Admiral Bay Resources Inc. is an emerging unconventional gas (coalbed methane (CBM) and shale) production company focused on development of projects in the United States. The Company's objective is to build a mid-tier gas producer over the next two years.
The strategy to achieve this, is two fold. First, the Company acquired properties in the early stage of development, which are located next to strong gas markets, and secondly, to only focus on the development of unconventional gas and shallow conventional oil and gas plays.
Admiral Bay is currently developing six projects having a total land position in excess of 112,100 net acres. The Company continues to increase its land position in most project areas. All projects are in areas with current production and existing pipeline infrastructure.
Development of the Company's projects began in March 2004. To date, Admiral Bay has drilled and/or reactivated more than 250 wells, with the first 170 wells now connected to the pipeline and selling gas. Work to connect the remaining wells to the pipeline is ongoing and will be the Company's focus in the short term. Admiral Bay will focus on development of the Shiloh, Mound Valley, Santa Rita and Devon projects in south eastern Kansas and the Revloc project in Pennsylvania.
A reserve report completed as at July 31, 2007 by Norwest Questa Engineering Corporation of Golden Colorado reports Proved Reserves of 32.61 Bcf (2P & 3P Reserves of 143.01 Bcf ).
PROJECT SUMMARY
For more detailed on information on the projects, see the project information section of the website. Project Information
SHILOH PROJECT - Cherokee Basin
The Shiloh Project is located in Woodson, Wilson, Allen and Neosho counties northwest of Chanute, Kansas and is currently the most advanced of the Company's projects. Admiral Bay has a 100% Working Interest in the project, which has Proved Reserves of 13.31 Bcf (2P & 3P reserves of 13.91 Bcf). The project targets both the unconventional Pennsylvanian coals and shales and the conventional sandstone reservoirs of the Cherokee Group. These reservoirs are found at depths of 600 to 1,150 feet (180 to 380 meter).
To date, Admiral Bay has drilled and/or re-activated more than 147 wells of which 106 are producing on this 18,400+ net acre project. Current gas production is now over 2.0 MMcf/day and is coming from both coalbed methane and conventional gas wells. The project also includes 4 water disposal wells which are being used in conjunction with the CBM wells in the area. Due to the “process” in 2007, the Project is not as far along as the Company would like it to be. The Company is now in the process of opening up additional zones in each well and completing the remaining wells.
The Shiloh project will be a focal point of the 2008 Development Program.
MOUND VALLEY PROJECT - Cherokee Basin
The Mound Valley CBM Project, is located in Labette County, in southeastern Kansas. The project consists of approximately 28,700 net acres, 44 producing coal bed methane wells, five awiating completion and pipeline, an extensive gas gathering system and two water disposal wells. Admiral Bay has a 100% Working Interest in the project, which has Proved Reserves of 10.21 Bcf (2P & 3P reserves of 31.35 Bcf).
DEVON PROJECT - Cherokee Basin
The Devon Project is located in Bourbon County, west of the town of Ft. Scott, Kansas. The project targets both the shallow unconventional Pennsylvanian coals (at depths of 350 to 550 feet) and the conventional sandstone reservoirs of the Cherokee Group.
To date, Admiral Bay has drilled and completed more than 46 CBM wells on this 31,800+ net acre project and holds a 100% Working Interest in the project, which has Proved Reserves of 8.93 Bcf (2P & 3P reserves of 39.72 Bcf). Twenty gas wells are now connected into the main gathering system and are in the process of dewatering. Production at this project continues to increase as the dewatering process continues. The remainder of the wells are in various stages of being tied into the pipeline.
As with most coal bed methane wells, initial production begins small, with production increasing as the wells continue to be produced. Initial flow rates begin at a rate of 5 to 30 MCFGPD and are expected to ramp up to 40-60 MCFGPD on average, per well, as the wells are dewatered. Water rates for wells in this area are expected to be less than 5 barrels per day in the first year of production. The produced water rates are expected to decline to little or no water within a year. In addition, there are several small conventional oil and gas zones that will be produced along with the coals.
The Company has also built a joint pipeline with two other parties to connect and sell gas at the project. The Company has signed contracts to buy gas from a number of private operators in the project area. Admiral Bay receives 50% of the gross profit under this joint venture.
SANTA RITA PROJECT - Cherokee Basin
The Santa Rita Project is located in Greenwood County, Kansas. Admiral Bay holds a 100% working interest in this 14,700 net acre project, which has Possible Reserves of 25.01 Bcf.
Admiral Bay has shot 2D seismic over the project area. Interpretation of the seismic data has been completed and several anomalous areas have been identified representing potential Bartlesville sandstones, Mississippian "Chat" and Arbuckle reservoirs.
Two initial test wells were drilled and cased in June 2006. Initial results from drilling and desorption indicate that the Cherokee Group carbonaceous shales and coals contain sufficient gas to warrant further testing. In addition, the Chattanooga Shale of Devonian Age contains sufficient hydrocarbons to begin production testing. The Santa Rita project will be a focus for the Company in the 2nd and 3rd quarter of 2008.
SWORDFISH PROJECT - Cherokee Basin
The Swordfish Project is a conventional oil and gas and coalbed methane (CBM) project located in the Chautauqua County, Kansas. Admiral Bay holds a 100% Working Interest in this 2,300 net acre project, which is made up of unconventional gas & conventional oil and gas wells. The project has Possible Reserves of 4.87 Bcf). The company released the majority of its acreage in 2007 because it was in a "process" and the cost of extending the leases was significantly more then taking new leases.
To date, two existing wells have been recompleted by the Company with an additional six wells (five exploration and one development) drilled and awaiting completion. The Swordfish project is expected to be a focus for the Company in 2009.
REVLOC PROJECT - Appalachian Basin
The Revloc Project is located in the southern central part of Cambria County, Pennsylvania. The project lies on the eastern flank of the Appalachian Basin and targets coals of the Pennsylvania Alleghany and Pottsville groups. There are approximately five to seven coals of two to seven feet (0.6 to 2 meters) thick. The state of Pennsylvania has reported gas content of the coals to be in excess of 450 scf/ton (standard cubic feet per ton). There are several pipelines that either pass through or are adjacent to the present acreage, with current gas prices being above the NYMEX spot price.
Admiral Bay has sold a 25% working interest in the project to a private independent producer based in London, England. Admiral Bay began drilling a seven well pilot project in January, 2008. The partner is responsible for 100% of the drilling costs of the seven wells to casing. Upon completion of the drilling, the partner has 60 days in which to purchase an additional 1% to 50% working interest for upto $2 million dollars respectively. The project contains 18,642 net acre project, with Possible Reserves of 28.15 Bcf. The Company is continuing to increase its acreage position in the project area. The test program of the drilling of seven wells isp resnetly drilling and completion is expected by the 1st week of March. The drilling program is designed to collect gas content and coal information.
