NEWS RELEASE
For Immediate Release, April 24, 1998
BPI INDUSTRIES INC. (the "Company") (BPR - VSE) is pleased to provide an update on the coalbed methane project in southern Illinois.
Following the successful completion of the initial drilling program
including a deep well in the New Albany Shale, a total of 19 wells
have been drilled. Fourteen of these wells were completed with
production casing and the New Albany Shale well is awaiting completion.
The remaining test wells will not be used for production purposes.
The last step in the test phase to validate the original hypothesis,
is the pump test. This test is currently underway and should be
completed within the next two to three weeks, which will enable
Cawley, Gillespie & Associates to complete their report.
To date, the Company has invested in excess of CDN$4,500,000
in the project. The Test Program has been an extremely thorough
and has utilized the very latest technological advances to ensure that
the Company has a viable and valuable asset. The Company and its
joint venture partner, Mid-Continent Methane Inc. ("Mid-Con") are pleased that the tests to date, have exceeded expectations. BPI is delighted to have a partner like Mid-Con, with its vision and in-depth knowledge of the coalbed methane industry.
THE FUTURE
The next phase as proposed by our joint venture partner and operator of the project, is to drill an additional 72 coalbed methane wells and 4 New Albany Shale wells. A gas gathering system will be included in this phase so that the gas produced can be collected and sold. The drilling of these additional wells will further delineate and significantly increase the reserves. The reserves will be categorized as proven, proven / probable, and probable. On data generated from the test program to date, Mid-Con estimates that 0.5 TCF has been
proven in the project.
To achieve this next phase Mid-Con believes it will require approximately US$25,000,000. The partners are currently negotiating with several interested parties to raise these funds. All wells drilled to date will be put into production as quickly as possible, which will generate initial revenue to service the funding. With two existing pipelines running through the property, a ready market exists for the gas produced.
After completion of this phase, Mid-Con projects the following revenues based on 90 coalbed wells and 5 New Albany Shale wells.
Taking an average of 150 MCF per day per well (the Sittig # 1 previously flow tested at 318 MCF per day) for the coalbed wells and 300 MCF per day for the New Albany Shale wells, annual revenue would be estimated at US$11,000,000. Using current gas prices of US$2.40 per MCF, and deducting the 15% royalty and annual operating costs, net revenue would be approximately US$8,700,000, which is more than sufficient to service the debt and further development of the project.
BPI INDUSTRIES INC.
Lakhwindar Janda
President
For Further Information Contact
800-803-3204 / 604-685-8688 or info@bpi-industries.com
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