Corridor Resources Inc.

Corridor Resources Inc.

March 05, 2008 08:00 ET

Corridor Provides Update on Operations at Mccully

HALIFAX, NOVA SCOTIA--(Marketwire - March 5, 2008) - Corridor Resources Inc. (TSX:CDH) reported today that testing operations have been completed for wells drilled and stimulated during the previous (2007) frac campaign. Two of these wells (McCully D-66 and P-76) have been placed on production to the McCully gas plant while hook-ups for the remaining wells (D-67, I-67, F-58 and J-38) are expected to be completed during the month of March. Final tested flow rates for these wells are shown in the following table, along with the current flow rates for the producing D-66 and P-76 wells.

Well Zone Flowing Time Flowing THP Gas Flow Rate
(hours) (psi) (mmscf/day)

D-66 A/B/D/E/F Producing 614 1.47

D-67 Shale/A/B 96.2 648 0.65

E-38 Shale/C/D 41.8 2 0

F-58 Shale/B 63 430 0.48

I-67 A/B/C/D 81 544 0.71

J-38 C/D/E 65 1307 2.70

P-76 B Producing 603 1.42

To date, the sands of the E-38 well have failed to produce natural gas at any significant rate due to an abundance of bitumen damaging formation permeabilities. Corridor is planning further workovers in the well to attempt to stimulate gas production. The McCully H-76 and J-76 wells, reported on previously, are not included in the above table and are suspended, awaiting future frac stimulations in the "B" sands. The "A" sand is indicated to be water bearing in both of these wells. The total gas production rate for the field is expected to be approximately 31 mmscf/day (22 mmscf/day net to Corridor) by the end of March once the tie-ins for the D-67, F-58, I-67 and J-38 wells are completed and these wells are on stream and producing against an average gathering system pressure of approximately 600 psi. Further clean-up of injected frac fluids is expected to occur in these wells during early stages of production which may result in increased rates of production in some wells. However, as currently forecast, the gross field production for April (including the additional wells) is approximately 2.5 mmscf/day less than Corridor had previously forecast. However, based on first quarter gas pricing and the outlook for gas prices for the balance of the year, it is expected that the decrease in 2008 revenues resulting from a reduced production forecast will be more than offset by the increase in revenues resulting from higher gas prices.

Corridor is encouraged by the initial flow test results in the McCully J-38 well despite the presence of bitumen in the reservoir and wax observed in the wellhead following flow testing operations. The Company is planning another eastern delineation well (C-29) to be located to the northeast of J-38 and drilled in June, 2008. If C-29 is successful there are numerous additional locations to be drilled in this eastern extension of the McCully structure, where a younger set of relatively thick and porous gas-bearing upper Hiram Brook sands are present. Another key well is McCully J-47 which is currently drilling and which has penetrated a thick section of highly prospective upper Hiram Brook sands at that location.

Other Activities

Corridor has completed drilling, casing and logging the McCully K-48 well (Nabors Rig #86) and is now drilling the McCully J-47 well (please refer to the map below) from the same well pad at a current measured depth of approximately 2640 meters in the upper Hiram brook formation. The K-48 well encountered 20 meters of indicated natural gas pay in the "B", "C" and "D" sands based on a 4% porosity cut-off. The well will be fractured in these intervals during the upcoming frac program planned for this summer and will be placed on production this fall.

The McCully E-67 well is drilling ahead (Nabors Rig #58) at a depth of 3850 meters in the Frederick Brook shale formation. The well has encountered significant shows of natural gas in the Frederick Brook shale formation and is attempting to reach and penetrate the underlying Dawson Settlement formation. It has been necessary to flare substantial volumes of natural gas during tripping operations. The E-67 well is now the deepest drilled to date in New Brunswick and is expected to reach total depth in late March. The well is being drilled utilizing 10,000 psi blow-out preventers (BOPs) to ensure safe handling of the high pressures encountered in the lower Frederick Brook formation. In the event the Dawson Settlement formation is not reached in this well, Corridor plans to complete the well as an open hole completion in a manner that will permit underbalanced testing and potential production of the extensive and naturally fractured Frederick Brook section.

A map is available at the following address:

Frederick Brook Shale Gas Play

Efforts to date to assess the productive potential of the Frederick Brook formation have been limited to incremental evaluations in vertical wells intended primarily as Hiram Brook producers. Nevertheless, Corridor has been encouraged by the initial results from the completions attempted to date in the F-58, P-76 and D-67 wells. Accordingly, Corridor has re-allocated funds in its 2008 budget to include the drilling, fracturing and testing of a horizontal shale gas well in the Elgin area to the east of the McCully Field this fall, replacing two joint in-fill wells which may have to be deferred to 2009. A horizontal well at Elgin will be subjected to multiple large fracs in an extended horizontal leg, followed by long term flow-back and testing and will be Corridor's first effort to apply techniques that have been proven successful in shale gas plays such as the Barnett shale in Texas. Corridor's goal is to apply fracturing technology that will permit the propagation of multiple fracs in the wellbore, expected to be conducted at less cost per frac than has been achievable to date in its McCully operations. The Frederick Brook shale is exceptionally thick within the McCully structure and extends over a large area to the northeast and within the Elgin lease area. The gas-in-place potential is difficult to assess at this time but is estimated to be in the order of several trillion cubic feet. The shale appears to have all the ingredients for successful extraction and development, including total organic content, headspace gas measurements and thermal maturity levels. Assuming encouragement in the Elgin test well this fall, Corridor is planning a multi-well shale gas pilot project in the Elgin area for 2009. "We are excited about the enormous potential of this play and applying the technology that is known to be working in shale gas plays elsewhere on the continent" said Norm Miller, Corridor's President.

Corridor Resources Inc. is a Halifax, Nova Scotia based company focused on exploring and developing natural gas resources in the McCully Field and surrounding areas of southern New Brunswick. The Company has completed construction of a field gathering system, a gas plant, and a pipeline lateral connecting the McCully Field to markets through the Maritimes & Northeast Pipeline (M&NP). The Company initiated natural gas production to M&NP on June 28, 2007 and has a continuous development drilling program underway to add reserves and production capacity as field development expands. Corridor also has a number of potentially high impact exploration projects planned in New Brunswick and elsewhere in eastern Canada.

Forward Looking Statements

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, 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.

Contact Information

  • Corridor Resources Inc.
    Norman W. Miller
    902-429-0209 (FAX)