Nextraction Testing 5-Stage Completion for Appalachian Basin Well
May 4, 2010Vancouver, BC - Nextraction Energy Corporation (TSX-V: NE) (the "Company") and its wholly-owned subsidiary, Nextraction Energy (US) Inc. ("Nextraction"), is testing flowback rates of the Mountain Minerals #5 well in its Appalachian Basin project. The well was frac'd on April 29, 2010 and flowed back natural gas and frac fluids over the weekend at a higher rate than expected. Nextraction and its operating partner, Vinland Energy, completed a five-stage frac program designed to test four formations.
After drilling the Mountain Minerals #5 well (see news release dated March 22, 2010) last month to a depth of 2,521 feet (788 meters), the Company evaluated the logs and designed a completion program that will include two isolated fracs in the Chattanooga (Devonian) shale, and one in each of the overlying conventional Mississippian age reservoirs which include the Ft. Payne Limestone, Knifely calcareous sand, and Big Lime Limestone formations.
Nextraction's primary objective is the 80 to 130 feet thick Devonian age Chattanooga Shale, which lies at depths of less than 3,000 feet (937.5 meters). The Chattanooga shale is a continuous, black, organic-rich, gas-saturated, finely-laminated shale that serves as the source rock, reservoir, and seal for gas trapped in the shale. The Chattanooga shale contains rich gas qualities of 1,390 British Thermal Units/cubic foot, which sells into the NYMEX pricing market at a substantial premium.
The conventional overlying formations are naturally fractured calcareous and dolomitic type reservoirs that historically have been the main economic producing formations in the Nextraction project area. Success rate approaches 90% for the wells drilled in the overlying conventional zones in neighboring areas of Whitley County, Kentucky (Source-Kentucky Geological Survey). Initial gas production rates range from less than 10 thousand cubic feet (10 MCF) to greater than 5 million cubic feet (5000MCF) of gas per day. Flow rates vary because reservoirs that encounter naturally fractured zones, or reach fractured zones from completion efforts, produce at a dramatically higher volume than reservoirs that do not encounter fractures. The overlying formations generally contain gas with a BTU factor of 1200.
The wells in this region produce little, if any, water.
Dr. Paul D. Trost, Company Director and VP or Operations spearheads the Appalachian Basin play and states: "Prior to drilling the first shale well, the Company invested significant time and expense in obtaining core data and logs, and conducted an extensive geological and petrologic evaluation of the Chattanooga shale. With these rock parameters in hand, we drilled the Mountain Minerals #5 well and designed a frac that had unique aspects for the area. The initial flowback is currently ongoing and strong. After initial flow back and cleaning the frac sands from the well, we will isolate the frac'd intervals to evaluate the frac effectiveness and gas flow rates from the formations. Testing will take three to four weeks, and there is a strong possibility that the conventional reservoirs will be significant contributors to the economics of this well and enhance the return on investment. We are pleased to be involved in shale development in the Appalachian Basin area, especially in an area that has such high probabilities of success both in the shale and the overlying conventional formations." Dr. Trost adds, "Our investment in this well is modest at US$180,000 for drilling plus and estimated US$140,000 for the frac'ing, testing, and completion of these four zones. The data we gather from this one well will provide important guidelines for how to best develop subsequent vertical and horizontal wells in our 70,000 acre resource play."
The completion of the Mountain Minerals #5 well follows the NI 51-101 resource valuation study conducted by MHA Petroleum Consultants, Inc. The report was released last week, and estimates volumes of undiscovered Original Gas in Place (OGIP) range from 0.419 to 2.5 trillion cubic feet (TCF) of gas.* The Company's in house analysis suggests solid returns of more than 20% Internal Rates of Return even in today's modest gas market. If the play passes this test the Company plans to continue its development by completing three additional wells in 2010 and 25 wells by the end of 2011.
About Nextraction Energy Corp.
Nextraction Energy Corp. is a Canadian junior oil and gas company engaged in the exploration and development of oil and gas resources in North America. Nextraction targets projects with known reserves that provide lower risk, high return development opportunities in both conventional and unconventional resource projects, where our technical expertise can be applied to enhance production. The Company is headquartered in Vancouver, BC, Canada, and is currently developing a tight-sands gas play on the Pinedale Anticline in the Green River Basin region of western Wyoming, and a 70,000 acre Chattanooga shale gas resource play in eastern Kentucky and Tennessee.
On behalf of the Board of Nextraction Energy Corp.
"Mark S. Dolar"
President and CEO
*CAUTIONARY STATEMENT
By definition of the COGE Handbook - "Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered." Further the Handbook states - Caution (per NI 51-101/5.9(2)(v)(B)) - "There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources."
FORWARD LOOKING STATEMENTS DISCLAIMER
Certain statements in this document may contain "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation. Such forward-looking statements or information include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Often, but not always, forward-looking statements or information may be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Statements regarding future production, reserve additions and capital expenditures are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. The Company does not assume the obligation to update any forward-looking statement, except as required by applicable law.
Neither the TSX Venture Exchange nor its Regulations Services Provider have reviewed this release and does not accept responsibility for the adequacy or accuracy of this release.
For further information on behalf of Nextraction Energy Corp, please contact:
Karmen Jade Birss
Manager, Corporate Development
Nextraction Energy Corp.
Phone: 604-630-0300
Toll Free: 1-888-630-0370
Info@Nextraction.com
www.Nextraction.com
