Corridor updates drilling and testing activities at McCully

HALIFAX, July 4 /CNW/ - Corridor Resources Inc. (CDH - TSX-V) announced
today that testing operations have now been completed at the McCully G-67 and
C-67 well locations, shown on the accompanying map. The rig will now be
positioned to directionally drill the McCully E-67 well to intercept the Hiram
Brook reservoir at a location several hundred meters west of the C-67 and G-67
wells.
The McCully G-67 well has been drilled to a total measured depth of 2560
meters, and has encountered the Hiram Brook "A" sand in a fault zone. As a
result, the well penetrated only eight net meters of reservoir in the "A" sand
before entering into the underlying Fredericks Brook (shale) formation. The
well also encountered eight meters of net pay in the "B" sand as well as a
stray sand in the "B" shale that has flowed small volumes of oil into the
wellbore. Corridor is evaluating two options for completing this well. The
first option is to case the open hole section of the well in preparation for a
frac stimulation treatment. The second option is to sidetrack the well to
encounter a full section of the "A" sand in the upthrown side of the fault at
a location approximately 100 meters south of the initial wellbore and case the
open hole section. Corridor expects to make a decision regarding these options
following completion of drilling operations at the E-67 well.

C-67 Test Results and Plans

The McCully C-67 well has been re-tested following suspension of drilling
operations at the G-67 well. Corridor previously announced that the well had
flowed at an initial rate of 2 million cubic feet per day for a six-hour
initial flow period, followed by a second flow period at a reduced rate. APA
Petroleum Engineering subsequently analyzed the results of the test and
concluded that the initial higher rate showed indications of turbulent flow
which negatively impacts production rates. APA believes that this problem can
be overcome with a successful frac stimulation treatment. Following the
initial tests, approximately 22 barrels of methanol were injected into the
well to facilitate the removal of condensed water observed in the annular zone
surrounding the wellbore. A series of tests have been undertaken to attempt to
incrementally remove the water/methanol mixture from the reservoirs. These
tests have involved shutting in the well to achieve a pressure build-up
followed by a blow-down of the well to remove liquids and a subsequent flow
test. A cumulative 4.5 cubic meters (29 barrels) of liquids (methanol and
water) have so far been recovered from the well, and the flow performance has
improved with each cycle. At latest report, the well flowed gas at a sustained
rate of 820,000 cubic feet per day at a sustained flowing tubing head pressure
of 9,000 kpa (1,300 psi). Continued cycling of the well will, Corridor
believes, eventually restore the well to its full undamaged (but unstimulated)
productive potential, which could approach or even exceed the 2 million cubic
feet per day initially recorded. However, the time to achieve such a result
may be several weeks or even months. Therefore, following completion of
drilling operations at the E-67 well, Corridor plans to case the open hole
section of the C-67 well in preparation for a multi-zone frac stimulation
treatment in September (see below).

G-67 Test Results and Plans

Initial efforts to cycle the G-67 well in a manner similar to C-67 have
met with only partial success, partly due to the loss of pay section in the
fault zone and indications that the well is continuing to show small volumes
of liquids (oil) accumulating in the open-hole part of the wellbore. The well
flowed at a sustained rate of 220,000 cubic feet per day at a sustained
wellhead pressure of 1820 kpa (260 psi). The test results indicate that
significant near wellbore formation damage was incurred during drilling
operations. Fluid clean-up operations at this well would be expected to take
an extended period of time and are impeded by the fact that the well slowly
continues to make fluid. Corridor plans to case the open hole section of the
well in preparation for a multi-zone frac operation in the fall.

McCully Frac Stimulation Program

APA Petroleum Engineering has strongly recommended to Corridor that
existing and future wells at McCully should be subjected to a carefully
planned frac stimulation treatments in order to achieve their full production
potential. For example, the "A" sand in the C-67 well exhibits reservoir
parameters and "blocky" thickness that make it an exceptionally attractive
candidate for a frac treatment. Corridor envisages that most McCully wells
should be subjected to comprehensive frac treatments in order to realize the
full economic potential of the field. APA has projected that, following
successful frac treatments, these wells will produce at rates 3 to 6 times the
undamaged and unfraced rate. Accordingly, Corridor is commencing immediately
to engage a team of experts to design a multi-well frac stimulation program
that will include the completion of the McCully G-67 and C-67 wells in
addition to the stimulation of several other gas-bearing wells in the field
that are currently shut in awaiting a connection to market. Selection of the
appropriate frac equipment and completion fluids will be critical to the
success of the planned program. Corridor plans to mobilize a frac team and
equipment to commence frac treatment operations at McCully in September. By
that time, it is anticipated that two new wells will have have been drilled
and cased in preparation for the planned frac campaign. Corridor expects the
resultant production capacity will be sufficient to justify a pipeline
connection to Maritimes & Northeast, and that gas could be flowing to the
pipeline by the end of 2006 or early 2007.
The McCully field, located near Sussex in south central New Brunswick, is
estimated to contain in excess of one trillion cubic feet of gas-in-place in
the Hiram Brook formation. Two wells have been on production for two years
supplying natural gas at an average rate of two million cubic feet per day to
a limited local market. The G-67 well is the tenth well to be drilled in the
McCully field and is part of the build-up of reserves and production capacity
to supply significant volumes of natural gas to markets in New Brunswick and
New England. Corridor intends to connect the McCully field by a 30 mile
pipeline to the Maritimes & Northeast pipeline system. The C-67, G-67 and
planned E-67 wells are located within an area that was independently appraised
by APA in December, 2004, and that represents less than 20% of the total field
area. The APA reserves report assigned proven gas-in-place of 217 billion
cubic feet (bcf) and proven and probable recoverable reserves of 119 bcf    
(79 bcf net to Corridor's interest) to the area assessed.
To date, none of the existing McCully wells have been drilled to a depth
sufficient to penetrate and evaluate the underlying Dawson Settlement
formation expected to be present across the McCully field area. It has been
estimated that this deeper horizon may contain volumes of natural gas
significantly greater than the overlying Hiram Brook formation currently being
evaluated. To date, wells are being drilled into the Hiram Brook formation,
consistent with our focus to establish production for the pipeline connection
to Maritimes & Northeast. Corridor intends that a future vertically drilled
well will test the deeper Dawson Settlement formation at an estimated
additional (incremental) cost of $2.5 million.
Corridor is a junior oil and gas exploration and production company,
headquartered in Halifax, Nova Scotia, with interests onshore in New
Brunswick, Prince Edward Island and Quebec, and offshore in the Gulf of     
St. Lawrence.

To view McCully Drilling Program Map please visit:
http://files.newswire.ca/96/McCully.doc

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"Statements in this Press Release may constitute forward-looking
statements. Such forward-looking statements include risks, uncertainties
and other factors which may cause actual results, performance or
achievements of Corridor to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Corridor does not undertake to update any of such
forward-looking statements."
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