Utica Shale - TLM Talisman Energy Provides Update Report 9/03/08 Quebec Canada Lorraine Shale

Talisman Energy came out yesterday with an operational update on its Utica Shale properties in Quebec Canada.

Talisman Energy Inc. ( TLM ) announced a successful test from the Utica shale in its Gentilly well in Quebec. The Gentilly well is located on the south side of the St. Lawrence River, approximately 100 kilometers south of Quebec City. Talisman holds a 75% interest in the well and is operator.

The well, which is a re-entry to a previously drilled Trenton-Black River well, flowed at 800 mcf/d from one completed interval on a sustained basis during the 18-day test period. At the time of shut in, the well was still cleaning up and pressures and flow rates were constant.
"We are encouraged by the initial results of this vertical well," said John A. Manzoni, President and Chief Executive Officer. "We have additional testing to do on the well, including zones within the Basal Lorraine and Lorraine shale formation, but this is a very promising start to our unconventional program in Quebec."

The Lorraine shale sits on top of the Utica and can be up to 6,500 feet thick. The Utica shale ranges between 300 and 1,000 feet. Early indications show that both the Lorraine and Utica rocks are thick, porous and appear brittle and over pressured, all of which are conducive to artificial fracture stimulation.

Talisman has an extensive land position with an option to earn 760,000 net acres through drilling in Quebec. The Company is in the early stage of evaluating the rock properties and reservoirs. Talisman will test three to four pilot areas over the next 18 months, with up to four additional wells planned prior to year-end.

Haynesville Shale - Natural Gas Prices - Boone Pickens 9/03/08

Natural Gas prices have plummeted over the past few months going from $14 to the mid $7's. The question is, is the Haynesville Shale still economical to drill if Natural Gas falls even further?

Yesterday, Boone Pickens came on CNBC and stated he thinks there is a huge amount of supply in natural gas which the demand is not as strong as the supply. Boone Pickens says he thinks Nat Gas could even fall back to $6 in the coming months.

With $6 natural gas, how will small companies like Goodrich Petroleum ( GDP ) and Petrohawk Energy ( HK ) be able to drill the haynesville shale? The answer is simple, these companies could stop drilling the Haynesville Shale and drill the formations above it such as the cotton valley formation. If their stock prices get to low, you could see a Devon Energy, Chesapeake Energy, or XTO Energy swoop and and buy these companies out.

With low natural gas prices, you will see a decline in drilling, but this decline will cause supplies to fall and in the long term will stable the price for natural gas out.

The Haynesville Shale is here to stay!