FLWE Fellows Energy Ltd. Purchases Interests in the Kirby and Castle Rock Coal Bed Methane Projects Covering 235,000 Acres in the Powder River Basin
June 24, 2005 09:56:02 (ET)
BROOMFIELD, Colo., Jun 24, 2005 (BUSINESS WIRE) -- Fellows Energy Ltd. (FLWE, Trade)("Fellows") announced today that it has purchased a portion of a 12.5% working interest in the Kirby and Castle Rock Coal Bed Natural Gas projects in the Powder River Basin under a revised agreement with Quaneco, L.L.C., an Oklahoma limited liability company ("Quaneco"). Fellows paid $500,000 for the purchase, and will participate in a 48-well drilling program during 2005 on the 95,000-acre Kirby project that will extend out from an existing 16-well pilot program of previously drilled wells. Fellows believes hundreds of wells could be drilled on the 95,000-acre Kirby CBNG Project.
Fellows will have ownership in the previously drilled wells, which are currently being dewatered and are nearing the production phase. Fellows will also participate in a 48-well drilling program during 2005 on the 140,000-acre Castle Rock project that will extend out from 4 previously drilled core holes.
"Our recently strengthened balance sheet allows us to participate in promising projects such as these," said George Young, Chief Executive Officer of Fellows Energy. "With energy prices at record levels, our ability to cost-effectively acquire interests in projects that will generate near-term revenue will allow the company to accelerate its growth and development strategy. We are excited to participate in these advanced-stage projects in the Powder River Basin as a compliment to our projects in other prospective areas."
The Powder River Basin coalfield of northeastern Wyoming and southeastern Montana is an unconventional gas play that offers an unusual combination of moderate risk and large economic potential. The vast coal deposits of the Powder River Basin are one of the greatest accumulations of coal in the world. These coal deposits contain a large resource of biogenic coal bed natural gas associated with numerous thick, laterally continuous, relatively shallow (less than 3,000 feet deep) Tertiary coal beds.
The Kirby project is an extension of the Powder River Basin coal bed methane play, which produces from the Tongue River Member of the Tertiary Fort Union Formation, on the western margin of the Basin north of Sheridan, Wyoming. This portion of the Basin has already seen considerable production from properties owned and managed by Huber Oil & Gas at Prairie Dog Field which is on the Wyoming side, and Fidelity Oil & Gas at CX Field which straddles the Montana/Wyoming border. The Kirby project comprises 95,000 acres of fee, state and federal leasehold about 10 miles north of Decker, Montana. Fidelity's CX Field is about 6 miles south of the southern boundary of the Block.
The 16-well pilot well program previously drilled on the Kirby acreage is well into the dewatering phase and nearing production. This pilot program will test the productivity of the Wall and Flowers-Goodale coals. Gas content data from mud logs and cores taken over these zones indicates the prospective coals are fully saturated with gas, which should translate into a short period of dewatering before commercial gas production volumes are achieved. The engineering firm Sproule Associates, Inc. has been retained to do a resource evaluation of the Kirby project.
The other working interest owners in the Kirby project include Quaneco (25%), Pinnacle Gas Resources (50%), and Galaxy Energy Corporation (GAXI, Trade) (12.5%). The other working interest owners in the Castle Rock Project include Quaneco (25.0%), Enterra Energy Trust (GAXI, Trade) (43.75%), Carrizo (6.25%) and Galaxy Energy Corporation (12.5%).
The Castle Rock project is an extension of the Powder River Basin play on the eastern margin of the Basin north of Gillette, Wyoming. This portion of the Basin is where most of the production has occurred in the Powder River Basin. The Castle Rock project comprises 140,000 acres of fee, state and federal leasehold along the Pumpkin Creek drainage about 20 miles west of Broadus, Montana. The eastern and northern boundaries of the Block are the outcrops of the Sawyer and Flowers Goodale Coals. Sproule Associates Inc. also conducted a resources evaluation of the Castle Rock project with favorable results.
Under the revised agreement, Fellows has the option to purchase all or a portion of the balance of the 12.5% working interest by paying up to an additional $3,450,000 and issuing $1 million of common stock by September 1, 2005.
About Fellows
Fellows combines a seasoned management team with exploration targets focusing on coal bed methane, shallow gas and low-risk oil and gas potential.
Fellows now has interests in over 450,000 acres of oil, gas and coal bed methane rights in Utah, Colorado, Wyoming and Montana.
Management hopes these transactions will bring additional value to the shareholders of Fellows Energy. There is no guarantee that the agreement with Quaneco or the interests that Fellows is acquiring will increase the value of its shares of common stock, or that Fellows will acquire rights to explore and operate any other such projects, or that in the event that it acquires rights to explore and operate other such projects, that these actions will be successful or increase the value of Fellows' common stock.
This press release may contain forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. There are many factors that could cause our expectations and beliefs about our plans to acquire additional exploration properties, our plans to drill or our drilling results to fail to materialize: competition for new acquisitions; availability of capital; unfavorable geologic conditions; the complexity of coal bed methane exploration and production; and prevailing prices for natural gas and general regional economic conditions. Fellows assumes no obligation to update the information contained in this press release.
SOURCE: Fellows Energy Ltd. |
