-energized (without nitrogen or carbon dioxide) frac in a 1000 meter horizontal section. The well had not fully cleaned up nor was critical flow (the minimum gas velocity required to efficiently lift water from the well) up the 114.5 millimeter casing achieved prior to the end of the test. Both the Doig and Montney formations exhibited elevated formation pressures characteristic of most shale gas plays.

The Joint Venture Partner and the Company believe that the test results of the c-20-E compare very favorably to the Talisman Farrell Project wells on a per-frac basis. When projected onto a typical development well of 1400-2400 metre lateral length and a 10-18 stage frac treatment, the Company believes the c-20-E has the reservoir characteristics to yield similar results. The average fracture treatment of a Montney horizontal well in northeast British Columbia is 14 stages (Oilweek, March 2010).

In addition to the Upper Montney, the Doig formation has logs and cores indicating pay with significant, open-hole, drilling gas flows.

The Doig Phosphate is thickest in the Peace River Project area and Talisman has demonstrated its productivity at Farrell. There are four (4) wells in the Peace River/Farrell area that have yielded positive gas tests from the Doig Phosphate.

The Lower Montney also yielded significant gas flows while drilling and exhibits resource potential.

The Company engaged Sproule Associates Limited ("Sproule") to estimate the total-gas-initially-in-place ("TGIIP") in both the c-20-E and the previously drilled Portage 9-23-81-26W6 wells. Sproule has estimated the c-20-E and the 9-23 wells to contain a gross TGIIP of 171 and 207 BCF per section respectively from the Doig Siltstone, Doig Phosphate, and Montney zones combined. The Company would have a 50% interest, assuming the Joint Venture Partner completes their earn-in.

Sproule has not yet been asked to estimate the recoverable portion of these in-place resources, and the Company will continue working with Sproule toward an estimate of recoverable volumes of gas as the more data is acquired.

The Joint Venture Partner has committed to drilling a minimum of 1400 meter horizontal lateral in the next well (Portage 3-12-82-26), which is anticipated to be spud by July 15th, with completion expected in early Q4, 2010.

The results of the c-20-E testing were the primary driver in the Company's acquisition of additional acreage on the Peace River Project (see the Company's prior announcement dated June 25th 2010). The Company was successful in acquiring 14 gross and 7 net sections in the May and June lease sales which increased the Company's net deep rights land base by 20%.

The Company expects the Joint Venture Partner will await the results of the 3-12 well before initiating a pipeline connection.

The Company has 42 net sections of Montney rights in northeast British Columbia, representing 168 potential net Montney drilling locations.

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