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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: DavidG who wrote (46506)	6/16/1999 10:09:00 AM
From: The Ox	Respond to of 95453

Pennaco Energy Announces 44% Increase In 1999 Capital Budget, Gives Operating Update DENVER, June 16 /PRNewswire/ -- Pennaco Energy, Inc. (Amex: PN) today announced that its Board of Directors has approved an increase in its 1999 capital expenditure budget to $26.5 million, which is an $8.1 million or 44% increase from the $18.4 million budget previously announced. All of the revised $26.5 million capital spending budget will be directed toward the Company's Powder River Basin Coal Bed Methane Project. Pennaco plans to spend $18.0 million to drill approximately 460 net wells in the play during 1999, which is up from $9.6 million for drilling approximately 330 net wells in the original budget for 1999. The budget also earmarks approximately $8.5 million for additional lease acquisitions in the play. The drilling budget will be allocated both to Pennaco/CMS joint venture wells and wells drilled by Pennaco outside of the joint venture area in the South Gillette Area. Pennaco is in the process of securing a reserve-based, bank credit facility which will be utilized in addition to cash on the balance sheet and internal cash flow to execute the revised capital spending budget. The capital spending plan will be reviewed quarterly by the Board of Directors of Pennaco Energy and may be revised in response to drilling results, pipeline and gathering system construction progress, natural gas prices and other pertinent factors. Pennaco has now drilled a total of 197 wells (176 net wells) since beginning its drilling program in November 1998, which is a rate of about one new well per day. Of these wells, 178 (167 net wells) are located in the South Gillette Area while the remaining 19 wells (9.5 net wells) are located in the Pennaco/CMS joint venture area. The Company reports a 100% success rate in its South Gillette development area, while the Pennaco/CMS joint venture program is in early pilot testing and evaluation. The Company also reported that it currently has five Pennaco-operated rigs drilling in the South Gillette Area, and plans to increase to eight rigs by the end of June. Meanwhile, the Pennaco/CMS joint venture has one rig drilling which is operated by CMS Oil and Gas Company, and expects to increase to four rigs (two CMS-operated, two Pennaco-operated) by the end of the month. Current Pennaco working interest production is 12.4 million cubic feet (MMcf) per day. Future production increases will be limited until the Fort Union Gas Gathering System and Thunder Creek Gathering System commence operations, which is expected on or before September 1, 1999 and October 1, 1999, respectively. Approximately 47% of Pennaco's wells are producing while the remainder are undergoing completion, testing and hookup. Pennaco Energy, Inc. is an emerging exploration and production company headquartered in Denver, Colorado. The Company is completely focused on the development and production of natural gas from coal bed methane properties in the Powder River Basin of northeastern Wyoming and southeastern Montana. Pennaco is one of the largest leaseholders in the play with approximately 315,000 net acres. This lease position includes approximately 290,000 net acres held by Pennaco in its previously announced joint venture with CMS Oil and Gas Company, a wholly owned subsidiary of CMS Energy Corporation (NYSE: CMS). This release contains forward-looking statements regarding future plans and expected performance based on assumptions believed to be reasonable. A number of risks and uncertainties could cause actual results to differ materially from these statements, including without limitation, fluctuations in the price of crude oil and natural gas, the success rate of drilling efforts, the timeliness of development, pipeline and gathering construction activities, as well as other risk factors described from time to time in the Company's disclosure and offering documents filed with the SEC. SOURCE Pennaco Energy, Inc. CO: Pennaco Energy, Inc. ST: Colorado IN: OIL SU: 06/16/99 08:57 EDT prnewswire.com