Halifax-based Corridor Resources announced Monday that Apache Canada has opted not to pursue the next phase of natural gas exploration in the Elgin area after disappointing results on two test wells.
The two companies were partnering on a hydro-fracking project near Elgin but that partnership ended because wells "have not generated sustained shale gas production."
Apache Canada's decision came ahead of the June 1 deadline to decide whether it would invest another $100 million in shale gas exploration in the area.
Apache Canada had already invested $25 million in the project that was exploring two wells.
Corridor Resources said in a statement that the project is still in the early stages.
The company also said the consensus among third-party consultants and its own technical staff is that the problems surrounding the lack of gas in the test well have to do with the hydro-fracking technique that was being used.
The loss of Apache Canada is not halting the project, however.
"In addition, Corridor will entertain discussions with potential joint-venture partners who wish to engage in a program to develop the Frederick Brook shale and who can add value to the potential development," the statement said.
"The information and data obtained to date from Corridor's and subsequent Apache programs will be of significant value as this program advances."
Phil Knoll, the president and chief executive officer of Corridor Resources, said Apache's decision is simply a bump in the road.
"It's important to remember that in these shale plays, the ones that are commercial it takes a number of attempts and a number of techniques to optimize the extraction method," Knoll said.
Corridor Resources announced last year the formerly abandoned wells could have more natural gas than is available in all of western Canada's proven reserves.
When Corridor Resources and Apache Canada announced their deal last year, the two companies said they could drill as many as 480 new wells if the natural gas reserves emerged as predicted.
The companies were also partnering on a new environmental impact assessment process for hydro-fracking projects.
Hydro-fracking is a process where oil and gas companies inject a mixture of water, sand and chemicals into the ground, creating cracks in shale rock formations.
That process allows companies to extract natural gas from areas that would otherwise go untapped.