FIELD ACTIVITIES / Colt Energy Inc. Green River Basin Update
COLT ENERGY INC. IS PLEASED TO PROVIDE AN UPDATE OF ACTIVITY IN THE
GREEN RIVER BASIN
Date: 7/20/98 7:59:23 PM
Stock Symbol: COE
Colt Energy Inc. (ASE: COE) ("Colt") is pleased to provide an
update of activity in the Green River Basin, Sublette County,
Wyoming.
In the North Lizardhead prospect area, fracturing of the upper
stage in the North Lizardhead 11-8 well has been completed and
after one day of testing, the 11-8 well flow tested at a rate of
2.1 mmcf per day. Colt has been advised in a letter from Ultra
dated April 27, 1998 that the North Lizardhead 11-8 well is a
well capable of producing in paying quantities, and consequently
Colt has earned an undivided 50% of Ultra's proportionate working
interest in the North Lizardhead prospect area. As Western Gas
Resources, Inc. requires a final pipeline permit from United
States regulatory authorities and as construction of the pipeline
is anticipated to take approximately 3 weeks, gas sales from the
North Lizardhead 11-8 well are not anticipated to commence until
September, 1998.
In the Northeast Lizardhead prospect area, pursuant to the
Farm-in Agreement with Ultra Petroleum Corp. ("Ultra") dated
October 14, 1997, on or before April 1, 1998 and which was
subsequently extended to today, Colt had the option to pay Ultra
a US$1,000,000 prospect fee. Following the payment of the
US$1,000,000 prospect fee, Colt was obligated within fifteen (15)
days of receipt of Ultra's AFE to pay 100% of Ultra's
proportionate share of the cost to drill, case and complete the
Northeast Lizardhead 3-9 test well to a depth of 12,500 feet.
Upon establishment of a well capable of producing in paying
quantities, Ultra would have been obligated to assign to Colt an
undivided 50% of Ultra's proportionate working interest in the
Northeast Lizardhead prospect area. As the initial test rates on
the lower three stages of the North Lizardhead 11-8 well did not
meet Colt's expectations, Colt has elected not to exercise its
option pay the US$1,000,000 prospect fee or drill the Northeast
Lizardhead 3-9 well.
In the Antelope Ranch prospect area, Colt has paid Ultra a
US$500,000 prospect fee, which pursuant to the Farm-in Agreement
gave Colt the option to pay 100% of Ultra's proportionate share
of the cost to drill, case and complete a test well to a depth of
12,500 feet (the "Antelope Ranch Test Well"). Upon spudding of
such well, Colt is required to pay Ultra an additional US$500,000
prospect fee. If Colt exercises its option to drill the Antelope
Ranch Test Well, upon notification by Ultra of the issuance of a
permit to drill the Antelope Ranch Test Well, Colt is obligated
to pay within fifteen (15) days of receipt of Ultra's AFE, 100%
of Ultra's proportionate share (85%) of the cost to drill, case
and complete the Antelope Ranch Test Well. Upon establishment of
a well capable of producing in paying quantities, Ultra would
then be obligated to assign to Colt an undivided 50% of Ultra's
proportionate working interest in the Antelope Ranch prospect
area.
Ultra has provided Colt with an AFE in respect of the Antelope
Ranch Test Well (Horse Creek 14-33); as well as an extension to
the obligation to pay such AFE within 15 days. Pursuant to the
Farm-in Agreement, as Colt has failed to pay Ultra's AFE, Colt
has lost its option to participate in the drilling of Antelope
Ranch Test Well and its ability to earn an interest in the
Antelope Ranch prospect area.
In the West Billy prospect area, Colt has paid Ultra a US$500,000
prospect fee, which pursuant to the Farm-in Agreement gave Colt
the option to pay 100% of Ultra's proportionate share (100%) of
the cost to drill, case and complete a test well to a depth of
12,500 feet (the "West Billy Test Well"). Should Colt elect to
fund the West Billy Test Well then, upon spudding of such test
well, Colt is required to pay Ultra an additional US$500,000
prospect fee. If Colt elects to drill the West Billy Test Well
then, upon notification by Ultra of the issuance of a permit to
drill the West Billy Test Well, Colt is obligated to pay, within
fifteen (15) days of receipt of Ultra's AFE, 100% of Ultra's
proportionate share (100%) of the cost to drill, case and
complete the West Billy Test Well. Upon establishment of a well
capable of producing in paying quantities, Ultra is obligated to
assign to Colt an undivided 50% of Ultra's proportionate working
interest in the West Billy prospect area. Ultra has not yet
identified a test well location for the West Billy Test Well.
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