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September 2008

Vol. 13, No. 38 Week of September 21, 2008

MGM to test four plays

Drilling could tap 400 Bcf of potential gas reserves in NW Mackenzie region

Gary Park

For Petroleum News

Arctic explorer MGM Energy said it plans to test four distinct play types for natural gas during the upcoming winter drilling program in the northwestern region of the Mackenzie Delta. The plan is subject to the approval of MGM’s partners and regulators.

Four wells will be drilled to depths of about 5,000-6,600 feet and are projected to cost a total of C$74 million. Each prospect has un-risked potential of 80-100 billion cubic feet.

The program is part of a farm-in agreement with Chevron Canada and BP Canada Energy, an 11-well program which requires a minimum three wells this winter for MGM to earn a 50 percent working interest in existing discoveries and three more wells in the 2009-2010 winter season.

The first 2008-09 well, which MGM president Henry Sykes said could spud before the end of December, will be on Ellice Island, testing prospective zones within the Taglu formation.

The second, identified with three-dimensional seismic acquired by MGM in the 2007-08 season, will test the footwall of the Ellice Island anticline in the Tertiary-aged lower Taglu and Aklak reservoirs in the southern portion of the anticline.

The third well is planned for the northern portion of the Ellice anticline and will test Aklak reservoirs in the crest of the North Ellice anticline. The company said the North Ellice crestal play has additional deeper potential that is unlikely to be tested this winter.

The final well, also pinpointed from 3-D seismic acquired by MGM, will test a stratigraphic play on the west side of Langley Island.

It is a new play type for this portion of the basin and is analogous to the reservoirs found at MGM’s Umiak discovery, which has gas resources estimated at 265 Bcf.

MGM said it expects to test and complete each of the four wells before the end of the drilling season in mid-April, but it cautioned that unforeseen weather and operating conditions could affect the program.

The company said existing cash resources, comprised chiefly of funds raised from an MGM equity issue in July, are sufficient to fund anticipated drilling and logistics costs, plus the company’s other costs for the next year.






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