Atlas Salt Inc. press release
Vulcan Minerals Inc. - Alberta Update
TSXV - TSX Venture Exchange · Salt · Sodium · Gypsum · Aluminium · Canada
Stock Symbol: TSX: VUL Shares issued: 35,278,384
ST. JOHN'S, Aug. 8 /CNW/ - Vulcan Minerals Inc. ("the Company" TSX-V: VUL), the Company announces that the evaluation of its Medicine Hat gas project is ongoing. The original plan to drill five new wells by August 8th has been extended to allow further time for permitting surface access. The Operator, Enerhance Energy Inc advises that a drilling contractor and related services have been sourced and it is expected that drilling will commence in the next couple of weeks, as soon as surface access can be arranged for all proposed sites. In the meantime the Operator has re-entered two of the shut-in wells and has applied for a continuation of the natural gas lease. The two wells were subjected to a short term (24 hours) rate test using a 2" critical flow prover with a 1/4" orifice and flowed gas at calculated rates of 220 MCFD (thousand cubic feet per day) and 121 MCFD which are regarded as commercial rates for this area. Both wells also contain substantial volumes of frac fluid from the original stimulation by a previous operator. Gas flow rates are expected to improve as this fluid is produced from the well bore. These wells may be re-stimulated to further enhance flow rates. As well it has been determined that three abandoned wells on the property that originally tested a zone deeper than the current target zone may be re-entered. An evaluation of the feasibility of perforating and stimulating the Medicine Hat "A" sands in these wells is being undertaken. Towards this end, one of the wells has been successfully re-entered and the Medicine Hat "A" sand was perforated and recorded gas flow. Pressure build-up tests are currently being under-taken. It is anticipated that the well will be a commercial producer with hydraulic fracture stimulation. Re-entering these existing wells should result in significant costs savings versus drilling new adjacent wells. An evaluation report on the exploration potential of the Medicine Hat project by Chapman Engineering Ltd (Chapman) of Calgary has been completed and is accessible on the Company's website (http://www.vulcanminerals.ca/updates.html). The Chapman Report concludes that the total project has a best estimate of prospective resources of recoverable gas in place of 20.9 billion cubic feet (BCF), a low estimate of 6.9 BCF and a high estimate of 49.5 BCF, based on historic data from offsetting production in the Medicine Hat gas field. Vulcan's share is 85% before payout and 75% after payout as per the news release dated June 21, 2006. Based on forecast prices and costs, Vulcan's share of the project on a potential unrisked basis is valued at $42,236,000 for the best estimate of 20.9 BCF and on a potential risked basis is valued at $12,246,000. These valuations are based on cumulative cash flow discounted at 10% per year. The main risks to recovering commercial gas from the lands relate to reservoir quality and the efficiency of hydraulic fracture stimulation of the reservoir. The Chapman Report should be consulted for complete project evaluation. The TSX Venture Exchange has accepted for filing documentation pursuant to an arms length farmout agreement with Enerhance Resources Inc. as described in a news release dated June 21, 2006 whereby the Company has obtained its interest in the Medicine Hat gas project.
The TSX Venture Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. %SEDAR: 00003997E