With the success of Eureka's Eagle Ford Shale-Austin Chalk, Sugarloaf Project, the Board has implemented a strategy to acquire and drill prospective acreage along the developing regional Eagle Ford Shale trend in Texas. Accordingly, the Board is pleased to announce that a wholly-owned US subsidiary of Eureka has signed an option agreement to acquire a 100% working interest (73% Net Revenue Interest) of a 761.5 acre block of leases on the eastern extension of the Eagle Ford trend, some 90 miles north-east of Eureka's producing Eagle Ford Shale-Austin Chalk interest in the Sugarloaf Project. On exercise of the option the new lease block will increase Eureka's overall net acreage position in the Eagle Ford trend by more than 50%.
The lease block is located in Fayette County, south of the major producing Giddings Oil Field and west of Apache Corporation's extensive Eagle Ford Shale lease holdings in Brazos, Burleson and Lee Counties. Three vertical wells were drilled on the leases during the 1980's Austin Chalk exploration boom. All of those wells intersected Austin Chalk with indications of oil, underlain by Eagle Ford Shale at about 10,700 feet. Wireline log analysis indicates that the lower Austin Chalk and the Eagle Ford Shale have significant, mostly fracture porosity (up to 18%) and the Eagle Ford and the lower Austin Chalk are both interpreted to contain hydrocarbons.
Based on the results from recently drilled horizontal wells in the emerging regional Eagle Ford trend, Eureka believes that the lease block is located in the oil leg of the trend. Eureka's assessment of the data from old wells on the lease block suggests that horizontal wells with appropriate multi-stage completions, similar to those successfully applied at Sugarloaf, would produce hydrocarbons from the Eagle Ford and lower Austin Chalk.
Wireline log analysis also indicates that all three existing wells intersected hydrocarbon bearing Wilcox Sandstone at depths around 6300 feet. This represents a significant secondary target within the block.
Eureka is continuing its extensive review of well and seismic data from the leases and surrounding area, with the objective of selecting locations for an initial horizontal well to test the primary Eagle Ford Shale-Austin Chalk target and the shallower Wilcox secondary target.
Since the commencement of leasing of this block, leasing activity targeting this area of the Eagle Ford Shale has increased rapidly, resulting in reports of substantial increases in immediately adjacent lease prices.
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