Mr. Ron Hughes reports
TRANSAMERICAN ACQUIRES SHALE GAS AND GAS PROSPECTIVE LANDS ALONG SIDE AND WITHIN THE ST-LAWRENCE RIVER AND ON ANTICOSTI ISLAND
TransAmerican Energy Inc. has entered into a letter of intent toacquire a 100-per-cent interest in 10 Utica shale oil and gas propertiescomprising 136,000 acres located in Quebec.
In consideration therefor, the company has agreed to pay the vendor a$25,000 non-refundable deposit, to be held in trust pendingTransAmerican's completion of due diligence. Subject to the companybeing satisfied with its due diligence investigation, it will acquire a100-per-cent interest in the property (the Lacasse property) by payingthe vendor $225,000 cash (inclusive of the deposit).
The company has further agreed to grant the vendor a 2-per-centoverriding royalty consistent with those generally applicable in the oiland gas extraction/production industry, payable on commencement ofcommercial production revenues from the property. The company will alsopay a cash finder's fee of $11,250 in connection with the acquisition onclosing of the acquisition.
The Quebec Utica shale
Questerre Energy Corp. reported that it believes the entire Quebec Uticashale region could hold potentially up to 20 trillion cubic feet ofgas, with initial production rates of up to 12 million cubic feet perday with the typical decline rates for tight gas reservoirs (Globe andMail Report on Business article published Feb. 23, 2010). From 2006through 2009 24 wells, both vertical and horizontal, were drilled totest the Utica. Positive gas flow test results have been reported,although none of the wells had been put on production at the end of2009. There is no certainty that similar results will be obtained on theLacasse property.
The Utica shale is a black calcareous shale from 150 to 700 feet thick,and between 3.5 per cent to 5 per cent by weight total organic carbon.The Utica shale play focuses on an area south of the St. Lawrence Riverbetween Montreal and Quebec City. Interest has grown in the region sinceDenver-based Forest Oil Corp. announced a significant discovery thereafter testing two vertical wells. Forest Oil said its Quebec assets mayhold as much as four trillion cubic feet of gas reserves and that theUtica shale has similar rock properties to the Barnett shale in Texas.Quebec has been known to have natural gas reserves, but advancedhorizontal drilling techniques and higher gas prices are only now makingthe play potentially economically viable.
Forest Oil, which has several junior partners in the region, has drilledboth vertical and horizontal wells. Talisman Energy has drilled fivevertical Utica wells and began drilling two horizontal Utica wells inlate 2009 with its partner Questerre Energy, which holds under leasemore than one million gross acres of land in the region. Among othercompanies in the play are Quebec-based Gastem and Calgary-based CanbriamEnergy.
Apart from interesting exploration targets on the southwestern sectionof the aforementioned area, TransAmerican believes that the Lacasseproperty is in a very favourable and strategic position with landsbordering the St. Lawrence Gulf and River. Islands in these waters willenable the company to test the suspected presence of massive gas poolsunderwater that could encompass these islands.