The 2007 capital budget includes US$20.0 million for drilling of approximately 150 wells in the Powder River Basin; US$10.0 million to initiate Storm Cat operated development wells in the Fayetteville Shale; US$4.0 million in Elk Valley to maintain de-watering operations and operate existing production; and US$6.0 million in Alberta for drilling and completion activities. The US$40.0 million capital budget will be funded through cash flow from operations and cash on hand augmented in part by the existing US$35.0 million reserve-based revolving line of credit with JP Morgan, of which US$10.0 million was drawn at March 31, 2007, and the Company's recent US$50 million subordinated debt financing.
The 2007 capital budget may be revised based on drilling rig and oilfield service availability, drilling results, operational developments, unanticipated transaction opportunities, market conditions and commodity price fluctuations.
Acting Storm Cat President and CEO, Keith J. Knapstad, said: "For a company of our size, we are fortunate to possess a high quality, complementary asset portfolio. I expect 2007 to be a year of transformation and continued growth for Storm Cat as we advance our core operating areas. We intend to increase our asset value in the Powder River Basin through continued aggressive development activities. Additionally, we are eager to shift our Fayetteville shale assets from an acreage play to an active production play. We will build meaningful net asset value in the Fayetteville through drill-bit success in 2007. We were able to put together an attractive position in the Fayetteville in advance of industry interest and are pleased with the improving economics and expanding production extent of this prolific play. Further, we will maintain our diligent work in Elk Valley by continuing our dewatering efforts so we can best determine the economic viability of this project. Storm Cat's 2007 goals are achievable and, equally important, are fully funded due to recent successful financing activities."
Storm Cat Energy is an independent oil and gas company focused on the pursuit, exploration and development of large unconventional gas reserves from fractured shales, coal beds and tight sand formations. The Company has producing properties in Wyoming's Powder River Basin, and exploitation and development acreage in Canada, Arkansas and Alaska.
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