Funds raised from the unit offering are planned to be used to initiate field development of Petrol's Coal Bed Methane ("CBM") project on its Coal Creek Project in Coffey Co., Kansas, acquire additional mineral acreage and producing properties, and for general working capital.
Petrol has planned an aggressive drilling program in 2004-2005 with the closing of this current round of fundraising. Their 165,000-acre leasehold covers the Cherokee group and other coal seams in southeastern Kansas and southwestern Missouri and could support up to 1,700 producing gas wells. The shallow depths associated with the multiple coal seams means low drilling and production costs. In addition, the flat terrain of Eastern Kansas offers ease of access for rigs and other development activities.
According to the Kansas Geological Society, Coal Bed Methane production in Kansas has been growing rapidly, to over 7 billion cubic feet in 2003. This represents a 75% increase from the 2002 production of about 4 billion cubic feet.
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