Avenue Group to Drill 10 Wells in Appalachian Basin
Avenue Group's subsidiary, Avenue Energy, Inc., has signed an agreement with Drilling Appalachian Corporation (DAC), to participate in the drilling of up to 10 gross wells in the Appalachian Basin.
DAC, located in Alma, West Virginia, holds lease interests in over 30,000 acres in Doddrige and Wetzel counties, West Virginia. The company operates over 160 producing oil and gas wells and associated gathering lines.
Pursuant to the agreement, DAC will drill and operate up to 10 new wells with well depths ranging from 3000 to 5500 feet. Avenue in most cases will hold an 80% working interest and DAC will participate with a 20% working interest. Drilling is expected to commence shortly. Well costs will average between $250,000 to $298,000 per well and generally take ten to fourteen days to drill and complete. The success rate in this part of the Appalachian Basin has historically been in excess of 90% with initial production in the range of 40 to 100 mcfgd. Ultimate recoverable reserves have averaged 200 million cubic feet of gas per well.
The drilling program with DAC contemplates drilling and completing 2 wells in November and December of 2006 and approximately 8 wells in March through May of 2007.
"Our strategy is to acquire a portfolio of oil and gas assets that include low risk oil and gas reserves worldwide and the generation of low risk drilling opportunities in Appalachia and similar basins in the US," said Levi Mochkin, President and CEO of Avenue Group Inc. "Our participation in DAC's drilling program provides us with low risk drilling opportunities we seek together with a quality operator."
Norman Singer, Director of Avenue Energy, Inc., commented, "DAC has an impeccable reputation as an operator and we look forward to drilling many successful wells with them."
The Appalachian basin covers over 185,000 square miles across seven states (from Western New York through Georgia and Alabama) and is the US's oldest producing region with production in excess of 46 tcf of gas from over 400,000 wells. In 2003, the National Petroleum Council estimated the basin still contained another 9 tcf of proved gas reserves and an additional 68 tcf of unproved gas reserves.
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