Samson will pay Mountain Energy almost US$500,000 for the acquisition via a share placement of 1.66 million ordinary shares at US$0.30 each. Each company will fund half of any future expenditure, following settlement of the agreement on December 16.
The Perth-headquartered junior now has more than 175,000 acres in the Hawk Springs area covering the Niobrara, Cordell and Lance formations.
“The partnership with [Mountain Energy managing director] John Lockeridge has been formed to pursue an aggressive exploration program covering three formations and using the latest drilling and completion technologies including horizontal drilling using coil tubing,” Samson managing director Terry Barr said.
The joint venture is currently drilling three coalbed methane wells in the Lance Formation. This will be followed early next year with deeper horizontal drilling to test the Niobrara and Cordell formations.
The Hawk Springs CBM project is estimated to contain between 12 metres and 18.3m of coal seams in the Lance formation at depths from 305m to 610m.
Possible reserves between 560 and 1,130 billion cubic feet of gas are indicated, assuming a gas content range between 150 and 200 standard cubic feet per ton, the company said.
Samson said the project was geologically similar to the Raton Basin CBM field, which was commercially valued at US$1.7 billion.
The joint venture’s Niobrara formation is a fractured chalk reservoir, in which more than 10 million recoverable barrels of oil have been recovered less than 50km south in the Silo Field.
“There is a strong correlation between the resistivity of the Niobrara Formation and where the rock is fractured and oil saturated,” Barr said.
“As a consequence, two areas of anomalously high resistivity readings form existing well bores within the Hawk Springs project have been established where it is likely that analogies to the Silo Field can be established.”
The exploration program will consist of two vertical wells in the areas of elevated resistivity to penetrate the Niobrara, Codell and the Muddy Sandstones, Samson said.
Meanwhile, the Cordell formation was identified as a potential gas prospect, following the Wattenberg field’s recovery of 320 billion cubic feet of gas and 30 million barrels of oil.
“Similar geologic circumstances are present within the south western part of the project area, where an isolated thick sequence of Codell Sandstone has been mapped using existing well control and therefore has the potential to generate a trap,” Barr said.
“While vintage exploration wells have penetrated this sequence and returned significant oil and gas shows, no commercial flows were established.
“However…early drilling and completion of the Wattenberg Field in the Codell was not successful and it was only in the very late 1990s that fracture stimulation technology enabled this rock to be exploited commercially.”
Cordell contains a potential 95 to 140 million barrels of oil equivalent, according to Samson.
