Longford Corporation

June 07, 2007 17:30 ET

Longford Corporation Operational Update

CALGARY, ALBERTA--(Marketwire - June 7, 2007) -


Longford Corporation (TSX VENTURE:LFD) today provided the following progress report on its CBM projects.

Moundville, Alabama

Since late 2005, Longford has acquired leases or the right to drill approximately 10,000 acres of CBM rich lands in the Black Warrior Basin of Alabama. Longford recently drilled a five well pilot program and acquired gas gathering and water disposal systems along with several compressor sites for approximately US$5 million. These wells penetrated over 90 feet of CBM rich coal and management estimates that there is potential for 20 to 30 BCF per section gas in place. Longford commenced dewatering of the Moundville project in January 2007. The dewatering has taken longer than anticipated due to gas locking problems with the pumping equipment, caused primarily by excess gas concentration in the water. Despite high water fluid levels and the early stage of dewatering, these wells are currently producing methane gas at a rate of approximately 26 mcf/d. Longford has negotiated a favourable gas sales contract that will provide a premium to Henry Hub pricing when commercial production commences. Gas sales have not yet commenced as the nitrogen content is too high meet pipeline specifications. This nitrogen was introduced by the Company during frac operations and has been slowly declining from about 70% when the wells were first put on pump to the current level of 13%. It is anticipated that this nitrogen will diminish and production and revenues will commence during the third quarter of 2007.

Barrhead, Alberta

Longford is the operator of 28 gross sections (12 net sections) directly to the south and on trend with the Corbett Creek CBM project. Longford recently drilled three horizontal CBM wells in partnership with Nexen at a cost of $6.9 million (net $3.2 million). Longford commenced the dewatering of two wells in January 2007, but the pump on the second well, 9-12-59-6W5, became jammed with coal fines after 21 days of test production. The initial well at 13-11-59-6 W5 currently produces gas at about 15 mcf/d despite a very high fluid level and low pump rates due to partial plugging of its pump. The pumps will be replaced when the third well at 1-1-59-6-W5 is completed after breakup. Seaton Jordan recently valued Longford's Barrhead acreage at $699,749.

Alder Flats, Alberta

Longford's three oil and gas wells are currently producing at a rate of approximately 18 boe/d. Trimble Engineering Associates valued these properties at $1.438 million PV10 effective December 31st, 2006. These are not core properties and Longford will look to divest these properties in 2007.

Financial Position

Longford currently has 53.409 million shares outstanding (72.09 MM shares fully diluted)

As at March 31, 2007, the Company's working capital deficit was $1.2 million, primarily due to cost overruns associated with the Moundville CBM pilot project. The Company is currently evaluating several financing alternatives to raise $2 million to fund this working capital deficit and see these eight wells through to production. These financing alternatives may include the sale of the property at Alder Flats, Alberta.

Longford Corporation is a Canadian oil and gas exploration company listed on the TSX Venture Exchange under the symbol "LFD". The Company is focused on exploring for and developing North American oil and gas assets and currently has two Coal Bed Methane projects in Barrhead Alberta and Moundville Alabama.

Forward-looking Information

Statements in this release that are not historical facts are "forward-looking information" within the meaning of applicable securities law. Certain information regarding the Company in this news release including management's assessment of future plans and operations; the value of certain assets; capital raising efforts and amounts; financing alternatives; the amount and timing of capital expenditures; and future production amounts and potential may constitute forward-looking information and necessarily involve risks including, without limitation, risks associated with CBM development, production, competition from other producers, inability to maintain or remedy drilling rigs and other services, and the inability to raise funds at desirable costs. Readers are cautioned that any such statements are not guarantees of future performance and that actual developments or results may vary materially from those in these "forward-looking information".

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.


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