NEW YORK (Associated Press) - Forest Oil Corp. said Tuesday it has drilled successful natural gas test wells on a sprawling site it controls in Quebec, and plans to pay $285 million for tens of thousands of acres in parts of the southern U.S. where it already operates.
In Quebec, Forest said it drilled two vertical wells last year atop a rock formation known as the Utica Shale that were able to produce the equivalent of up to 1 million cubic feet of gas per day. Three new horizontal wells are planned for this year.
The company cautioned that "the play is still in the early stages," but said early results were encouraging given the quality of the rock and gas, nearby pipelines and strong natural gas prices. Early indications suggest Forest could extract the equivalent of 4 trillion cubic feet from the site, with production scheduled to begin in 2009, the company said.
In addition, Forest said it will buy existing natural gas operations in Arkansas, Texas and Louisiana that contain the equivalent of an estimated 110 billion cubic feet for $285 million. In 2007, the reserves produced an average of 13 million cubic feet equivalent per day.
The seller was not named. Forest plans to pay for the purchase using its existing credit line and cash on hand. Top of page
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