Storm Cat Completes Powder River Basin Acquisition

Storm Cat Energy has successfully closed the purchase of approximately 25,200 gross acres (17,000 net acres) in the Powder River Basin for approximately U.S.$30.7 million in cash. The producing property, reserves and undeveloped leasehold, located in and around Storm Cat's core Powder River Basin coalbed methane operating area, allows the Company to capitalize on economies of scale and operating efficiencies. The acreage is approximately 81% undeveloped and 90% of the acreage is located on U.S. federal lands. The effective date of the transaction is July 1, 2006.

Storm Cat is acquiring approximately 10.2 Bcf of proved reserves, 9.6 Bcf of probable reserves and 7.8 Bcf of possible reserves. Pro forma for the acquisition, Storm Cat will have approximately 19.8 Bcf of proved reserves, 13.8 Bcf of probable reserves and 7.9 Bcf of possible reserves. Storm Cat's reserve quantity estimations were evaluated by Netherland Sewell & Associates (NSAI), a Dallas-based, independent reservoir engineering firm.

Gas production from the acquired properties is approximately 6,600 Mcf/d, (approximately 3,000 Mcf/d net), of natural gas from 64 producing CBNG (coal bed natural gas) wells, 46 of which will be operated by Storm Cat.

J. Scott Zimmerman, President and Chief Executive Officer commented, "Today's Powder River Basin acquisition represents a major increase in the Company's reserve and production capabilities in the basin. Given the close proximity to our current Powder River CBNG operations, we view this as a strategic fit to our asset base. Additionally, these properties can be developed using the multi-seam completion technique that provides for increased recovery and reduced finding and development costs, ultimately maximizing the value of the asset. We are excited about the potential opportunities this property presents for the Company and its shareholders."

The proceeds from a recently completed $15 million secured mezzanine facility as well as funds from the Company's $250 million revolving credit facility were used to fund the acquisition.


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