Australia: Metgasco Provides Update on its CSG Multi-lateral Drilling Program

Metgasco is pleased to provide an update on the current coal seam gas (CSG) multi-lateral drilling program.

Over the past month, Metgasco has installed the surface equipment and telemetry on Corella P18 and completed the surface pumphook up. Water production from this well has now been underway for approximately two weeks.

Corella P18 is making good water volumes of approximately 30 Bbls/day which is encouraging and consistent with the water production from the Company’s lead pilot well Corella P11. Gas desorption commenced immediately with gas flows to surface and the well head pressure is currently above 100 psi. The Company is monitoring water production from this well and well head pressure build up. Metgasco intends to continue dewatering this well until we see a decline in water production. At this point we will commence production testing.

The Company has achieved a technical success in re-entering the Corella P18 well and drilling a sidetrack to 861metres MD as planned. The total length of the inseam lateral is 607 metres.

The performance of Corella P18 to date provides further evidence that the gas reservoirs at this location are fully gas saturated, over pressured and produce low water volumes. These gas reservoirs have different technical characteristics to Queensland CSG reservoirs most of which tend to be under saturated and under pressured therefore requiring a significant dewatering effort before gas desorption commences.

Drilling commenced on the Harrier P01 multi-lateral well on 5 March 2011. The Company’s goal is to complete two horizontal in-seam laterals. The first lateral has been completed at 1229 metres MD. This lateral has now been lined in preparation for future production testing. The rig is currently drilling ahead in the second lateral and is currently at 1150 metres MD.

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Source: Metgasco, March 30, 2011;