Ann: Operating Update - Mercury Stetson , page-7

http://www.proactiveinvestors.com.au/companies/news/28392/challenger-energy-reviewing-barnett-shale-fracture-stimulation-plan-in-texas-well-28392.html


Challenger Energy (ASX: CEL) is reviewing the design of the planned fracture stimulation of the Barnett Shale at its Mercury Stetson sidetrack well in Texas after water influx killed production in the deeper Woodford Shale.

The company said while it produced enough gas to light and run a flare from the Woodford, this could not be sustained due to the continued influx of water into the well bore.

It has since shut in the well to carry out a pressure build up evaluation of the well ahead of mobilising a service rig to strop out the tubing and set a bridge plug above the Woodford Shale.

Challenger said an initial evaluation suggested the Woodford fracture stimulation was not effective in providing a broad contact with the reservoir.

As a result, it is reviewing the design of the Barnett frac to take into account the information obtained during Woodford Frac.

Log analysis had indicated the well had intersected 450 feet (137.2 metres) of Barnett Shale, more than twice the thickness of the Woodford. The zone selected for the frac also has up to 50% higher porosity than the zone tested in the Woodford.

The sidetrack was drilled to determine the validity of the estimated 138 billion cubic feet of in-place gas per square kilometre present in the two shale formations, or 14.5 trillion cubic feet in the initial 105.2 square kilometre prospect.

Challenger is earning a 50% stake in Mercury Stetson by acting as operator; paying US$2.2 million (A$2 million) to renew and extend existing leases; drill, fracture stimulate, and complete two vertical wells; shoot seismic that will be funded partially by revenue from the first well; and connect the two wells to the nearby sales pipeline.