The Evaline twin well was drilled into the Lodgepole Reef that was targeted and encountered oil, but not in sufficient quantities for the Company to earn its interest under the Farmin Agreement (the "Agreement") with Helis Oil & Gas, LLC ("Helis"). The Company then moved uphole and perforated and tested the Mission Canyon Formation which had a significant show of oil while the Company was drilling to the Lodgepole. The Mission Canyon was tested and it too contained oil, but again not in sufficient quantities for the Company to earn its interest. Under the Agreement, Helis may complete the Evaline twin well and establish production at less than the threshold.
The Listou well encountered significant gas shows on the way down to the Lodgepole Reef that was targeted. The Listou Lodgepole Reef, about 200 miles west of the Evaline twin well, was flushed with fresh water and not productive. Coastal tested several zones of potential gas production but was unable to find any zone in the well which would produce commercial quantities of gas. The well will be abandoned.
Coastal will now focus on its 137,163 net acre leasehold in Valley County, Montana which contains two primary oil and gas objectives: a large number of identified Lodgepole Reefs; and a 34,000 acre structure that is similar to two large natural gas fields in the area. There are also a number of additional secondary objectives.
Coastal continues to work with Victory Energy Corporation to finalize the formal agreement between the two covering Coastal's Valley County, Montana leases. Coastal and Victory have worked together to select the first drilling locations and are beginning the permitting process for the first wells to be drilled under that agreement, the first one of which would be in or before July, 2007.
Now in its 55th year, Coastal Caribbean Oils & Minerals, Ltd., is engaged in the exploration for and development of oil and gas reserves through its wholly owned subsidiary, Coastal Petroleum. Coastal Petroleum's principal assets are its cash and its non-producing oil and gas leases within the Williston Basin, covering approximately 9,000 net acres in North Dakota and approximately 137,000 net acres in Valley County, Montana.
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