Petrol Oil & Gas Inks Long-Term CBM Supply Deal

As part of its ongoing field development program, Petrol Oil and Gas has signed a multi-year contract for the sale of Coal Bed Methane (CBM) and other natural gas from wells on its Coal Creek project in southeastern Kansas. Petrol expects to begin selling gas to Big Creek Gas Field Services, LLC under the terms of this contract within thirty days.

Petrolís CEO, Paul Branagan, says, ďMost of our field efforts this year have focussed on establishing the gas reserves within our Coal Creek Project area. We are all extremely excited to see our coals successfully de-watering and beginning to produce commercial quantities of CBM gas. Petrol is now in the process of transforming from a start-up company looking to prove up its play to a true production and development company.Ē

To date, the Company has drilled 6 pilot wells on its Coal Creek Project and is finalizing the stimulation process on each well in order to connect them to the Big Creek gas sales line and into commercial production.

Petrol is planning an aggressive drilling program, as its large 165,000 acre leasehold overlying the Cherokee Group of coal seams in southeastern Kansas and southwestern Missouri can support about 1,700 producing gas wells. The flat terrain of Eastern Kansas offers ease of access for rigs, fracturing equipment and other development activity, furthermore the shallow depths associated with the multiple coal seams being targeted means drilling and production operations can be performed at a very low cost per well.

Petrolís corporate strategy is focussed on the exploration, development and production of CBM gas and other producible petroleum products. At present Petrolís efforts are concentrated in developing their current acreage while continuing to acquire mineral leases in the coal rich Western Interior Basin that blankets eastern Kansas and western Missouri. Petrol Oil & Gas has approximately 165,000 mineral acres leased, with 145,000 acres in Eastern Kansas and 20,000 acres in Western Missouri. Four major interstate pipelines cross through Petrolís leases providing an available transportation vehicle to gas markets in the Northeast.

The Western Interior basin is one of the largest CBM basins in the continental US. According to the USGS, CBM accounted for about 7.5 percent of U.S. annual natural gas production and their most recent estimates indicate more than 700 trillion cubic feet (TCF) of coalbed methane gas in place, with over 100 TCF economically recoverable.

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