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Energen Eyes Potential Gas Resource in Black Warrior Shales

Energen Corp. said its exploration and production subsidiary, Energen Resources, has leased 140,000 acres in the Black Warrior Basin and will pursue exploration and development of natural gas from several shale formations across north-central Alabama.

The company said the basin, which is known primarily for its other unconventional resource, coalbed methane (CBM), also could harbor significant gas deposits in various types of Paleozoic-era, organic-rich shales, including the Floyd shale, a Mississippian-period shale that is similar in age to the Barnett shale in Texas, the Fayetteville shale play in Arkansas and the Woodford shale in Oklahoma.

Energen said it has drilled two wells to evaluate the gas potential of one of the shale formations and found gas, but the results were inconclusive as to the formation's productivity due to mechanical problems. Energen said it plans to drill additional wells across its leasehold over the next 24 months and will be applying various drilling, completion and stimulation techniques in order to ascertain the optimum combination for production.

"Our current lease position spans approximately 140,000 acres, multiple shale formations and a potentially significant amount of gas in place," said Energen President James T. McManus. "We have a lot of work to do, though, before we know exactly what we've got, how viable gas production may be from these various shales and how best to get the gas out of the ground.

"We have known for some time that various shale formations in the United States contain vast amounts of gas in place," McManus said. "And higher natural gas prices have spurred the pursuit of the Barnett shale play in Texas, the Woodford shale play in Oklahoma, the Fayetteville shale play in Arkansas and others. We also know Alabama contains a great deal of shale-rich land. Our challenge at Energen Resources is to unlock this resource," McManus said. "We are excited about the potential but mindful that developing significant shale plays in Alabama likely will happen over a period of years rather than weeks or months."

Energen Resources created a niche for itself in the late 1980s and early 1990s after pioneering development of CBM in the Black Warrior Basin, between Tuscaloosa and Birmingham in west-central Alabama. Energen remains a major player in the basin, currently operating some 1,279 CBM wells with annual production of 35.5 Bcf. Energen's net production from Black Warrior is estimated to be 14.5 Bcf in 2006.

"As Energen Resources continues to add, subtract and otherwise shape its lease position in Alabama shales, we will not be providing detailed information about our shale-related activities that could place us at a competitive disadvantage," McManus said. The company said it considers reserves associated with this shale opportunity to be a potential resource and as such, these reserves were not included in Energen's recent report of its probable and possible reserve potential.

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