Covalent Energy has assembled a 15,000 acre lease in the Utica gas shale play in central New York state.  Net shale thickness in the play averages 200 to 300 feet thick, with target depths in the range of 2,500 to 5,000 ft. Significant measured gas shows, along with isotherm studies that yield in-situ gas contents of 30-80 cf/ton (comparable to other commercially gas shale projects), suggest that EUR values will be between 300 and 500 MMcf per well.   The U.S. Geological Survey (USGS) estimates that there are between 163 and 313 Tcf of gas shale resources in New York.

Covalent developed the play using available geologic and reservoir data including shale depth and thickness, structure, isotherms, TOC, and proximity to existing gas infrastructure.  Layered on top of this, we performed a natural fracture analysis to identify areas of enhanced natural fracturing related to basement features and tectonic events.  In addition to the Utica shale, there are several secondary potential pay zones including the shallower Queenston and deeper Trenton-Black River formations.
 

We recently partnered with Keehfus Energy to acquire additonal acreage and drill the first several production wells.  Drilling is anticipated to begin in the second quarter of 2007.