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CANADA
Quebec project area.
Analysing seismic data.
Quebec (100% Working Interest, 86%-87.5% Net Revenue Interest)
Molopo now controls 2.2 million acres of conventional (oil & gas) & unconventional (shale gas) exploration acreage in the province of Quebec, Canada, having added approximately 0.31 million acres in two stages during the year.
The first stage of acquisition involved 274,000 acres. The new acreage has a net revenue interest (NRI) of 86%-87.5%, whereas the originally acquired acreage has an NRI of 80%. The new acreage comprises six exploration licences located in two areas. Three licences infill the acreage between the Bedford area on the Canada/USA border in the south and the Drummondville/Lyster areas to the north.
The other three licences infill the acreage between Drummondville and Lyster to the south and Quebec and Seaway areas to the north. In the second stage, 39,000 acres was granted within the St Lawrence River, adjacent to the Quebec City prospect area, within the area between the Isle d’Orleans and the south bank of the St Lawrence River.
Seismic and aeromagnetic/gravity interpretation work has continued using the comprehensive dataset acquired with the acreage purchase. Molopo has high graded some 375,000 acres based on available well gas shows and production test results. This area has a potential 40 trillion standard cubic feet (“Tscf”) of gas in place and a potential recoverable quantity of some 6 Tscf. The remaining acreage is not expected to be quite as prospective, but has the potential to add at least a similar recoverable quantity.
Molopo completed the interpretation of approximately 100km of 2D seismic acquired in October/November 2008 in the Richelieu area east of Montreal. Two drilling targets have been identified and one is proposed to be drilled in the fourth quarter of 2009. Detailed well planning, location permitting and rig sourcing activities are well advanced.
At the end of the year, additional 2D seismic acquisition totalling some 200km was underway in the Lyster and Pintendre areas, aimed at maturing prospects for drilling during 2009/10. Seismic was undertaken to follow up encouraging gas flows on a test of shales in a 1970’s exploration well at Lyster and the excellent gas shows reported in shales in an untested 1970’s well at Pintendre.
Seismic operations, Canada.
Positive views of the overall Quebec shale play were presented by a number of companies and investment groups during the year. Production results from a new Utica shale test well, Gentilly-1, drilled by Talisman announced a 30 day average flow rate in excess of 800 Mscf/d providing further confirmation of the significant potential of this emerging shale gas basin. Positive flow test results were also announced by Forest Oil - stabilised rates from four separate well tests were reported in the 100-800 Mscf/d range confirming the feasibility of using horizontal wells as a development option. Questerre Energy Corp also stated that three well tests from a single Utica zone validated their belief that the Utica shale will be commercialised with horizontal wells. Early results from other zones in the Utica and shallower Lorraine were also very encouraging.
Molopo received several expressions of interest by other industry participants to partner Molopo in the region and formal requests to farm-in to our acreage are under consideration.
During the year, as part of our preparations for operations in Canada and to support Quebec drilling during 2009, Molopo opened an office in Calgary, where two new staff have been employed. Molopo also appointed a Canada-based director to its Canadian subsidiary to provide strategic direction and guidance to the expansion of Molopo’s Canadian operations.
