Meridian Acquires Rights to Exploit Estimated 158 BCF Gas Recoverable

Meridian Petroleum, whose key assets are in the U.S. and Australia, said that it has negotiated the rights to exploit the deep gas potential of the Cotton Valley Formation in the Calvin Field, Winn Parish, La., by way of a 70% net revenue interest.

The Calvin Field is a dome-like structure with a prominent, possibly sealing, NW-SE fault that bisects the field. Meridian already holds rights to the relatively shallow Sligo-Pettet and Rodessa formations south of the fault.

The deep rights contain four distinct potential reservoir members:

--Knowles (or Winn) Limestone
--Terryville A&B sandstones (Main Targets – normal pressure)
--Calvin A&B sandstones (Main Targets – overpressured)
--Troy Limestone

Scott Pickford, at the request of Meridian, has undertaken a review of the available data to assess the gas potential of the Cotton Valley Formation. He has concluded that there is substantial gas-in-place.

The Terryville A and B sandstones are normally pressured but relatively tight reservoirs. The Terryville B sandstone flowed gas at variable rates during the late-1970s using conventional completion techniques. The Terryville A sandstone, meanwhile, has yet to be tested but looks to be similar based on log character and cores. The Terryville A and B sandstones are considered to be contingent on the successful application of modern completion techniques such as “slick-water fraccing,” which may significantly enhance Meridian’s ability to successfully develop these reservoirs.

The over-pressured Calvin sandstones have tested at significant rates in the past, with very high pressures and high flow rates for the area. Pickford considers that there is a need for high-pressure rated facilities and appropriate safety systems to control the prevailing well-head conditions, along with pressure reduction facilities to get the gas online. Note that both Anadarko and Rising Star are producing from similar formations in the Vernon Field, to the north of the Calvin Field.

Pickford considers the high pressure volumes to be contingent on an economically viable development plan that takes into account the requirement for specialist facilities. Meridian will be progressing such a plan after the normally pressured reservoirs have been tested, converted to reserves, and brought onto production.

Pickford’s unrisked estimate of gas in-place and recoverable contingent resource is tabulated below.

Reservoir	In-place (Bcf)	Recovery Factor (%)	Estimated Recoverable (Bcf)
Normal Pressure	 	 	 
Terryville A	61.78	        55.0%	                33.98
Terryville B   117.50	        60.0%	                70.50
Calvin A	40.76	        75.0%	                30.57
Calvin B	32.61	        70.0%	                22.83
Total	       252.65	                               157.88

“The previously discovered and tested Calvin deep reservoirs contain significant estimated recoverable gas resource though they have remained undeveloped due to technical difficulties,” said Anthony Mason, Meridian’s chief executive. “We will apply modern recovery techniques to overcome these difficulties, enabling us to bring significant quantities of gas to market under controlled conditions. Meridian currently has production from the Victory 21 well while the Calvin 36 # 1 is ready to commence production immediately upon the granting of a state permit, which is anticipated shortly.”