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Apache Canada Invests in Corridor’s New Brunswick Acreage
Apache Canada Ltd. on Monday agreed to appraise and potentially develop natural gas and oil resources in southern New Brunswick under a farmout and option contract with junior explorer Corridor Resources Inc.
Under the agreement, Apache would spend up to C$25 million over 18 months to evaluate the commercial potential of natural gas development in the Frederick Brook Shale formation and light oil development at the Caledonia oil discovery. Apache would test the acreage using seismic, drilling or fracturing and complete/abandon one or more vertical gas, oil and/or shale gas wells.
When the appraisal is completed, which is expected by June 1, 2011, Apache would earn a half stake in the spacing units drilled, Corridor said. Apache also would have the option to drill more test wells and to construct a 20-kilometer natural gas pipeline from the Elgin area that connects to Corridor’s natural gas plant at the McCully Field.
Corridor currently produces natural gas at the McCully Field near Sussex, NB. In mid 2007 the Halifax, NS-based producer finished building a field gathering system, gas plant and pipeline lateral connecting the McCully Field to markets through Maritimes & Northeast Pipeline. All together Corridor has almost 820,000 net acres in the Moneton Basin and was one of the first movers in the emerging Horton Group-Frederick Shale gas play in New Brunswick (see Daily GPI, Oct. 4, 2007).
If the Apache Corp. subsidiary were to use its option to drill more test wells, it agreed to purchase at cost a half stake in the Green Road G-41 well and spacing unit. The purchase price would be part of the expenditure commitment for the option program.
This second and optional phase of activities is to be completed by March 31, 2013 and would require Apache to spend at least C$100 million, according to Corridor. Apache would be the operator for all of the activities it undertakes under the agreement.
Once the farmout agreement is completed, Apache would have a 50% working interest in the 116,000 net acres that Corridor (100%) currently holds in the farmout area. Corridor would pay half of any other activities conducted on the farmout lands, it said.
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