Irvine Energy to Acquire Interest in Shale Gas Project

Irvine Energy plc said that it has signed agreements to acquire a 75% working interest in approximately 30,000 acres of oil and gas leases as part of a lease acquisition, exploration, and development program in respect to the Chattanooga Shale in Kansas.

The primary focus of the project is shale gas exploration and development of the Chattanooga Shale in a joint venture with the Metro Group, which comprises Metro Energy Group Inc. and Kanco Energy Inc. The project’s exclusive area of mutual interest (AMI) consists of approximately 7 million acres covering the Chattanooga Shale. The Metro Group, experienced shale gas developers, will be the operator and will hold a 25% working interest in the project.

Irvine and the Metro Group will seek to build a large strategic acreage position over the Chattanooga Shale, with a target acquisition of 100,000 to 200,000 acres of oil and gas leases within the AMI. In conjunction with acquiring additional oil and gas leases within the AMI, Irvine and the Metro Group will undertake 3D seismic studies and drilling programs to establish the economic parameters of the Chattanooga Shale gas formations. The directors believe this exploration program has the potential to generate conventional oil and gas targets for testing, with the possibility of early cash flow from the conventional targets and the shale gas wells.

“The project is an exciting opportunity for Irvine to partner with an experienced operator in a large, new USA shale gas play in an established oil and gas region with excellent infrastructure and the potential to create significant value for Irvine shareholders,” said Michael Frayne, Irvine’s chairman.

The Metro Group has oil and gas operations in Oklahoma, Louisiana, and Kansas and has significant in-house experience and expertise in geology, prospect generation, field operations, and oil and gas marketing. The group has a proven track record in shale gas development, including an operating agreement in the Woodford Shale gas play in Oklahoma with Devon Energy, one of the largest shale gas developers in the U.S.

The project AMI, approximately 7 million acres, covers 11 contiguous counties in Kansas that cover the Chattanooga Shale. The AMI has a history of prolific oil and gas production from a number of formations and has significant infrastructure in place, including gas pipeline networks. Over the past 2 decades, there has been limited application of the technologies proposed under the Project, including 3-D seismic and horizontal drilling.