Southern Star strikes gas and shale in Louisiana

Oct 17, 2008 02:00 AM

Southern Star Energy has successfully drilled and logged the targeted Haynesville interval in its Atkins-Lincoln 17-2 Well with positive results.
The well reached a total depth of 11,300 feet on October 14, 2008. This well is strategically located in the centre section of the company's Sentell Field in Bossier Parish, Louisiana. The Atkins-Lincoln 17-2 is the second well in the company's 2008 development program and the first of two Haynesville Shale vertical test wells in the Sentell Field planned for 2008.

Wireline logging and mud log shows indicate the Atkins-Lincoln 17-2 Well encountered 205 feet of highly laminated, silty, and naturally fractured shale zone with cross plot porosities ranging from 9 to 12 %.
Mud logs indicated abundant gas shows throughout the interval, ranging from 400 to 600 units with trip gas as high as 3,000 units. This interval exhibits the characteristics of the Lower Bossier Shale. Immediately below this laminated section, the well encountered approximately 185 feet of quality dark black organic rich shale.

In this zone, gas shows ranged between 1,100 and 3,000 units. This lower interval exhibits all of the characteristics that the industry classifies as the Haynesville Shale. The wellbore is suspended with 7-inch intermediate casing through the Cotton Valley Formation at 9,500 feet in order to preserve the company's options to complete the well as a vertical producer, or to re-enter the wellbore for horizontal drilling pending the development of completion techniques.
As a member of the Core Laboratories ("Core Lab") Integrated Reservoir Solution's regional Haynesville Shale Study, the company's data are being incorporated into the Core Lab database for use in designing optimum completion techniques for horizontal drilling in the Haynesville play.

The Atkins-Lincoln 17-2 is the company's seventh consecutive successful Cotton Valley well in the Sentell Field, and the first well to positively evaluate the Haynesville Shale. Each of the company's seven Cotton Valley wells has similar log characteristics. Five of these wells are flowing into sales lines. The company's sixth successful Cotton Valley well, the Cash Pointe 30-1, is scheduled to flow into sales lines in fourth quarter 2008.
David Gibbs, Southern Star President and Chief Executive Officer, said, "The preliminary results from the Atkins-Lincoln 17-2 Well represent significant news in the history of Southern Star Energy. We believed that we might be sitting on top of a significant Haynesville position, and I could not be more pleased now that we have evidence that the Sentell Field is right in the middle of the Haynesville play. We have extensive petrophysical analysis work ahead of us, and another vertical Haynesville test well to drill this year, but the initial results are positive. We believe Southern Star Energy remains a high-quality investment in these challenging times, and we are working tirelessly to develop our acreage on behalf of current and future shareholders."

Gibbs continued, "As we pause to consider the best way forward given these positive results, we are moving our rig southwest to the A S Burt 20-1 location. This next location is designed as a combination Cotton Valley development well and our second Haynesville evaluation well."
"We expect positive results in this location given the results from the Atkins-Lincoln 17-2 well. Importantly, this new well discovery should be additive to our reserve base and strengthen our total financial position. While we have adequate capital to carry out our 10-well drilling program, we believe our valuation and growth plans will support additional financing."

Source / Southern Star Energy, Inc.
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