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Seven more wells are in the process of being completed and connected into the Home Run gas-gathering system. Both of the current producing wells were each delivering from multiple zones at 60,000 cubic feet per day.
Alto managing director Greg Channon acknowledged that these were modest rates by conventional gas standards.
“Flow rates from a single shale gas well are nothing to get excited about,” he said.
“You need to have a large acreage position. But the advantage is that they are shallow and only cost a bit over $100,000 to drill. They are also very low risk once you have delineated the field.”
Channon said Alto was still fine-tuning the completion and gas-gathering process, and it believed production would increase from these wells.
“The operator, Hay Exploration, is working to connect the remaining wells into the existing Home Run gas-gathering system, which should be completed within the next two months,” he said.
Under the participation agreement with Hay, Alto gained access to four existing well bores to fracture stimulate at the Devonian Shale level.
The farm-in agreement also provided for drilling five wells in the Home Run project, followed by an optional further five-well program.
Alto is funding 100% of the four-well completions and the 10-well drilling program, earning 50% revenue from the existing wells and 75% of the revenue from the drilled wells. It will then have a 50% working interest in all subsequent wells within a 20,000-acre (around 8093 hectares) area.
Alto Energy is building up a strong position in the US shale gas sector. It has opened an office in Charleston, West Virginia and acquired 75,000 acres spread over three Appalachian states. It currently has up to three rigs exploring its blocks.
Alto’s five projects include Home Run and Little Sandy/Pigeon Roost in Kentucky, Paint Mountain and Bug Run/Cornstalk/Green Park in West Virginia, and Rich Mountain in Tennessee. Interests in projects vary between 29% at Bug Run/Cornstalk/Green Park and 90% at Paint Mountain.
Wells have already been drilled at Home Run, Little Sandy/Pigeon Roost and Bug Run/Cornstalk/Green Park. Each well has found gas.