Java Field

Wyoming County, New York

Mesa Energy owns a 100% working interest in the Java Field, a producing natural gas project that includes 19 existing wells on approximately 3,235 mineral acres “held by production” (HBP), two tracts of land totaling approximately 36 acres and two pipeline systems including a 12.4 mile pipeline and gathering system that serves the existing wells as well as a 2.5 mile system with a tap into another major public line.

After acquiring the project in late 2009, we evaluated a number of the existing wells in order to determine the viability of the re-entry of existing wellbores for plug-back and re-completion of the wells in the Marcellus Shale and selected the Reisdorf Unit #1 and the Ludwig #1 as our initial targets. These two wells were re-completed in the Marcellus Shale and fracked in May and June of 2010. The initial round of testing and analysis provided a solid foundation of data that strongly supports further development of the Marcellus in western New York. Formation pressures and flow-back rates were much higher than expected providing a clear indication of the potential of the resource. We now believe that shallow horizontal drilling, as is currently being done successfully at this depth in the Fayetteville Shale in northern Arkansas, is ultimately what is needed to maximize the resource.

The State of New York has placed a moratorium on high volume frac stimulation in order to develop new permitting rules. The new permitting rules have not been completed and there can be no assurance when such permitting rules will be issued or what restrictions such permits might impose on producers. As a result, we have temporarily suspended our development plans in New York.

A recent report released by the New York Department of Environmental Conservation proposes to remove the moratorium in all areas of the state other than in the New York City and Syracuse watersheds and to implement new permitting rules for drilling and fracking horizontal wells. Although these measures have yet to be formally adopted, we believe that this report constitutes significant progress and that its final adoption could ultimately allow us to proceed with the next phase of development of the property and the expansion of our acreage position in western New York.