Chattanooga Shale

Energen Resources - Chattanooga Shale Update

Energen Resources (EGN) reported its second quarter of 2009 earnings and updated its exploration and development activity in the Chattanooga Shale. The company said it plans to drill a new well targeting the Chattanooga Shale formation in Alabama before the end of 2009.

Energen Resources obtained its acreage in the Chattanooga Shale through a farm out agreement with Chesapeake Energy Corporation (CHK). Energen Resources received a 50% interest in 660,000 acres but is obligated to drill a well into both the Chattanooga and Conasauga Shales. ___________________________________________________________________

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The Chattanooga Shale - CNX Gas

CNX Gas is drilling a test well in the Chattanooga Shale on its acreage utilizing a nine stage hydraulic fracturing in a single lateral of 2500-3000 feet. The original drilling program used a four stage hydraulic fracturing.

CNX Gas is currently operating two rigs in the Chattanooga Shale in 2009. If this new hydraulic fracturing program increases productivity, CNX Gas projects that it will have 2700 possible drilling locations assuming 80 acre spacing.

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The Chattanooga Shale - CNX Gas

CNX Gas (CXG) is an exploration and production company with nearly one million acres under net lease in various shale plays in North America. CNX Gas has 244,000 net acres under lease in the Chattanooga Shale, and the company estimates that its net unrisked resource in its Chattanooga Shale acreage to be in a range of 1.1-2.5 Tcf. Its proved reserves are currently 11 Bcf.

CNX Gas is currently developing its acreage in the Chattanooga Shale in Tennessee. The company’s first horizontal well in the Chattanooga Shale had an initial production (IP) rate of 3.9 Mmcf per day. CNX gas has drilled a total of 20 horizontal wells in the Chattanooga Shale through June 2009.

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The Chattanooga Shale - Geomet

Geomet (GMET) is a small cap exploration and production company that has built a sizeable acreage position in the Chattanooga Shale. The company has 72,000 net acres under lease, of which it owns a 100% working interest. One of its prospects is called the Garden City prospect located in Northeast Alabama.

The Chattanooga Shale is found at depths of 1600-2100 feet at the Garden City prospect. Geomet has drilled four vertical wells and two horizontal wells here so far to date. The last horizontal well produced at a rate of 340 mcf per day.

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The Chattanooga Shale - Stratigraphy

Stratigraphy is defined as the branch of geology that studies the arrangement and succession of strata of rock, particularly the distribution, deposition, and age of sedimentary rocks.

An oil and gas exploration and production company must understand the stratigraphy of the formation before developing the Chattanooga Shale. Here is a illustration of the stratigraphy of the Chattanooga Shale.

The Chattanooga Shale - Description

The Chattanooga Shale is an Upper Devonian shale formation that runs through Tennessee, Alabama and Kentucky. It runs concurrently and is located below the Floyd Shale, which is an Upper Mississippian Shale formation.

The Chattanooga Shale is not a major focus of the oil and gas industry since other shale plays are more attractive and delineated at this time. Companies that are currently developing its acreage include Geomet (GMET) and CNX Gas (CXG).