Barnett Shale Project Detail

Located in north central Texas, the Barnett Shale, covering approximately 6,000 square miles and as many as 21 counties, has emerged as one of the largest and most active gas fields in North America. It currently produces more than one-half of the shale gas produced in the United States. The field appears well on its way to producing 500 billion cubic feet of gas this year, placing it in the top three U.S. fields along with Prudhoe Bay in Alaska and the San Juan Basin in New Mexico.

Initially developed by Mitchell Energy in the early 1980’s, the Barnett play has continued to grow as a result of improved completion and fracturing methods, horizontal drilling and successful refracturing of existing wells.

ReoStar’s Barnett Shale leasehold currently consists of 9,000+ gross acres in Montague County and southwest Cooke County in the “oil” window of the play. Our drilling efforts in this area began in early 2004. We drilled approximately 20 wells when we realized the “standard” slick water frac that was developed for the core area was not effective in our geologic region of the play, the main reason being a change in deposition of the Barnett interval. Even though the formation is thicker in our area, there are laminated limestones and turbidites throughout the entire section. After the initial efforts proved disappointing, ReoStar consulted with outside engineers who suggested that the completion techniques needed to be re-designed to focus on the oil bearing fractures that occur at the intervals between shale, limestones and turbidites. The first newly designed frac was completed in October of 2006 and has been enhanced several times over the next 20+ wells giving us great results with significant increases in IP’s and sustained production. This resulted in increased oil production revenues that matched gas production revenues regularly for all of fiscal 2007.

In January of 2007, ReoStar again modified the frac to include 20,000 gallons of retarded 20% HCL acid ahead of the slick water injection. This has enhanced permeability in the fractures away from the well bore resulting in better production. We have drilled 8 wells using our refined completion methods and continue to see improved results. We have also tightened or reduced the spacing patterns of these well-bores which have allowed us to capitalize on the energy from recently fraced wells nearby. The closer proximity of recently drilled wells to one another synergizes their collective permeability enhancements to create more sustainable production profiles.

In conjunction with our working interest partners, ReoStar expects to drill 30 wells over the course of 2007.