Cadence Farms Into Antrim Shale Wells
Cadence Resources Corporation has signed a participation agreement with Aurora Energy granting Cadence participation rights for a twenty five percent working interest in potentially as many as 200 shallow natural gas wells in the Antrim shale. The Antrim shale is a well-known productive shale and has hosted as many as 8000 natural gas wells, a large percentage of which are still in production.
The wells are projected to be drilled to shallow depths of between 300 to 1000 feet. The average daily production from Antrim wells is typically about 130 mcf, with a reserve of about 500,000 mcf. The average life expectancy of these wells is about 30 years, although some Antrim wells have produced commercially for in excess of fifty years.
According to Howard Crosby, President of Cadence, "We believe the Antrim property is an exceptional addition to our natural gas property portfolio. Our strategy is to participate in as many wells as possible in the Antrim shale so that we are involved in a statistically meaningful number of wells."
The terms of the deal call for Cadence to participate for a 25% working interest by paying its share of incurred land lease costs, as well as drilling and completion costs. Prior to payout, Aurora will receive 10% of the Company's working interest, and after payout, will receive an additional 10%. Cadence has the right to participate in an initial 100 well program and if the Company participates in the first 70 of these wells, will have the right to participate in an additional 100 wells.
Aurora currently has sufficient acreage under lease in Michigan for an estimated 250-300 wells and is very actively assessing other property with Antrim shale potential. It is expected that drilling will begin before the end of the year on the first package of wells located in the "Black Bean" unit.
In other news, the Company's 2B well that was drilled in October encountered 41 feet of indicated pay in the Canyon limestone as announced previously. The Company attempted to complete this well by perforating the lower 21 feet of this pay. Unexpectedly, the Company encountered persistent inflows of salt water, probably from a heavily karsted portion of limestone at depth. The Company elected to plug the bottom portion of the hole, but still has the option of attempting completion of the upper 20 feet of pay. Depending on the recommendation of the Company geologic advisors, the Company may attempt this perforation in the early part of 2003.
The Company has also completed processing of 3-D seismic shot on its latest reef targets on the West Electra Project in Wilbarger County, Texas. The West Electra Project is a 50/50 joint venture with the Waggoner Ranch which is also the owner of the acreage on which the project is located.
The results of the seismic survey have confirmed the presence of several sizable reef targets that the Joint Venture will likely decide to drill soon. A large structure in the Noble limestone has also been delineated. At present the drill rig is scheduled to be on site on December 26th and will spud the hole the following day excepting any changes by the project managers. The hole is expected to reach a total depth of about 4200 feet and will test the Canyon reef target as well as several other formations of interest.