Petrogen Completes Sidetrack Well at Emily Hawes Field

Petrogen reported the successful completion and log results of the E.H.#3A well, the first sidetrack well in its Emily Hawes Field prospect, on Matagorda Island, Calhoun County, Texas.

As anticipated, the E.H.#3A well encountered up to eight potential pay sands in the Basal Miocene formation after being drilled to a total measured depth of 6,725 feet. Log analysis has shown 75 feet of gross sand and greater than 60 feet of possible natural gas pay. Perforations over three prospective intervals in the over-pressured Basal Miocene initially indicate presence of permeability.

"We are extremely pleased that this well confirmed the presence of potentially prospective gas sands and results are coming in as expected," stated Sacha H. Spindler, Petrogen's Chairman and Chief Executive Officer. "We are currently performing additional analysis of the E.H.#3A to determine how to most effectively proceed with testing and production operations under the guidelines of the U.S. Fish and Wildlife Service, which strictly monitors and limits activity on the island due to its important role as a wildlife refuge."

Previously, three wells drilled in the Hawes Field (E.H. #1, 2, and 3) produced approximately 1.7 billion cubic feet of natural gas ("BCFG") from multiple Basal Miocene Sands, before being shut in over 15 years ago. In 2002, third party engineering and petrophysical analysis estimated that 12.2 BCFG of reserves remain to be produced in the field.

With the successful test of the E.H. #3A sidetrack well, Petrogen plans to re-drill the remaining E.H. #1A and E.H. #2A wells in the second quarter 2005. Mr. Spindler added, "While we were performing sidetrack operations on the E.H. #3 well, we also re-entered the E.H. #1 well and found that it initially had approximately 920 psi. of surface pressure and flowed natural gas. Although additional drilling operations are planned to maximize production levels in the E.H. #1 well, we are very encouraged by these early indications of the presence of natural gas. We are currently finalizing our plans to attempt to finish re-entry operations on the E.H. #1 under the timing guidelines provided for by the Fish and Wildlife Service and evaluate the potential of producing gas from the well at these lower production levels until sidetrack operations can be initiated next year to maximize its production levels"

By re-entering the three existing wellbores, Petrogen can both mitigate the environmental impact of sensitive land residing on a Wildlife Reserve, while at the same time qualify for a 7.5% State severance tax relief for a period of 10-years. Recently, Petrogen succeeded in acquiring the remaining 5% interest in Emily Hawes Field previously unavailable for lease resulting in Petrogen holding a 37.5% working interest and a 29.1% net revenue interest in all hydrocarbon developments to depths above 7,100 feet and is funding approximately 17% of development costs of the E.H. #3A Sidetrack.
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