AltaCanada Begins Production from Several Montana Wells

AltaCanada Energy has revealed preliminary results from the company's Montana exploration program showing commercial rates of production from several wells that were drilled in December 2003 and fracture stimulated in February 2004. The Company is engaged in a flow test program to determine the extent of reserves attributable to the wells and the results are anticipated to set up an aggressive multi-well drilling program and pipeline tie-in to existing infrastructure delivering gas to markets in Canada and the United States.

During 2003 AltaCanada acquired a substantial contiguous Montana acreage position totaling approximately 180,000 net acres through its wholly owned subsidiary, Montana Land & Exploration Inc., ("ML&E") in two separate transactions for an aggregate of $5 million (CDN). AltaCanada has remaining earning commitments on one-third of this acreage.

The Montana acreage is located 25 miles south of the Canadian border and is offset to the northwest by the Battle Creek field operated by Omimex Group and to the west by the Tiger Ridge field operated by Devon. Although on trend with these fields, AltaCanada's acreage was assembled from multiple landowners and has been largely unexplored with any modern gravity or seismic and has very few wells.

To support a prudent drilling program, AltaCanada focused efforts in 2003 on conducting regional gravity surveys and shooting seismic over identified gravity anomalies seeking prospects in the shallow Eagle Sands. Secondary deeper Jurassic prospects will be pursued by the Company in subsequent programs. A regional gravity survey covering 16 townships was completed in December 2003 defining structural trends over two-thirds of that area. 65 miles of additional seismic was undertaken commencing in February to develop specific well locations. The process of conducting surveys, consolidating land positions, obtaining approvals for drilling and scheduling rigs in a very active market has proved to be more time-consuming than anticipated but will not impact the success of the project.

AltaCanada has had a success rate of 5 out of 8 exploration wells drilled in Montana to date. As anticipated, we have encountered thinner tighter sands in the northeast portion of the play and thicker more permeable multi-zone prospects as we move to the southwest where seismic and other information is more limited. AltaCanada has encountered gas in multiple sections of the Eagle Sands in several wells. After experimentation with completion techniques we have determined that the key to success is to avoid damaging formations that are often over-pressured and to selectively fracture stimulate each productive zone.

AltaCanada announces the following well results. Specific well locations are being maintained confidential while AltaCanada consolidates its land position in the area.

In January 2004 ML&E refrac'd well 'A' which ML&E had drilled in May 2003 originally flowing 260 mcf/d. After two targeted, tubing conveyed frac's, this same well flowed at 990 mcf/d at 290 psi on a 3/8" choke from the Eagle at 1400'.

Well 'B' (ML&E 97.5%) successfully encountered 2 "thrust repeated Eagle sheets". After the initial frac, the top sheet (17' of net sand) yielded 250 mcfd @ 160 lbs flowing pressure over a 3-day test with stable rates and pressures and no water. The second sheet, only 200' deeper at 1300', also flowed gas at 50 mcfd and, while not in the ideal position on the second fault block, demonstrates that sheet to be gas bearing. After a second frac, the commingled last rate was 311 mcf/d@ 187 psi, with no water.

Wells 'C' (ML&E 95%) and 'D' (ML&E 100%) were drilled in December in the higher quality sandstone fairway, moving toward the southwest of our acreage, and encountered much thicker Eagle sands. Well 'C' encountered nearly 50' of greater than 18% porosity but contained thin gas pays over water. Well 'D' is still under evaluation having encountered 42' of 18% or better porosity and gas rates varying between 100 mcfd and 600 mcfd with minor water. Only 2 of 4 separate sands are open and separation of these two sands is planned as well as an evaluation of the other 2 sands up hole. Additional seismic control is planned for each of these structures, as it is clear we can get higher on each respective fault block. Each well was a "one line seismic feature" using the strategy of testing with relatively inexpensive drilling costs ($60,000) before detail seismic is acquired.

Well 'E' (ML&E 12.5%) is a non-operated well yet to be completed. Extended length flow tests are scheduled for all wells with results anticipated by April.

Four high working interest operated wells are scheduled for late March, depending upon weather conditions. Fifteen high working interest operated wells are scheduled for May. At the March 2, 2004 Montana State sale, ML&E acquired 1920 acres in three tracts.

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