By Ian Gilson, PhD, CFA
Given the success of the first well, the Magnus #1, the company has filed an intent to drill another well on the B&W Ranch Lease with drilling to start later in June. This will be the Anna #1 and different technology will be used to evaluate the coal gas formations found in the Magnus #1. This is the second of a three well evaluation program on the same lease.
New Western Energy (NWTR) has reported that the Magnus #1 well was drilled to nearly 2,000 ft. through several geological structures in the Mississippi Dolomite formation. This well is the first of three wells that will be drilled in the area. The drill encountered several coal gas (gas trapped in coal seams) bearing formations similar to some in the area that are commercially viable. If enough gas is found then the company will build a two mile gas gathering pipeline connecting the B&W Ranch Lease to a local sales point.
The company has announced the acquisition of the Fredonia Gas Prospect consisting of three producing gas leases, the Farwell, Eagle and Puckett leases. These aggregate about 1040 acres and include 9 producing gas well and a water disposal well. Current production is close to 6,000 MCF per month at about $4.00 per MCF. Initial reports quoted an incorrect production number.
The three leases are situated in the (mature) Cherokee Basin Structural Province. The gas is trapped in sandstone reservoirs at moderate depths between 600 to 1,400 feet. Drilling costs should be relatively low and any required infrastructure is easily accessible.
A copy of the full research report can be downloaded here >> New Western Energy Report
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