Mako Hydocarbons (ASX: MKE) has spudded its first Duvernay well on its Rimbey, Alberta, acreage to evaluate the shale horizon.
Operator Black Swan Energy is drilling the well as a commitment vertical test well to a planned depth of 3,300 metres.
Drilling is expected to take about 35 days and the well will be cored and after several months of evaluating the drilling results, a decision will be taken by Black Swan on drilling a horizontal well from the wellbore.
The well is being drilled at no cost to Mako, which retains a 10% working interest in the well.
Mako will also receive all well information during drilling operations and will have complete access to the Duvernay core sample and core analysis work as well as all drilling samples and logs taken during the drilling operations.
The Duvernay Shale is an emerging world class liquids rich resource play that is the source rock for most of the conventional oil fields in Alberta that has recently attracted the attention of companies such as ExxonMobil (NYSE:XON).
It came to prominence in 2010 and 2011 when more than C$2 billion was spent in land auctions for mineral rights and is widely considered to be Canada's analog to the highly productive Eagle Ford Shale in Texas.
Wells drilled in the Duvernay have production at initial rates ranging from 900 to 1200 barrels of oil equivalent per day with high ratios of valuable natural gas liquids. Recent horizontal wells have yield between 100 barrels and 200 barrels of natural gas liquids for every million cubic feet of gas produced.
Importantly, significant activity has been carried out near Mako's acreage, which de-risks its acreage while giving it a better understanding of what it holds.
This has attracted the likes of ExxonMobil, which made a friendly C$2.6 billion (A$2.5 billion) takeover of Celtic Exploration (TSE:CLT) which includes a large Duvernay Shale acreage.
Mako noted that while Exxon's transaction is an endorsement of the potential shale play in the Western Canadian Sedimentary Basin, it does not believe that there is any sufficient data to draw any analogy between the Duvernay play in the Kaybob area with Company lands in the Pembina area of west central Alberta.
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