HALIFAX, NOVA SCOTIA--(Marketwire - May 31, 2011) - Corridor Resources Inc. (News - Market indicators) Corridor Resources Inc. announced that it received notification today that Apache Canada has elected not to proceed with the second phase of the farm-out program with Corridor in respect of the potential shale gas resource development near Elgin, New Brunswick.
As was announced by Corridor on March 30, 2011, the two horizontal wells drilled and hydraulically fracture stimulated by Apache (Will DeMille G-59 and Green Road B-41), using similar large slick water techniques, have not generated sustained shale gas production to date. In May, the Will DeMille G-59 well was re-opened and flowed frac fluid at low rates with minor gas shows over 5 days. It is important to note that, when the Will DeMille G-59 well was shut-in after initial testing in early December, 2010, it had recovered only approximately 4% of the total frac fluid.
Corridor previously reported that the Green Road B-41 well had been placed on a 45 day gas lift which ended on March 16, 2011. At that time, the well was shut-in after recovering 17% of the frac fluid. In late May, due to significant well head pressure build-up, the well was reopened and flowed gas at a maximum rate of 0.7 mmscf/d for several hours prior to frac fluids loading the well causing gas rates to decline.
Based on a consensus among third party expert consultants and Corridor technical staff, the most significant issues identified with the G-59 and B-41 well performance relate to the design of the horizontal wells in this high-stress environment and the fracture technique. Corridor believes that a different well design and frac program will lead to a commercial development of the Frederick Brook shale. It should be noted that, as previously reported, Corridor re-tested the Green Road G-41 well in December 2010, which produced gas at a constant rate of 4 mmscf/d for five days at a final flowing pressure of 1306 psi. During Q1 2011, the G-41 well was used to provide gas lift and consistently delivered the required rate of 0.5 mmscf/d during a 45 day test, at a final pressure of 2007 psi.
Corridor intends to drill two vertical appraisal wells in the Elgin area commencing late this year in order to confirm the well productivity required to proceed with a pilot phase. Based on the results of these appraisal wells, Corridor plans a staged approach to demonstrate commercial viability which would include a pilot phase with a capacity of approximately 40 mmscf/d, targeting gas production in late 2013. This program would include vertical wells in a multi-well pad design to take advantage of the shale thickness and the high gas saturations. During the pilot phase, Corridor will evaluate various drilling and completion techniques. Corridor will provide further details on the Frederick Brook shale gas development plans in a corporate presentation to be placed on Corridor's website on June 6, 2011.
In addition, Corridor will entertain discussions with potential joint-venture partners who wish to engage in a program to develop the Frederick Brook shale and who can add value to the potential development. The information and data obtained to date from Corridor's and subsequent Apache programs will be of significant value as this program advances.
It is important to recognize that the evaluation of the Frederick Brook shale gas resources is still in its early stages, and that the best estimate of gross discovered resources is 67.3 trillion standard cubic feet (as estimated by GLJ Petroleum Consultants Ltd. in the GLJ shale resources report, effective June 1, 2009.)
Corridor is an Eastern Canadian company engaged in the exploration for and development and production of petroleum and natural gas onshore in New Brunswick, Prince Edward Island and Québec and offshore in the Gulf of St. Lawrence. Corridor currently has natural gas reserves and production in the McCully Field near Sussex, New Brunswick and discovered crude oil reserves in the Caledonia Field near Sussex, New Brunswick in 2008. In addition, Corridor has contingent resources and discovered resources of shale gas in Elgin, New Brunswick.
Forward Looking Statements
This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking information typically contains statements with words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "may", "will", "project", "should", or similar words suggesting future outcomes. In particular, this press release contains forward-looking statements pertaining to: business plans and strategies; the characteristics and potential of the Frederick Brook shale; the belief that a different well design and frac program will lead to a commercial development of the Frederick Brook shale; plans to drill two vertical appraisal wells late in 2011; plans to demonstrate commercial viability, including a pilot phase; timing of gas production, if any; plans to engage in discussions with potential joint venture partners to develop the Frederick Brook shale; and the quantity of discovered resources of natural gas. Statements relating to "resources" are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated and can profitably be produced in the future.
Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to Corridor and its shareholders.
Forward-looking statements are based on Corridor's current beliefs as well as assumptions made by, and information currently available to, Corridor concerning the characteristics of the Frederick Brook shale, business prospects, strategies, regulatory developments, future natural gas commodity prices, future natural gas production levels, the ability to obtain equipment in a timely manner to carry out development activities, the ability to market natural gas successfully to current and new customers. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Unknown risks and uncertainties include, but are not limited to risks associated with oil and gas exploration, financial risks, substantial capital requirements, bank financing, government regulation, environmental, prices, risks may not be insurable and reserves and resources estimates. Further information regarding these factors and additional factors may be found under the heading "Risk Factors" in Corridor's Annual Information Form for the year ended December 31, 2010.
The forward-looking statements contained in this press release are made as of the date hereof and Corridor does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
Oil and Gas Disclosure
The best estimate of discovered resources of shale gas of 67.3 trillion standard cubic feet was estimated by GLJ Petroleum Consultants Ltd. in a shale resources report in respect of Corridor's interests in the Frederick Brook shale formation, which is effective June 1, 2009. The "best estimate" is defined as the value that best represents the expected outcome with no optimism or conservatism. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate. Discovered resources refers to that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The term discovered resources is equivalent to discovered total petroleum-initially-in-place. There is no certainty that it will be commercially viable to produce any portion of these discovered resources.
Resources do not constitute, and should not be confused with, reserves. Reserves and resources will vary from its reserve and resource estimates, and those variations could be material.
