CAPCO Begins Recompletion Ops on Brazos 440L Field

Capco Energy reports commencement of the Brazos 440L Re-completion Project. Capco has entered into a Net Profits Interest sharing agreement with Domain Development Partners I, LP, a private investment partnership targeting behind pipe and bypassed reserves in the Brazos 440L Field offshore Matagorda in Texas State waters. The first of the 15 possible well bores was re-completed on November 4th, 2005, to a previously untested zone in the field. The well's current production level is about 1.2 mmcfd.

Domain is providing 100% of the capital and project coordination for the re-completion program of up to 5 wellbores in each of 3 groups of wells. Following a review of the field data the team has identified one to three zones per wellbore to be completed or re-completed. Total additional gas in place is estimated at greater than 18 BCF. Capco has a working interest of 65% in the Field, which was discovered in 1966 by Shell and has produced more than 200 BCF. It is anticipated that the additional re-completions can be done at a rate of one to two per month.

Capco has 20 to 30 additional candidate wells in inventory from other offshore producing assets, which are currently under review by Domain and Capco for similar re-completion projects.

As part of the financing arrangements, Capco's revenue interest in the target wells will be directed to repayment of the investment provided by Domain. The revenue interest will increase as repayment is made, and upon Domain achieving a 2.0 multiple on invested capital, Capco will receive 100% of the remaining net interest cash flow.

Commenting for the Company, Mr. Chaudhary said, "We are very pleased to be working with Domain in this uniquely combined technical and financial model. The result on our first well is very encouraging. We expect to announce further improvements in Capco's balance sheet and cash flow statement as we pursue this campaign to increase future cash flow and shareholder value through the exploitation of our existing assets coupled with the deployment of our completion equipment."

Capco also announces the following operational updates:

A) Offshore

a. Matagorda Island, Texas State Waters: Capco has a 100% WI in 6 wells in this area. The Company plans to re-activate production from at least 3 wells after certain lease issues have been perfected. Plans are to begin this process in the second quarter of year 2006.

   b. Chandeleur Area/St Bernard Parish, Louisiana: Capco has an after
      payout interest varying from 33% to 66% in 11 wells with current
      production levels of 11 mmcfd from 4 of the wells.  Payout is
      expected in the second quarter of year 2006. The land holdings are about 8,000 acres gross.  The potential exists to re-complete idle
      wells and drill developmental wells in this area.

   c. High Island 196, Federal Waters, Gulf of Mexico: Capco has an after
      payout interest of 66% in 4 wells in this block with current
      production levels of 0.8 mmcfd. Gross acreage holding is
      approximately 5,000 acres.

B) Onshore

a. Orange Field, Orange County, Texas: In December 2005, Capco
      participated in the acquisition of a producing property with
      production of 125 bopd from 20 wells. The property has a total of 130
      well bores in a 500-acre field. Capco has a 66% after payout interest
      in the field. Capco plans to commence workovers to return selected
      wells to production utilizing its Company-owned workover rig.

   b. Caplen Field, Galveston County, Texas: Capco has an average 62%
      working interest in approximately 6,000 gross acres and 11 wells in
      this property. Current production is about 30 BOPD from 2 wells.
      Further drilling and workover activity is underway to place other
      wells on production and also exploit the gas potential of the

   c. Slick Waterflood, Creek County, Oklahoma: Capco has a 50% working
      interest in approximately 2,700 acres with approximate current
      production levels of 20 BOPD from 11 wells. There are a total of 115
      wells in this lease and the Company plans to continue to place
      additional wells on production.

   d. Bandwheel, Osage County, Oklahoma: Capco has 100% working interest in
      1,300 acres of land with current production levels of 18 bopd.  There
      are a total of 120 wells on this lease and the Company plans to
      continue to place additional wells on production.  Capco is planning
      to lease some other synergistic leases in the area and drill a
      development well in 2006.

   e. Belridge Field, Kern County, California: Capco has a 20% working
      interest in a field which is currently producing 40 bopd from a newly
      drilled well and 3 old wells. In addition another new well has been
      drilled and completed.  Production rates of this well are not
      available as yet. The Company is also attempting to lease certain
      heavy oil leases in the region.

In December 2005, Capco improved its balance sheet by extinguishing a third party guarantee and reducing accounts payable attributable to the cost of drilling the GA 297 well, where the Company had drilled a dry hole in mid year 2005. Funds for such activities were made available from insurance proceeds and assumption of a short-term debt.

The Company believes that with modest success in the Brazos 440L Field, combined with current offshore and onshore activities and reversion of interests, the net production to Capco's interest is expected to increase considerably.


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