Terax Energy Provides Barnett Shale Operational Update

Terax Energy has reached total depth on its Mitchell #4-H well and has completed the initial gathering system for its Erath County, Texas, project, completing the company's first phase of its Barnett Shale drilling infrastructure.

Terax reached total measured depth of approximately 7,150 feet on the Mitchell #4-H well on March 6. Terax has set production casing on the well, which was spudded on Feb. 5. The FMI log on the Mitchell #4-H well indicates natural gas in place of approximately 9 billion cubic feet ("BCF") per square mile and a shale thickness of approximately 90 feet. By comparison, the FMI log on the Mitchell #1-H and #3-H wells indicated 27.6 BCF and 30.6 BCF per square mile, respectively, with shale thicknesses of approximately 130 feet and 140 feet.

"The Mitchell #4-H readings are lower than the more favorable readings from the two previously logged wells, but it is not totally unexpected as the Barnett Shale has some variability in thickness and gas content," said Lawrence Finn, chief executive officer and chief financial officer of Terax. "The Mitchell #3-H well is only half a mile away from the Mitchell #4-H well."

Terax has also completed its gathering system for the Mitchell #1-H and #2-H wells, laying four miles of eight-inch pipeline, and installing tank batteries and compression facilities.

Terax has begun completion work on the Mitchell #1-H and #2-H wells. The company has a firm date for the week of March 20 from BJ Services to begin fracing the Mitchell #1-H well, after which it plans to frac the Mitchell #2-H well. Terax has also begun construction on the second phase of its gathering system to the Mitchell #3-H and #4-H wells, which is expected to be completed by the end of May.

"We have made marked progress in drilling our first four wells and completing our initial gathering system," Finn said. "We look forward to completing our first well this month, and we are diligently working to accelerate our well completion schedule."

Terax expects its drilling contractor to move the rig to a fifth drill site in Erath County on March 11 and commence drilling of the Mitchell #5-H horizontal shortly thereafter.