Corridor Completes Initial Analysis Of Natural Gas Discovery At McCully
Halifax, Nova Scotia, December 12, 2000: Corridor Resources Inc. (CDH - CDNX) confirmed today that it has completed an initial analysis of the McCully natural gas discovery first announced on September 20th, 2000. The McCully well data, combined with 3-D and 2-D seismic data, indicate the McCully field is potentially a major natural gas discovery. Corridor and Potash Corporation of Saskatchewan Inc. (PCS) are equal partners in the McCully well, which is located 12 kilometres northeast of Sussex, New Brunswick. The well reached a total depth of 2657 metres in October and was production tested in November. Initial analyses of well logs, production tests and 3-D seismic data indicate in-place natural gas reserves possibly in excess of 300 billion cubic feet (bcf) within the McCully Joint Venture area (4 sections or 3550 acres). "The McCully discovery appears to be much larger than anything we expected onshore in the Maritimes" said Norm Miller, Corridor's president. "It signals an exciting new exploration play for New Brunswick". However, Mr. Miller cautioned that the well completion design required to turn the McCully well into a natural gas producer has not as yet been finalised, and it will be necessary to drill several step-out wells before the commercial value of the McCully discovery can be determined.
The McCully well encountered more than 40 metres of net natural gas bearing sand within a 340 meter gross sand/shale sequence between the depths of 2030 metres and 2370 metres. Within this section, the bottom sand of the sequence has 22 metres of net pay in a relatively continuous vertical sequence. The sands have low porosities and permeabilities and lie within the Albert Formation (Mississippian). The well was air drilled to a depth of 2389 metres and flowed natural gas at a rate of 2.4 million cubic feet per day during drilling operations. Below 2389 metres, the well was drilled using a conventional heavy drilling mud. The formation is over-pressured, with the pressure in the main gas-bearing reservoir indicated to be greater than 4100 pounds per square inch (psi), or 600 psi greater than the normal reservoir pressure for this depth. During production testing operations, the bottom sand flowed natural gas at a rate of 750,000 cubic feet per day and no water for three days. Adams Pearson Associates Inc. (APA) of Calgary, Alberta have undertaken a preliminary analysis of the flow and pressure data from this test, confirming the high reservoir pressure and no indication of reservoir depletion. APA's analysis also indicated that the reservoir was damaged during drilling operations and should be capable of higher rates of production than were achieved during the initial production test. An attempt to hydraulically fracture the reservoir was unsuccessful and current plans are to re-complete the well as a "barefoot" producer. The natural gas is of good quality, with minor traces of carbon dioxide and no hydrogen sulfide.
The McCully prospect is a large, anticlinal structure with simple 4-way closure, covering an area of at least 7,000 acres. In addition, the overlying Hillsborough unconformity provides a regional stratigraphic trap across this prospect. Reprocessed 2-D seismic indicates the field extends west, north and east of the 4-section Joint Venture lands onto lands held 100% by Corridor. The prospect also extends to the south, where on December 7th Corridor and PCS jointly (50/50) were the successful tenderers ($4.63 million spending commitment) for an exploration licence covering 14,784 hectares, including the southern flank of the McCully field. At the same time, Corridor was the successful tenderer for three new exploration licences (100% Corridor) located to the west of McCully, adding 43,107 hectares to Corridor's existing 52,000 hectares (100% Corridor) lying to the north of the discovery area.
The McCully discovery is located approximately 35 miles from the Maritimes & Northeast Pipeline which currently delivers natural gas from offshore fields in the Sable Island area to markets in the Maritimes and New England. Future drilling plans at McCully will be aimed at proving sufficient reserves to economically justify the development of pipeline infrastructure to transport McCully gas to both local markets and markets served by the Maritimes & Northeast Pipeline system. Corridor and PCS plan to commence the drilling of the first step-out well on joint venture lands in mid January, 2001.
Corridor is a junior oil and gas exploration company, headquartered in Halifax, Nova Scotia, with interests in more than 5 million acres of petroleum exploration licences in Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.
The Potash Corporation of Saskatchewan Inc. is a public company trading on the Toronto and New York stock exchanges.
This press release contains certain forward looking statements relating to, but not limited to, Corridor's operations, anticipated financial performance, business prospects and strategies, including expectations relating to production levels; capital expenditure programs; the quantity of natural gas reserves; projections of market prices; projections of costs; supply and demand for natural gas; expectations regarding the ability to raise capital and to continually add to reserves through exploration and development; and treatment under governmental regulatory regimes. These statements are based on current expectations that involve numerous assumptions regarding factors and risks that could cause actual results to vary materially, including, without limitation to, the following factors: risks associated with oil and gas exploration, financial risks, substantial capital requirements, bank financing, government regulation, environmental, prices, markets and marketing, dependence on key personnel, dependence on Potash Corporation of Saskatchewan, Inc., availability of drilling equipment and access, risks may not be insurable, management of growth, expiration of licenses and leases, reserves estimates, seasonality, competition, conflicts of interest, Kyoto Protocol, issuance of debt, title to properties and hedging. There is no representation by Corridor that actual results achieved will be the same in whole or in part as those set out in the forward looking information. Furthermore, the forward looking statements contained in this press release are made as of the date hereof, and Corridor undertakes no obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise.
