• Tennessee Wells on Production • Magnolia Drilling Update
Tennessee The first five wells drilled in the Millers Tennessee project are now in production with gas being delivered under an existing sales contract with the current gas price above US$12 per thousand cubic feet. The five wells all intersected thick sections of the target Devonian shale and flowed open hole flow rates averaging 130,000 cubic feet per day per well. The five wells are currently flowing a total of 135,000 cubic feet per day into the flow lines, and are still stabilising. At this time, three of the wells are producing at satisfactory rates, while the other two may require some further work. One independent shale zone remains to be fraced in one of the wells, and is expected to provide additional gas flow. Norwest CEO, Joe Salomon said that the five wells are being closely monitored, and the final results are not yet known. “While the initial results are not up to expectation, the high gas prices make the project commercial. The project is still in its initial stages, and we are learning as we go. At this early stage, we regard this as an exploration effort as we look for the sweet spots. New exploration work incorporating the data from these wells suggests that these may be to the east of the current well locations. The wells are providing valuable information for this and our other Appalachian projects. We will be meeting with the project operator, Millers, next week to discuss the results and to plan the way forward. Our review teams are looking at re-perforating and/or re-fracing options to increase production rates. In the mean time the recent US$2.2 billion acquisition by Chesapeake of the Colombia Natural Resources predominantly Appalachian shale gas portfolio confirms the basic strategy which Norwest and its partners are following, and provides a regional benchmark value of over US$500 per acre. To date, Norwest has paid a fraction of this to develop its continually expanding position in the basin. ” Further information on this (unrelated) transaction is available on http://www.corporate-ir.net/media_files/irol/10/104617/news/100305.pdf . Norwest remains committed to its Appalachians projects. Start up at the Kentucky and West Virginia projects is expected in the coming weeks as drill rigs become available. Norwest has a 37.5% interest (approximately 29% net revenue interest) in the Miller project.
Magnolia The Magnolia well is now expected to spud in mid November as soon as the contracted drilling rig completes its current well. The Magnolia prospect has the potential to hold 80 to 100 million barrels of recoverable oil, and is ranked very highly. The prospect is well defined by 3D seismic, there are positive seismic indicators and it lies within a productive petroleum system on trend with producing fields. Norwest will pay less than 1% of well costs (to a cap of US$8 million) while retaining a 19.6% interest. For further information contact Mr Joe Salomon, Tel 618 92273240 E-mail: [email protected]
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