Fellows Energy Ltd. issued an update today on its ongoing work to finance its operations and prepare for drilling and development.
As previously announced, Thunderbird Energy Corp. ("Thunderbird") and Fellows have agreed for the expenditure of funds by Thunderbird for the drilling and completion of three wells to the Dakota formation on the Weston County project, upon its final acquisition of a 50% interest in that project. Fellows estimates that the cost of such drilling will be approximately $3.5 million. Upon the completion of such expenditures by June of 2009, Thunderbird will receive an additional 25% working interest in the Weston County project. Fellows will reserve the option to commence drilling under the previous joint venture structure if Thunderbird does not commence drilling by May 31, 2008. Thunderbird recently closed a financing facility that includes funding for the Weston County project. Fellows has been advised that Thunderbird is planning a seismic program for Q1 of 2008 to be followed by drilling.
As announced on October 30, 2007, the Company has entered into an agreement, the "Dolar Agreement", subject to financing, to acquire interests owned by Dolar Energy, L.L.C. and Cochrane Resources, Inc. in the Pinedale Anticline in Wyoming, and in the Divide Field and the proposed Wilkens Ridge Waterflood Unit in the Uinta Basin in Utah. Fellows has evaluated a number of structures and potential partners and investors to close those transactions, and efforts continue to that end. In addition, Fellows has evaluated two other producing projects that it is targeting for acquisition, potentially in conjunction with closing the Dolar Agreement transactions.
Under the Dolar Agreement, Fellows intends to purchase Dolar's 25% working interest in a 2,400-acre leasehold along the world class Pinedale Anticline in Sublette County, Wyoming. The acreage is situated between and around two completed wells with project reserves between 6-10 BCFG per location from the Lance formation. Since 1999, the Pinedale Anticline has become the second largest producing gas field in the United States, with field production of 0.7 BCFG per day, and cumulative production of over 0.6 TCFG, almost all of which has been produced since 1998. Projected recoverable reserves are in excess of 26 TCFG for the field. The acreage being acquired has potential for 16-32 wellsites. The major operators in the area include EnCana Oil & Gas; Ultra Resources, Inc.; Shell Rocky Mountain Production LLC; and Questar Exploration and Production Co. In the event of closing, Fellows would commit to drilling at least one 14,000 foot well in 2008, with anticipated costs exceeding $6 million per well (on a 100% basis).
"We continue our efforts to finance and close the Dolar Agreement, and we are excited at the prospect of Thunderbird commencing drilling on the Weston County project," said Fellows' CEO, George Young. "We have been able to successfully restructure our asset base by dropping some of our early-stage exploration properties and selling our interest in the Carbon County project which has enabled us to pay down on our debts, and we continue to look for ways to retire the balance outstanding on our debentures. Entering into a joint venture or other business combination to move forward with the Dolar projects would enable us to significantly improve our capital structure, and we hope to see added value from drilling by Thunderbird."
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