Junex/Shale Gas Project: First Frac in Quebec's History
Junex Inc. reported that frac operations have been completed at the Becancour 8 well. This is the first time in Quebec's history that this type of work is performed with the purpose of evaluating the Shale gas potential.
The fracture stimulation was completed in mid-December in order to stimulate the Shale for gas potential. A production casing was installed and the well flowed natural gas to surface during the on-going frac fluid recovery. The final results should be known in the months to come when all the fluids injected in the well are recovered and all the analyses completed.
In July 2006, Junex signed an agreement with a significant independent natural gas producer in the United States for the development of shale gas in the Becancour/Champlain region. The agreement specifically targeted the evaluation of the gas potential of the shale section on four blocks of permits covering 143,395 acres located between Quebec-City and Montreal, which are entirely held by Junex. Pursuant to this agreement, Junex's partner has analyzed a total of 34.15 meters of Utica shale coring cut from the Becancour 8 well drilled by Junex. The cores were laboratory tested in order to better understand the physical and chemical properties of the sedimentary layer of the shale and to evaluate their productivity potential. Based on the results of this analysis, its partner advised Junex in May 2007 that it would go forward with a pilot-project. The first step of this project consists of performing a frac job on the Becancour 8 well.
In addition to the lands included in the partnership discussed below, Junex holds approximately one million net acres of permits located in the St. Lawrence Lowlands region. Under Junex' opinion all these lands are prospective for Shale gas projects.
Subject to regulatory approval, Junex intends to issue a total of 58,671 common shares to Desjardins-Innovatech s.e.c. as an interest payment on the unsecured convertible debenture issued on May 4, 2006. As stipulated in the debenture, the interest payments can be paid with common shares of Junex. The shares will be issued at a price of $1.08 per share, which represents the average trading price for the 20-day period preceding the payment date for the interest on the debenture.
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