Petrogen's EH#3A Compression Initiative Completed

Matagorda Island, Gulf of Mexico
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Petrogen Corp. has completed the installation of a two-stage compression system on its Emily Hawes #3A (EH#3A) natural gas discovery well, located on the Company's Emily Hawes Field property, Calhoun County, Texas.

On October 7th, 2005, crews were mobilized to Emily Hawes Field to install the compression system as part of Petrogen's ongoing developments upon its natural gas gathering and transportation management facilities on Matagorda Island. Increased natural gas flow from the EH#3A will initially be established over the course of the next several days utilizing one-stage of compression, at which time the Company will gauge consistent daily natural gas flow rates. Since the EH#3A well has been brought into production earlier this year, Petrogen has been receiving daily sales prices for its natural gas production from the well ranging between $10.00 per Mcfg up to as high as $17.95 per Mcfg.

Extensive analysis was performed by several natural gas compression specialists to determine gas flow rate increases that could be expected from the EH#3A through the addition of varying stages of compression. Results from the wellbore pressure and data analysis indicated that production flows from the EH#3A could be doubled with the implementation of one-stage of compression. Petrogen thereafter contracted Hanover Compression Company of Houston, Texas on August 30, 2005 to install a two-stage compression facility on the EH#3A well. Due to high line pressures on the Northern Natural Gas/Matagorda Offshore Pipeline System sales pipeline (NNG/MOPS), optimum daily natural gas production rates from the EH#3A have been suppressed. The addition of the first stage of compression has been implemented to mitigate any further suppression from the NNG/MOPS line pressures to ensure optimum daily natural gas flow rates can be sustained from the EH#3A.

On November 23, 2004, Petrogen announced that it successfully tested natural gas from the EH#3A well from the Basal Miocene M1 sand with an absolute open flow of 1,998 mcfgd; 978 mcfgd was tested on a 14/64" choke with flowing tubing pressure of 1,395 psi and a final shut-in pressure of 1,950 psi. On May 7, 2005, crews were mobilized to Emily Hawes Field and immediately began an extended production test of the EH#3A well. On August 3rd, 2005 Petrogen announced that it had commenced natural gas sales from the EH#3A well.

The Emily Hawes Field property is located approximately 90 miles southwest of Houston, Texas within the prolific oil and gas producing Miocene-Frio trend of the onshore and offshore Texas Gulf Coast. Near term plans include the expansion of operations through the development of a number of infill and step-out drilling locations to that of the EH#3A well targeted at the Basal Miocene Sands within the Emily Hawes Field.

About Matagorda Island

Matagorda Island is one of seven barrier islands located in the Gulf of Mexico, Texas Gulf Coast. Today, Texas and the Texas Gulf Coast represent one of the premier oil and gas exploration regions in the world, accounting for 32% of all natural gas production and 27% of proved natural gas reserves in the United States. Over the past few years, several large discoveries by Shell, BP and Chevron Texaco have contributed to the growing prominence of the Gulf Coast region as a hotbed for the expansion of domestic natural gas developments. Matagorda Island is approximately 34 miles long by 4 miles wide and is situated along the prolific, natural gas producing Miocene/Frio trend.
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