Private drilling funds have been utilized to provide the capital costs of the first three wells on the Wagnon lease. The Company's operating subsidiary will "back-in" to a residual 53.2% working interest in net proceeds on the Kellster 1-5 well from production once capital repayment is complete.
The Company also announces as at the date of this news release, that drilling on the Kyndal #2-2 is proceeding according to plan with vertical section drilling completed. Horizontal section drilling is now in process. A third well, the Bryce #3-2, is scheduled to follow the drilling of the Kyndal #2-2 immediately after well completion. A total of four to five horizontal CBM gas wells are planned on the Wagnon lease.
About the Drilling Play: The drilling site is located in the Hartshorne coal zone fairway of the prolific Arkoma Basin, in the middle of one of the largest CBM drilling programs undertaken in the State of Oklahoma. According to the Oklahoma Geological Survey, 865 (40%) of the 2,179 CBM completions in Oklahoma from 1988 to 2002 were located in the Arkoma Basin. Wells adjacent to this property have average initial production of between .5 and 1.0 MMCF per day, although a number of the wells are producing over 1.0 MMCF per day. An average of 153 horizontal CBM wells completed in Hartshorne coal have provided initial production that averages 0.418 MMCF per day.
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