RE: QUESTERRE - updates is expected today after TSWE ARE VALUING ONLY UTICA – LORRAINE COULD
BE A DOUBLE
Our economics are assuming only the Utica is prospective at this point but the younger
Lorraine shale lying directly above the Utica also holds promise. Taken from Talisman,
the rock characteristics of the Lorraine have the potential to match or perhaps even
exceed the Utica. For example, while the Lorraine is expected to have less natural
gas per cubic foot, it is also a thicker formation than the Utica. Gas-filled porosity
provides an indication of free gas while TOC (total organic carbon) provides an indication
of adsorbed gas in the rock. You can see the Lorraine is generally lower on both
metrics. That being said, the Lorraine ranges in thickness between 1,500-6,500 feet
while the Utica is only 300-1,000 feet thick. With the shale being less gas rich, the
solution is more drilling to capture the recoverable reserves. Talisman has estimated
it will have to downspace to 80 acres between wells for the Lorraine as compared to
100 acre spacing with the Utica. The thermal maturity “Ro” suggests both shales
range from dry gas prospective to overcooked producing CO2. Generally speaking,thermal maturity from 0.4-0.6 would suggest oil production, from 0.6-2.0 dry gas, and
over 2.0 carbon dioxide. Other parameters such as Silica and Clay suggest this
formation should also be open to fracture stimulation. The Utica itself is not perfect as
it has somewhat low Silica content but it still was able to be fractured, likely due to
high levels of carbonates (which are not included in the Talisman table).
In the end, Talisman estimates the Lorraine to hold an average of approximately 120
Bcf/section of original gas in place which compares to the Utica estimated at 93 Bcf/
section. For this reason, if the Lorraine proves to be open to fracture stimulation like
the Utica and flow rates are also economic, the natural gas in place could make this
play a double from our current analysis.