Mustang Resources Acquires Acreage in Medicine Hat Area

Mustang Resources has closed the acquisition of approximately 220 boe/d in the Medicine River, Alberta area from a senior oil and gas producer. The purchase price was $12.5 million with an effective date of February 1, 2004. As part of the acquisition, Mustang has acquired a 100% working interest in a sour oil battery and gas compression facility valued at approximately $5 million. Mustang will be tying in its Leduc Pinnacle Reef discovery well at 8-35-38-4 W5, which tested at various rates of up to 1,000 bbls per day of 44 degree API light oil, into this facility.

Mustang has 3D seismic coverage over all of the existing producing pools and sees up to eight potential step out development locations and also believes that existing production can be optimized by upgrading the artificial lift systems. Volume adds for the first three new wells and the first three optimized wells are anticipated to be an incremental 600 - 1,000 boe/d (100% W.I.) increase in production from this acquisition. Mr. Richard Todd, President and CEO of Mustang, states that "This purchase, with the upside potential defined by our extensive 3D dataset, will further establish Mustang's Central Alberta core focus area and could significantly increase production volumes".

Mustang is also in the process of licensing an offset location to its 8-35-38-4W5M discovery that could be spud before spring break-up. With success in the three well development program referred to above, five additional development locations and other well optimizations will be initiated in the second half of 2004.
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