RE: RE: SPI News Release"Geological and technical data obtained during the evaluation of the Upper Montney Formation in
the two wells resulted in a decision not to proceed with a horizontal section at this time. Further
evaluation of the Upper Montney Formation on this block of seven sections may be undertaken
in the future with the development of infrastructure, technological improvements or higher
natural gas prices."
My gut feeling is that the price of natural gas is the main reason for not drilling the horizontal section. SPI was aware of the infrastructure the current state of technology before drilling the Montney wells.The good news in the Press Release is that one well was granted "New Pool Discovery" status, which means that they found "something" while drilling the vertical section.
"Land prices for Montney Formation rights in the Farrell Creek area remain strong and drilling by
various operators continues to be active. On November 12, 2008, bids ranging from $5,413 to
$14,878 per hectare for drilling licences in the Farrell Creek area resulted in a total bid of $105.6
million. The parcels attracting the higher bids are in close proximity to the western portion of the
Company’s Farrell Creek lands."
The value of the SPI's land holdings is not properly reflected in the share price. The land value plus working capital of approximately $12M should translate into a share price that is way north of 50 cents........but "the market is always right". We have to wait until next week to see how the market interprets this Press Release.