Corridor Reports On Initial Post-Frac Test Results
Halifax, Nova Scotia, December 12, 2005: Corridor Resources Inc. (CDH - TSX-V) (the "Corporation") announced today the results of initial flow tests following frac stimulation operations at the McCully field conducted during the past two months. The initial flow rate results from the recently fraced wells are very promising, and Corridor now believes that there are sufficient gas reserves and well deliverabilities to proceed with applications to the New Brunswick government and Public Utilities Board for approvals to construct gathering lines, a gas plant and a 30 mile pipeline to connect the McCully field with markets in New Brunswick and New England through the Maritimes & Northeast Pipeline (M&NP) system. The next step for Corridor is to meet with its partner Potash Corporation of Saskatchewan (PCS) early in the new year, to further plans for this next stage of development.
In October and early November, Corridor successfully placed fracs in the "A" and "B" sands in the C-67 well, the "A" and "B" sands in the G-67 well, the "A", "B", "D" and "E" sands in the O-66 well, and the "B" sand in the K-57 well. Preliminary flow tests have been conducted on these wells as well as on the previously fraced D-48 and J-65 wells, and the results are presented in the table below. The flow rates and pressures reported are at the end of the test flow periods. The O-66 and C-67 wells have cleaned up reasonably well, whereas flow rates at the G-67 and K-57 wells have been impeded by the presence of unrecovered frac fluids in the wellbores and surrounding areas. Flow results for the D-48 and J-65 wells have demonstrated significant improvement on re-test compared to the very poor rates measured more than three years ago when these wells were fraced and first tested.
| Well | Sands Fraced | Flow Duration (hours) | Choke Size (mm) | Flow Rate (mmscf/day) | Head Pressure (psi) |
|---|---|---|---|---|---|
| C-67 | A & B | 67 | 7.94 | 3.2 | 1410 |
| G-67 | A & B | 40 | 5.56 | 0.9 | 978 |
| O-66 | A, B, D & E | 92 | 12.7 | 5.7 | 955 |
| K-57 | B | 61 | 7.14 | 0.9 | 634 |
| D-48* | B, D & E | 47 | 7.14 | 2.7 | 1147 |
| J-65 | B | 48 | 7.14 | 2.2 | 1102 |
| *Totals (As tested) 15.6 mmscf/day *Denotes Corridor 100% well, otherwise above wells are 50% Corridor, 50% PCS | |||||
The wells have now been shut in for a pressure build-up period and the C-67, G-67, O-66 and K-57 wells will be re-tested in mid/late January, 2006 to determine flow rates following a further short shut-in period. It is not possible to know at this point in time how much shut-in time will be required to allow remaining frac fluids to settle out in the formation and to determine the ultimate full production potential of the G-67 and K-57 wells. However, based on the experience of the previously fraced D-48 and J-65 wells, Corridor expects to achieve significantly improved flow rates from these wells once the remaining frac fluids have dissipated. Following completion of the initial pressure build-up period in early January, 2006, the flow rate and bottom-hole pressure results for the six tested wells will be analyzed by independent reservoir engineers in order to predict the longterm production performance of the wells.
Drilling operations at the McCully D-57 well have commenced and are progressing at a depth below 250 metres in the Mabou rock formation. The well is being directionally drilled to a bottom-hole location several hundred metres to the east of the A-67 discovery well, and is expected to reach a total vertical depth of approximately 2500 metres in the Fredericks Brook shale formation by the middle of January. Consideration is also being given to bottoming the well at a location (A-67B) approximately 400 metres to the east of the A-67 discovery well to facilitate better drainage of the reservoirs in that portion of the field. PCS must give notice to Corridor by early January if it is to participate in the D-57 well.
A follow-up frac stimulation program is planned for the late spring, 2006. At that time the previously drilled P-56 well, the recently drilled B-58 well, the currently drilling D-57 well and any additional wells that may be drilled in the interim, will be fraced and tested. Well logs for the P-56 and B-58 wells lead Corridor to believe that these wells could also be significant gas producers following frac stimulation treatments. Corridor is hopeful that the currently drilling D-57 well will also be successful.
The McCully field, located near Sussex in south central New Brunswick, is estimated to contain in excess of one trillion cubic feet of gas-in-place in the Hiram Brook formation. Two wells have been on production since April, 2003 supplying natural gas at an average rate of two million cubic feet per day to a limited local market. The D-57 well is the thirteenth well to be drilled in the McCully field, with all previous twelve wells encountering natural gas. The well is intended to add reserves and production capacity to supply natural gas to markets in New Brunswick and New England via a 30 mile pipeline connecting the McCully field with the Maritimes & Northeast Pipeline system. Pending timely regulatory approval and financing of the facilities, Corridor expects to be flowing natural gas to M&NP by the end of 2006. The Company's objective is to be onstream as soon as practicable to respond to the strong gas markets and prices for 2007 as currently predicted by the gas futures markets. Sufficient quantities of natural gas will be reserved for present and future requirements of PCS and for any other competitive markets in the Sussex and Havelock areas.
Corridor's 2006/2007 drilling plans are currently being reviewed. However, it is likely that additional McCully wells will be drilled and fraced prior to the end of 2006.
The C-67, G-67, K-57, O-66, B-58 and D-57 wells are located within an area that has recently been independently appraised by APA Petroleum Engineering and Petrel Robertson Consulting Ltd. in November/December, 2005, and this updated report is expected to be finalized and available for review on Corridor's website http://www.corridor.ca/ by December 19th.
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.
