LDR, which is spending up to US$2 million for its 50% interest in Home Run, said operator Hay Exploration would frac and complete four previously drilled wells in early December.
Drill logs indicated strong gas shows in these wells, which will be completed in the Devonian Shale horizon, LDR said.
In the second week of December, Hay Exploration will undertake a five-well drilling, fraccing and completion program. Three of the wells will initially target the Devonian Shale, with the remaining two wells to be drilled and completed into the deeper Trenton horizon.
“The completion techniques adopted in the first four wells will be evaluated to determine the optimal method of fraccing and completion for the additional five wells being drilled,” LDR executive director of business development Andrew Dimsey said.
“Hay Exploration has indicated that a well drilled in the same location as the current drilling program prior to LDR acquiring an interest in Home Run was recently completed in the Trenton horizon and flowed at an initial rate of 3.4 million cubic feet per day of gas and 100 barrels per day of oil.”
LDR does not have an interest in this well.
Home Run is a 20,000 acre gas project in the Appalachian Basin.
LDR said the project is adjacent to existing production units and will target several geological “sweet spots” along proven and producing shale gas trends with the potential for more than 250 well sites.
In other news, the company said the proposed merger with Alto will involve off-market takeover bids by LDR for all of Alto’s ordinary shares.
Under the share offer, investors will receive 13 LDR shares for every one Alto share, as well as the option to subscribe for ordinary shares in Alto for 25c, which expire on January 31 2007.
LDR said offer documentation for the merger was in its final stages and would be dispatched to Alto shareholders shortly.
“The merger of Alto and LDR will result in a significant change to the nature and scale of LDR’s activities,” Dimsey said of the shareholder approval required for LDR’s activities.
“The proposed transaction will result in a company with a lower investment risk profile for LDR and Alto share and option-holders, and the management capability to reach a position of significant scale within a relatively short time frame.”
The merged group will have emerging production, a fully funded drilling program and a significant and growing acreage portfolio, he said.
He added that Alto had planned a drilling program on LDR’s West Virginia and Kentucky Projects over the next two months.
