OilVoice - New Standard Energy Progresses Shale Gas Project

New Standard Energy Progresses Shale Gas Project

Monday, May 10, 2010

• Positive finding from independent evaluation of Goldwyer shale gas prospectivity and exploration program by NSAI
• Extensive data interpretation and evaluation program planned for 2010 to identify most prospective shale gas targets for 2011 drilling
• Adviser appointed to assess alternatives to progress shale gas exploration in the Canning Basin

New Standard Energy has appointed a corporate and financial adviser to seek and assess proposals from potential partners to progress its shale gas exploration in the Canning Basin after a report from independent US-based shale gas experts provided positive confirmation regarding the potential of the company's Goldwyer shale gas exploration acreage and plans.

The report from the company's shale gas consultant, Netherland and Sewell and Associates (NSAI), concluded that the Goldwyer shale in the Canning Basin appeared to contain the requisite geological indicators for shale gas. A dedicated shale gas exploration and drilling program will be designed and undertaken to confirm the quality of these indicators.

NSAI is a leading US-based oil and gas consultant, specialising in reserves and resources assessments, technical studies, economic evaluations, and advisory work for both onshore and offshore fields throughout the world. It has extensive experience in reserves and resources assessments in shale gas throughout the United States, including the established Barnett, Fayetteville, and Woodford shales as well as the more recent developments in the Eagleford, Haynesville, Marcellus, and West Texas Barnett and Woodford shales.

NSAI was commissioned by New Standard to assess the hydrocarbon potential of the Odorvician Goldwyer shale which spans New Standard's 37,000 square kilometres of exploration permits in the Canning Basin.

NSAI reviewed 80 years of data from conventional hydrocarbon drilling as well as its own data, and using their significant unconventional experience concluded that the total organic content (TOC), thermal maturity and storage capacity of the Goldwyer shales were adequate for unconventional hydrocarbon generation.

NSAI also identified that the most promising shale reservoir potential contained within New Standard's large exploration acreage was the deeper, previously unpenetrated portion of the Goldwyer shale in the Kidson Sub-basin.

NSAI recommended New Standard should acquire core and log data from within the Kidson Sub-basin, through a dedicated shale gas evaluation drilling program. 'New Standard's exploration team has begun undertaking additional work to identify the most prospective targets for shale gas drilling next calendar year,' said New Standard Managing Director Sam Willis.

'We are developing a focused work program to evaluate the rock properties of the Goldwyer shale and provide information for potential gas in place calculations and targets.'

'NSAI's findings endorse our view that the Goldwyer shale is prospective for shale gas, and have given us the confidence to consider bringing in potential partners to assist with our substantial shale gas exploration program.'

Mr Willis said that since New Standard announced in March 2010 that it had been assessing the prospective shale gas in the Canning Basin for the past 12 months, it had received interest from Australian and International upstream companies wishing to partner with New Standard. As a result, New Standard has appointed Euroz Securities (Euroz) to assist with the assessment of alternatives to best progress the shale gas program.

'Given the size, early stage and rarity of our 100% owned shale gas project, New Standard has appointed Euroz as corporate and financial adviser to assist in the evaluation, marketing and potential farm-out of our prospective Goldwyer shale gas project.'

Euroz provides upstream corporate advisory services including equity capital markets, mergers, acquisitions and divestitures advice. Euroz assisted New Standard with the restructuring of its Canning Basin interests last year, and as part of its engagement of Euroz New Standard will open a data room for potential partners.

'The early movers in shale gas exploration in the United States have benefited from unprecedented corporate activity in recent years. This has no doubt contributed to the interest in New Standard's Goldwyer shale project,' Mr Willis said.

'Shale gas already comprises in excess of 15% of total gas production in the United States. It is a significant industry in the United States due to the inherent size of shale gas discoveries, and the geological components of many successful shale gas plays in the US appear to be similar to those characteristics being exhibited by the Goldwyer shale in the Canning Basin.'

NSAI shale gas report: Summary Findings
The NSAI report commissioned by New Standard to provide a preliminary evaluation of the Goldwyer shale and New Standard's shale gas exploration acreage found:
• The Goldwyer shale thicknesses across New Standard's acreage are between 100m and 500m, within a depth window of 2,300m to 3,500m which compares favourably to the depths and thicknesses of successful shale plays in the United States and Canada
• The Goldwyer depths across New Standard's acreage are deep enough to allow incremental thermal maturity as well as sufficient pressure to store a significant amount of gas in smaller pore volumes yet shallow enough to allow fracture stimulation of the rock in order to access any gas in-place
• Total Organic Content values contained in the Goldwyer were consistent with values required for shale gas production.
• Increasing silt/sand content, and associated silica content, towards the eastern portion of the Kidson Sub-basin may indicate that the optimum silica/organic mix in the Goldwyer shale resided in the deeper portion of the basin. The Barnett, Woodford and Fayettville shales have significant silica content in their better producing areas
• Maturity data indicates a potential gas generation window below 2,300m with the Kidson Sub-basin in New Standard's acreage containing a significant amount of Ordivician sediments below the 2,300m window and a trend of increasing TOC as you move towards the Kidson Sub-basin
• Subtle indications of over-pressuring have been identified in the southern portion of the Kidson Sub-basin which if confirmed would be a positive for potential hydrocarbon generation from the Goldwyer shale
• Oil fluorescence in the McLarty 1 well and good gas shows in the Looma 1 well (some 100km apart) indicate the areal extent of mature source rocks in the region

The Goldwyer shale formation in the Canning Basin is about 600km long and 300km wide, and New Standard controls a large portion of this on a 100% equity basis through its exploration acreage of in excess of 37,000km2.

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