Corridor Resources Inc.

Corridor Resources Inc.

December 12, 2007 08:07 ET

Corridor Provides an Update Report on Well Drilling, Completion and Testing Operations at McCully

HALIFAX, NOVA SCOTIA--(Marketwire - Dec. 12, 2007) - Corridor Resources Inc. (TSX:CDH) reported today on the current status of continuing well drilling, completion and testing operations at the McCully natural gas field in southern New Brunswick. A total of 27 fracs in eight wells (F-58, H-76, D-67, P-76, D-66, E-38, J-38 and I-67) have been completed or remain to be undertaken by the end of this year (with approximately 80% now completed). The duration of fracturing operations has been considerably longer than in previous years due to the greater number of fracs undertaken, driven partly by the objective of completing all or most of the productive intervals in each of these wells. In addition, the average size of the fracs completed this year has been significantly larger than in previous years, resulting in larger quantities of frac fluids to be recovered before the true productive capacity of the wells can be determined. Extended testing operations for most of the fractured wells only commenced in late November due to equipment availability limiting simultaneous fracturing and extended testing operations. All of the results represent a current snapshot of tested rates of gas production at the present stage of frac fluid recovery. More comprehensive flow test results are expected to be made available by late January, 2008 following planned well treatment and additional testing operations described briefly below.

Flow- Flow- Flow- Total Frac
ing ing ing Water Gas Transient Frac Fluid
Time THP CHP Rate Rate PI Fluid Recov-
Well Zone hrs psi psi bwpd mmscf/d scfd/psi2 bbls ered
F-58 Shale 133.5 n/a 0 26 0.247 0.024 9,744 39.0%
D-66 A/B/D/E/F 96.2 218 702 74 1.780 0.200 12,684 40.4%
P-76 B 71.4 426 799 21 1.639 0.178 7,218 34.6%
I-67 A/B/C/D 96 244 581 40 0.650 0.072 8,127 35.5%
E-38 Shale/C/D 6,721 28.0%
J-38 C/D/E 95.7 431 919 60 2.355 0.284 12,398 31.0%

Note: The E-38 well has not been tested.

F-58 Frederick Brook

Corridor to date has undertaken three small fracs and an acid squeeze in the Frederick Brook formation in the McCully F-58 well as part of an extended program to determine the best techniques for producing gas from shale, frequently a lengthy process in a new area. After conducting an acid squeeze on all the perforated intervals in the Frederick Brook formation and following a cumulative flowing time of 133.5 hours, the shale formation in the F-58 well was producing gas at a total rate of 247 mcf/day. However, 6000 barrels (61%) of frac fluids remain in the fracture system, restricting natural gas production. To date, the gas flow has been tested through 4-1/2" casing and has not been strong enough to lift substantial amounts of frac fluids accumulating in the well-bore without the assistance of a coiled tubing unit.

As next steps, Corridor plans to frac the Hiram Brook "B" sand in this well later this month, complete the well with a production tubing string and commence long-term production. The "B" sand will assist the shale in lifting frac fluids from the wellbore. In this manner, Corridor believes that, over time, it will eventually be able to determine the production capability of the Frederick Brook formation in this well.

Hiram Brook Frac Results and Bitumen Considerations

The flow test results for the Hiram Brook sands that were fractured this year are expected to take longer than previous wells to clean up, partly because of the larger volumes of frac fluids used in conducting larger fracs. Following flow testing operations, a hydrocarbon/polymer compound was found in two of the wells (D-66 and J-38), which has reduced the rates of gas flow. In addition, two of the wells drilled this year (J-38 and E-38) contained larger than expected amounts of bitumen in the reservoirs, reducing permeability and flow rates. Over the next number of weeks Corridor plans to undertake a series of workover operations on some of these wells in an effort to produce them at higher rates. The next report on the results from these re-tests is expected to be made available by late January, 2008. The H-76 well was fractured in the upper "A" and lower "B" sands and appears not to be gas productive. Corridor will consider fracturing the upper "B" sand later in 2008.

New Well Tie-Ins

New well tie-ins to the gas gathering system have been delayed because of the extended fracturing and testing program. Corridor expects that all new tie-ins will be completed and the wells placed on-stream over the period from mid January to late February.

D-67 well results

The McCully D-67 well has been drilled and cased to a total depth of 2867 meters, having encountered a total of 39 meters of indicated net gas pay, including 24 meters in the "B" sand and 15 meters in the "A" sand. Corridor plans to conduct four fracs in this well before the end of the year, including one frac in the Frederick Brook shale, one in the "A" sand and two in the "B" sand. The D-67 well is scheduled to be tied-in to the gathering system by late February.

Revised Production Forecast

Current gross production from the McCully Field, including gas delivered to the PCS mill, is approximately 32 mmcf/day. Field production from the 15 currently connected wells will continue to decline marginally until the newly fractured wells are tied in to the gathering system in January and February. Once the new wells are on stream and based on the current test results, Corridor expects gross field production to be in the range of 37 to 42 mmcf/day. If the planned workover and testing operations are successful, post tie-in production rates could be significantly higher. Corridor's gas plant capacity is currently indicated to be 45 mmcf/day. In addition, production to the PCS mill is forecast to continue at approximately 2 mmcf/day.

E-67 Deep Test

The McCully E-67 well is drilling ahead at a depth of approximately 2230 meters, commencing the underbalanced portion of the well. It is intended to penetrate and evaluate the gas potential of the Hiram Brook and Frederick Brook formations and to explore for and evaluate the gas potential of the deeper Dawson Settlement sands. Total depth for the well is planned for 4500 meters, and results are expected to be available in late January. Total cost of the well is projected to be $9.4 million, shared equally by PCS and Corridor.

An image of McCully Drilling Program - December, 2007 is available at the following web link:

PEI Frac Plans

Today Corridor is commencing a frac program on the Green Gables #3 and New Harmony #1 wells on Prince Edward Island. Over the next week, three fracs are planned to be conducted - two at Green Gables and one at New Harmony - followed by initial testing of the two wells. Additional (contingent) fracs (two at Green Gables and one at McCully) are planned for 2008. Initial test results are expected to be available by late January. The completion work at New Harmony is part of a Corridor farmin on PetroWorth Resources' Exploration Licence 03-02 announced on May 11th, 2007.

Newfoundland Offshore Licence Award

On Monday, December 3rd, 2007, the Canada - Newfoundland and Labrador Offshore Petroleum Board announced that Corridor was the successful bidder for a 51,780 hectare exploration licence situated on the eastern end of the Old Harry prospect off the west coast of Newfoundland in the Gulf of St. Lawrence. The licence carries a minimum work commitment of $1,521,000 to be conducted over a five year initial term. Acquisition of this licence is part of Corridor's long-term efforts to open up hydrocarbon exploration offshore in the Gulf of St.Lawrence.

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) 429-4511
    (902) 429-0209 (FAX)