By OGJ editors
HOUSTON, Sept. 23 -- Two Dallas area independents formed a joint venture to explore and develop coalbed methane and conventional formations in the southern and western San Juan basin in west-central New Mexico.
Drilling has started in the first phase of the three-phase project, said Magnum Hunter Resources Inc., Irving, Tex., and private CDX Gas LLC, Dallas. Efforts will concentrate on the Upper and Lower Menefee coals of the Cretaceous Mesaverde Group, lower in the geologic section than the Cretaceous Fruitland coals widely exploited in the basin the past few decades.
Magnum Hunter and affiliates exercised options on leases in McKinley, Sandoval, and San Juan counties, that cover 554,000 acres contributed to the joint venture. Magnum Hunter is exercising other options on 922,000 mineral acres in lightly explored, nonproducing Bernalillo, Catron, Cibola, and Socorro counties.
CDX's contribution to the joint venture is 14,000 mineral acres referred to as the Southeast Cabrito Project, Rio Puerco Project, and Zed Project. The joint venture also acquired leases on 8,000 acres of state lands.
Phase I, to cost $3 million and be complete by Feb. 15, 2004, calls for the drilling of 25 stratigraphic and core test wells as deep as 3,500 ft. Phase II, to cost $3 million and be complete by July 1, 2004, is to involve a further 25 wells.
The $5 million Phase III is to consist of several vertical and horizontal pilot projects.
Magnum Hunter said it owns the mineral leases on 75% of all acreage within an 18-mile radius of Hospah and South Hospah fields, which produce oil from Hospah sands of the Cretaceous Mancos shale at 1,100-2,300 ft. The joint venture plans to explore for oil and gas in Hospah, Cretaceous Dakota sandstone, and Jurassic Entrada sandstone on this southern portion of the Chaco shelf.
CDX Gas has used a proprietary, patented horizontal drilling and completion system known as Z-Pinnate with a fleet of purpose-built rigs to exploit coalbed methane. Magnum Hunter will manage all production operations.
