Following a visit to the US
Tennessee shale gas project last week to meet with the project
operators, partners and consultants, Norwest has determined
that the Tennessee project does not satisfy the Company's criteria
as a long term commercial proposition. Whilst the first five
wells are flowing gas and are expected to pay back drilling
costs of $820,000 over five years, the flow rates together
with the resultant drilling information has not provided sufficient
encouragement for the Company to invest further funds into
the Tennessee project. Accordingly, Norwest has elected to
withdraw from the Tennessee project, and will now concentrate
its US efforts on its Kentucky and West Virginia projects.
This decision does not affect the Company's optimism for its
Kentucky and West Virginia projects which are located in a different
geological setting, and which will be operated by other companies.
Norwest CEO, Joe Salomon said that withdrawal from this project
would allow the $820,000 earmarked for the next five wells to
be re-allocated to the other projects, where higher flow rates
are expected.
"We see this as simply an adjustment to the overall plan
following the drilling results. On top of this, our recent work
has identified additional opportunities in Kentucky and West
Virginia which we will be following up.
While the results in Tennessee did not meet our expectations,
considerable knowledge and information was gained which will
be beneficial in our other Appalachian projects.
The Tennessee project was in fact, the smallest of the three
US shale gas projects, and it is our expectation that this will
be more than made up for by continued leasing in both Kentucky
and West Virginia.
We retain an acreage block in Tennessee to the south of the Miller
leases, leased independently to Miller, which we can either drill
or look to sell. This acreage appears more prospective than the
Miller leases. Even though we have elected to withdraw from the
Miller/Tennessee project Norwest still retains its working 29%
interest in the five wells and will receive cash flow over the
production life of these wells."
In Kentucky, earthmoving equipment is currently on site preparatory
to drilling start up and in West Virginia, the operator Ascent
Energy is preparing to drill 3 wells before year end. The knowledge
gained from the Tennessee drilling will be applied in these project
areas. More-over these projects provide a better opportunity
than the Tennessee project in which to introduce new technologies
aimed at improving production.
"We remain optimistic about our US Appalachian projects
and we are looking forward to the commencement of drilling in
the very near term. We have high expectations with our West Virginia
project where we currently have 35,000 acres under lease, and
expect to be able to capitalise on the current gas price of over
US$12 /mcf " concluded Mr Salomon.
For further information, contact
Joe Salomon
Tel 618 92273240, E-mail info@norwestenergy.com.au |
