Fellows Energy Commences Downhole Operations in Uinta Basin
Fellows Energy progresses on its Uinta Basin and Carbon County projects:
Fellows reports that downhole operations at its Uinta Basin project have commenced to commingle production from the Upper Green River and Wasatch formations in the first wellbore of its up to 45-well program. Following testing which determined that the wellbore is in sound condition, Fellows began the drilling operations necessary to return the Wasatch Formation to production. Fellows will also recomplete the well in the Lower Green River formation, allowing the well to produce from all three horizons. The pumping unit has been delivered to the site, and surface facilities construction is underway. It is expected that production will recommence in as few as 10 days.
The initial well will tap the potential of the three previously tested and produced zones. New completions in never before perforated pay zones will also be accomplished. The additional zones will provide a further increase in daily production potential over results obtained previously. Gas transportation and sales facilities have been installed and a gas sales contract is in place. Evaluation of the next wells to be returned to production in the 45-well program continues concurrently.
Fellows has arranged for the participation by industry partners in the field with the contribution of $1,500,000 for project expenses. Final details are being prepared for the participation arrangements. Fellows intends to continue field operations continuously until up to 45 wells have been reworked and recompleted. Fellows projects net revenues in excess of $9 million over and above drilling and field expenses from this program in 2006, with increases over that level in 2007 and beyond.
Carbon County Project
Fellows has negotiated an extension in its option agreement to purchase the 5,953-acre Carbon County project until January 31, 2006. Further analysis of the productive potential of the project has been conducted, following the receipt of a favorable engineering study by Sproule & Associates. Current production is approximately 30 million cubic feet of gas per month, which is marketed into the adjacent gas pipeline operated by Questar Gas Resources. Production is derived from the Ferron Sandstone formation, a source of substantial production in the adjacent Drunkards Wash field operated by ConocoPhillips. Fellows believes from its analysis that it can significantly increase production from the wells currently in production and reinitiate profitable production in the six shut-in wells. Fellows also believes that the field has potential for 20 additional productive wells on 160 acre spacing on the undeveloped acreage. The property is adjacent to Fellows' Gordon Creek project and to the very successful Drunkards Wash field, which was originally developed by River Gas Corp, including some of Fellows' personnel.
Fellows has entered into an exclusive arrangement with Corporate Development Capital, Inc. for the completion of the financing of the balance of the purchase price and for the initial drilling capital for the additional wells. Fellows expects the financing to close on or about January 15, 2006, with the participation of a number of industry financing sources.
About the Uinta Basin
The Uinta Basin of Utah is currently one of the most active oil and gas producing areas in the onshore United States. The majority of activity in the basin is focused on the Wasatch and Green River formations, which are the primary producing formations in the Altamont-Bluebell Field. Fellows believes that the large areal extent, both horizontal and vertical, of hydrocarbon occurrence in the Uinta Basin makes for a lower risk project than exploration in unproven areas.
Fellows combines a seasoned management team with exploration targets focusing on coal bed methane, shallow gas and low-risk oil and gas potential.
Fellows has interests in over 500,000 acres of oil, gas and coal bed methane rights, including interests in the Weston County and Carter Creek projects in Wyoming, the Gordon Creek and Overthrust projects in Utah, the Kirby and Castle Rock Projects in Montana, and the Bacaroo project in Colorado.
Fellows recently completed its option under an Exploration Services Funding Agreement with Thomasson Partner Associates, Inc. of Denver, Colorado under which it will continue with project evaluation and acquisitions. Fellows has the first right to projects generated by Thomasson for up to a 100% basis on projects selected. Projects recently acquired by Fellows include the Bacaroo, Gordon Creek, Weston County, Platte, Badger and Carter Creek.
The agreement calls for TPA to present to Fellows an average of eight (8) projects per year with an area of interest of 10,000 to 80,000 acres per project with a reasonable potential of at least two hundred (200) billion cubic feet of natural gas reserves (200 BCF) or twenty (20) million barrels of oil reserves (20 MMBO).
As new projects are acquired, Fellows will add diversity to the interests previously optioned.
Management hopes these transactions will bring additional value to
the shareholders of Fellows Energy. There is no guarantee that the
agreement with TPA or the leases that Fellows has recently acquired
will increase the value of its shares of common stock, or that Fellows
will acquire rights to explore and operate any other such projects, or
that in the event that it acquires rights to explore and operate other
such projects, that these actions will be successful or increase the
value of Fellows' common stock.
- Fellows, Thunderbird Ink Finance Agreement for Drilling Dakota Formation (Jan 28)
- Thunderbird to Buy Remainder of Utah Gas Field (Jun 05)
- Fellows Energy Completes $2.25 Million Financing (May 30)