***NEWS RELEASE****
Strachan prospect discovery
First Star Energy Ltd FST
Shares issued 24,016,195 Sep 17 close $0.59
Fri 18 Sept 98 News Release
Mr. John Squarek reports
First Star and its partners have made the first significant Swan
Hills/Beaverhill Lake natural gas discovery between the Caroline and
Blackstone-Hanlan area in the foothills of Alberta.
The Strachan 2-22-38-09W5 well (formerly 3-22) (First Star 20 percent BPO,
25 percent APO) encountered 14 metres of porous dolomitized reef in the
Swan Hills formation during drilling operations in April. During the summer
months the well was acid stimulated and initial production testing of the
Swan Hills has now been completed. During the production test the well
flowed at raw gas rates up to 10 mmcfd with negligible water production.
The final test rate was 4.8 mmcfd on a 5/16 inch choke, and a wellhead
flowing pressure of 2375 psig. Survey and permitting for the tie-in of the
well to the Strachan gas plant will begin shortly, with an expected
onstream date of Jan. 1, 1999.
First Star previously reported (Stockwatch April 20, 1998), that this well
did not encounter the Leduc D-3 formation which was the primary target at
this location. However, the well has encountered a new natural gas
reservoir in the Swan Hills formation. The revised geological and
geophysical interpretation for the prospect area, which takes into account
information from the well, suggests that the Swan Hills formation was not
drilled in the optimal position.
Whereas the well location was originally moved to match the 3-D seismic and
optimize the expected structure (Leduc D-3), it was not the optimum
location for a Swan Hills well. Therefore, the option blocks originally
designated in the farm-out agreement relative to the D-3 target do not
necessarily correlate to the Swan Hills discovery. The farm-in partners
have elected not to drill the first option well on the option block
specified, although it is expected that the first development well for the
Swan Hills will be drilled in early 1999. Further drilling, both
development and exploration, will be required to determine the full extent
of the discovery.
Based on the penetration rates, gas detector reading and well logs, a
number of shallower zones, including the Mississippian and Lower Mannville
formations, appear to contain hydrocarbons in the 2-22 well. No tests of
these potential zones were carried out during the drilling operations (in
order to protect the integrity of the wellbore). A shallow well, to access
these reserves, is expected to be drilled in late 1998 or early 1999.
First Star's original acreage block, prior to the drilling of the discovery
well, consisted of 16.5 sections of P&NG rights, (10,560 gross acres).
Including the Sept. 16, 1998 sale, First Star now has rights varying from
25 per cent to 100 per cent in a total of 34 sections (21,760 gross acres)
or 7430 net acres for an average working interest of 34.2 per cent on this
play.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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