Gastem Inc. Stock Up After Forest Oil's Significant Find in Quebec

Gastem Inc. (GTMIF.PK) shares picked up where they left on Tuesday, and climbed more than 70% in early morning trading on Wednesday. The stock piled on to Tuesday's 42% gain, and raced to a 52-week high of C$2.19 before paring back to around C$1.90 approaching mid-morning.

Investors have been spurred on by the announcement that Gastem's partner in the Yamaska oil and gas prospect, Denver-based Forest Oil Co. (FST), made a significant oil discovery in Utica Shale in Quebec.

Over the past two years, Forest has accumulated approximately 269,000 net acres, under lease or farmout, in the St. Lawrence Lowlands in Quebec, Canada., of which 120,000 acres are Gastem's Yamaska prospect.

Forest Oil said that two vertical pilot wells were drilled in 2007, testing the Utica Shale, to a total depth of approximately 4,800 feet. Production rates tested up to 1 MMcfe/d.

While still early stages, Forest Oil said the results are encouraging noting the shale depth of the shale and the fact that rock properties are comparable to other more established shale plays. The company also said drilling uncovered high-quality natural gas with minimal impurities.

Forest plans to drill three horizontal wells in 2008 to refine its drilling and completion techniques and first production is expected in 2009 with the potential for a full scale drilling program in 2010 and beyond.

Montreal-based Gastem Inc.'s signed a deal last year with Forest Oil to farm out 60% of its Yamaska oil and gas prospect. Forest Oil can earn its stake by paying part of the costs of a two-well drilling program this year as well as further oil and gas development.