BC's Horn River gas play

It's not often desirable to be a small fish in a big pond, but for Bill Matheson's result energy inc. [RTE - TSXV], they couldn't be happier. In the Horn River region of the Fort Nelson district of northeast British Columbia, the larger fish gather. Sharks like eOg, apache and nexen, dolphins like crew energy inc. [CR-TSX] and of course whales like encana corp. [ECA- TYSX], are all sharing the water with Matheson's minnow of an independent junior company, each staking their territory in the natural gas pools of the Horn River Basin. Result Energy formally made its splash on the public market, beginning its story in 2001 through a takeover of Daybreak Energy (which was originally formed in 1997). But it wasn't until 2003 that it truly learned how to swim. Result's geologists started paying attention to the Horn River Basin from a safer angle. "We were originally looking at the Horn River Basin on the conventional side, knowing that the gas shale sits on the Keg River platform,? says Matheson, president/ CEO of Result. "Our strategy was to go at it from a conventional standpoint with the thought always being that we could chase the Keg River once the technology came through.? Forethought like that usually is lofty; chum for the sharks at trade shows circling around powerpoint presentations. But flash forward to today, that simple forward-thinking strategy has become a reality. From the development of the similarly tight Barnett Shale play south of the border in Louisiana, through the innovative progress of horizontal drilling and multi-stage frac techniques, the technology has indeed come through. Yet, economically speaking, the area is still elicits gulps. Difficult access, winteronly drilling and lack of sufficient pipeline infrastructure give the play the added excitement of uncertainty and risk, hence why its mostly been the splashing pool for the majors. Result recently sold off its Dodsland, Saskatchewan, assets just to make room in the budget to the tune of $11.8 million to devote to its BC holdings. Getting in early, the Result team accrued 100% interest in 40 sections through Crown Land sales. A lot has changed since they picked up that land package in 2006. It looks like the days of a junior company nabbing that much land in the Horn River region may have passed. "We have far and away the largest representation of all the juniors in the area,? boasts Matheson. But he doesn't think that other juniors looking to join the play will have the same opportunity to compete as his did. "I would think that it's too late. We paid $1 million for 40 sections. Now that same package would cost anywhere between $7-80 million now; depending on what part of the basin they're in.? While 40 sections is a lot to Result, it barely makes a dent compared to a Horn River portfolio the size of EnCana. Canada's largest producer will ultimately dictate the pace at which the school swims, with its 220,000 acres of Horn River rights. And while the giant's actions have already caused major ripples (including the swarm of media attention after the press conference where they announced the potential for a billion cubic feet of gas per day from the area), its message has been that of modesty and self-restraint. With current gas prices hovering above the double-digit mark, EnCana's economic model still resorts to making the play fiscally responsible as if prices were still in the conservative $6-8 range. "If the company can't be economical in that range, then it won't make the play. Our goal is always to establish ourselves as the lowest cost operator,? says Alan Boras, EnCana's media manager. "Efficiency is our strongest way to stay in the lead.? After steady involvement in the Barnett play south of the border, as well as the Montney play near Dawson Creek, which is located relatively close to the south tip of the Horn River basin, EnCana has been through these stages before. In the area of handling unconventional plays, EnCana may well be ahead of the curve. "The Horn River is really getting notice now, because it's a new opportunity. Anything new will draw attention as the players look for unconventional prospects,? adds Boras. The Horn River Basin is still in the early stages of development, but the tight gas will indeed be drawn from the pools that reside there. Judging by the size of the players in the area, it can only be assumed this pond has reached its capacity for newcomers. n Horn River Basin 50 www.resourceworld.com August 2008

Page 50 - Hotspot 1

natural fancy coloured diamonds www.torchriver.ca 3 bolero resources features mining news buying opportunities in junior mining stocks the world needs it we've got it 9 10 11 12 13 diamond exploration & mining 15 16 1 888 242 3234 18 19 - a field visit yukon mining exploration is booming, much more than in the rest of canada. it has increased from $22 million in 2004 to an estimated $132 million for 2008 - a 600% increase. while for this same period mining exploration in canada increased from $1.17 billion to $2.76 billion, a 235 % jump.22 23 ad design by 25 big nic, hope bc artha resources exploring wyoming uranium prospects give me a stage where this bull can rage south africa and precious metals molybdenum, uranium & gold marc natural fancy coloured diamonds in 2005, only 616 carats of investment-grade natural fancy diamonds were recovered, compared with 123.29 million carats of colourless diamonds.leadership development goes deeper at goldcorp 35 endeavour silver intersects mexican high-grade silver crescent gold spins off uranium assets to focus on gold mining hard creek nickel increases turnagain resources apollo gold plans black fox gold production 41 riverstone drills karma project, burkina faso, west africa glass earth gold ltd. exploring new zealand premier gold active on several fronts ride the ups & downs encana using co oil oil www.cambridgehouse.com bc's horn river gas playwhen where who how developments in alternative energy alternative energy in the news naikun wind energy advancing bc offshore wind project facts and news facts and news coming events 59 directory professional directory summer doldrums for many junior miners 63 64