Funds obtained in the financing will be used by Fellows to complete the Weston County Project acquisition and move closer to its objectives of achieving cash flow from production from its properties. Drilling will commence this week on the Southern Utah Project in Johns Valley and will soon commence on the Weston County Project, as highlighted below.
Fellows president George Young said, ``This financing demonstrates our ability to obtain ongoing funding and the strong support our company has to move forward with our business plans. It also reflects our commitment to build value for our shareholders by avoiding dilution as much as possible. Being able to finance at prices above our current trading price is a significant positive development. The funds will enable us to continue more aggressively with a variety of drilling programs focused toward building a cash flow from production.''
Fellows' exploration activities are progressing as planned. Permitting and drill site preparation have been completed for the first well on the Southern Utah Project in Johns Valley, and the drill contractor is mobilizing to the site to commence drilling on or about June 23, 2004. Fellows anticipates that the drilling and coring will be cheaper and faster than on the Overthrust Project, with the total depth planned at 1,300 feet. Simple coring can be used to obtain samples for gas desorption.
Results from the gas desorption tests from the core taken from the recently completed drilling on the Overthrust Project in Northern Utah are still pending in order to evaluate its coal bed methane potential. In the meantime, Fellows has also begun an evaluation of the potential for conventional gas production from the formations encountered in that drilling above the coal formations. Plans for obtaining existing seismic data or performing additional seismic surveys are now being considered to further evaluate that potential.
Fellows recently closed the purchase of the Weston County Project in Wyoming, and has concluded a complete reevaluation of certain local drilling data and seismic surveys. This has resulted in the delineation of 18 conventional oil and gas well locations on the property which Fellows believes are "drill-ready'' and are lower risk potential extensions of an existing producing field. Further plans and preparations for drilling are underway.
Fellows is also advancing with its work on its other projects that make up the balance of its more than 240,000 acres of oil and gas interests in Utah, Colorado, Wyoming and Montana. Fellows is also evaluating a number of additional acquisitions of new, high-potential exploration areas for coal bed methane and conventional oil and gas. In addition, Fellows is also evaluating potential acquisitions of projects currently in production which would provide cash flow along with additional upside exploration potential.
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