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Gastem: Initial Marcellus Tests Successful

Montreal-based producer Gastem Inc. said Thursday its Ross No.1 vertical well in the New York portion of the Marcellus Shale has been completed and is testing 150 MMcf/d after four weeks of "extended flow."

Subsidiary Gastem USA was granted approval in September by the New York Department of Environmental Conservation to test its Ross No. 1 well using hydraulic fracturing (fracking) and approval to test the upper section of the Sheckell's No. 1 well in the Utica Shale.

The junior producer has an 80% working interest in more than 33,000 net acres in Otsego County, NY, and is the operator.

"Two different zones of interest in the Marcellus Shale, namely the Chittenango and the Union Springs, were fracture stimulated and both fracks were successful," the company said. The fracture treatments were to evaluate the production potential of these zones, which previously had only been done in a lower Utica Shale section.

"We see some excellent productive indications on Gastem's first Marcellus frack in the region with a very limited frack volume," said CEO Raymond Savoie. "The combined economics of the multi-layer targets (Utica, Oneida and Marcellus) will provide development opportunities until the New York Department of Environmental Conservation completes their review process for horizontal shale wells..."

Gastem to date has fracked three potential productive shale intervals in the Ross No.1 well in Otsego County. The company in November 2009 fracked a well in its Utica Shale holdings using a "fluid volume" required under the state's existing environmental guidelines "with a maximum volume of 80,000 gallons," it said.

Gastem also is completing a seismic program on existing leased property in New York and plans to initiate development wells targeting "local gas for local use" in the area by mid 2011.

Weatherford Laboratories, an independent reservoir engineering firm, completed an original gas-in-place (OGIP) report for Gastem using core data from the Ross prospect, and results indicated an estimated total OGIP for the Marcellus and Utica shale formations of 144.98 Bcf per 640 acres (one square mile) with a 50% probability, Gastem said.

"The Weatherford report confirms our estimate of the excellent Marcellus and Utica shale potential in this area of New York State," said Savoie. "However, the report does not include an evaluation of the Oneida Sands, a promising conventional formation situated between the Marcellus and the Utica on our properties and we expect to test and evaluate the Oneida formation shortly."

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