utica updates

I thought I'd do some quick research on the Utica shale...

The Utica Shale continues to be the story for many of the Canadian shale gas companies. There are near term catalysts for Quebec coming in the next few months so it’s important to highlight the events worth watching as potential triggers for a move in MPO also...

-Talisman- vertical test on fourth earning well St. Edouard #1. Currently testing conventional Trenton Black River formation (below the Utica shale) this month but real test on Utica shale in the third quarter. Will provide another data point on vertical flow rates from Utica.

Forest- re-completions of three prior horizontal Utica wells. Forest had well cleanup problems getting all the fracture fluids back out of these wells suggesting there is potential issues with conductivity to the wellbore (fluids are escaping to another area or are absorbing into the formation). In any event, plans call for both re-fracture of the prior three wells in the existing perforations while also re-perforating the wells and re-fracturing these new perforations as well. This should give us essentially new horizontal tests in existing wells. Plans also call for making adjustments to fluids to avoid the same issues on the first run. We should receive news on the first of these results end of August. This is the next largest catalyst event as horizontal well tests give us the best idea on commerciality!!!!

News from Gastem on Canbriam/Suncor farm-in to the south. Canbriam (private equity fund based in Calgary which farmed in on lands owned by Suncor private spinout) is drilling 4-5 vertical wells tests into the Utica this Aug/Sept. Will provide additional vertical test rates while also showing prospectivity of shale acreage to the south of the main fairway. Gastem has a working interest in the wells and being the only company will be the news source on these test wells.

-Junex- is considering completing one of their Utica vertical wells with a gas frac which provides an interesting data point on possible other methods of fracturing these shale wells should water based fracs prove to not be effective. With well cleanup issues experienced by Forest using water based fracs in their three horizontals, gas fracs, while more expensive, may be the answer.

-Talisman committing to complete a couple of horizontal Utica test wells into the sweet spot of the Utica. All of the recent Utica flow rates tested have materialized gas from largely one sequence of the Utica.

Questerre has proposed to Talisman to drill a couple of horizontal test wells as step-out wells on prior Talisman verticals and target directly into this sequence. While longer away, if Talisman agrees to such a program, it would likely provide us with the best test results and highest flow rates. After Talisman finishes St. Edouard #1 their commitment is over so this would be a second phase of activity with Talisman should it occur. Likely to occur in 2010 (if it happens) after Talisman determines capital budget plans for next year.

Will be nice to see some MPo updates and work on the area also...