British Columbia’s Ladyfern attracts U.S.-based small cap

Gary Park

PNA Canadian Correspondent

A braxas Petroleum Corp. has surfaced as the latest U.S. player in British Columbia and Alberta after completing a C$150 million financing arrangement to support its development and acquisition activities in Canada.

A wholly owned subsidiary of Grey Wolf Exploration Inc. of San Antonio, Texas, Abraxas said Jan. 3 that it plans to drill up to 40 wells in the natural gas-rich Caroline area of central Alberta and the Pace River Arch of northwestern Alberta.

As well, it has scheduled six wells in northeastern British Columbia’s Ladyfern area, which has contributed 50 percent of Canada’s increased gas production in the past two years.

One of the few small cap companies with a direct interest in Ladyfern, Abraxas owns between 33 percent and 100 percent working interest in 24,000 acres in partnership with Northstar Energy Corp, the Canadian affiliate of Devon Energy Corp., and Canadian Natural Resources Ltd.

In participated in a 53-square-mile three-dimensional seismic program last winter and found a number of locations that were similar to those where major discoveries have already been made.

The company said that each successful well could add significantly to its production, based on reserves of 30 billion cubic feet per well and 30 million cubic feet per day of production, assuming a 33 percent working interest.

Abraxas chief executive officer Bob Watson said the financing deal with Mirant Canada Energy Capital Ltd. will “permit us to greatly accelerate our development operations in Canada, which will allow us to grow production and reserves at a much greater rate than would otherwise be possible in the current environment.”

He said drilling in the Ladyfern area will progress rapidly, with a three-rig program set to drill six wells in the next few months.

Abraxas has also contracted for firm capacity on a planned pipeline expansion that it hopes will allow a production start-up before the spring thaw.