Montello Suspends Drilling Operations After Encountering Hydrocarbons

Montello Resources Ltd. announced that the participating interests in the Morgan Highpoint # 3 and # 4 Test Wells are as follows: Montello, as Operator, is paying 15% of all costs associated with both the Morgan Highpoint # 3 and # 4 Test Wells to earn a 35% interest in the associated production spacing units. Austin Developments Corp. is paying 20% of the costs to earn a 30% interest, Blackrock Petroleum Corp. is paying 60% of the costs to earn a 30% interest and Park Place Energy Corp. is paying 5% of the costs to earn a 5% interest.

The Morgan Highpoint # 3 Test Well, located in Morgan County, Tennessee is strategically located approximately one mile west of the John Bowen # 1 & # 2 Wells and one mile north-west of the Howard White # 1 Well. From a geological standpoint this is significant as the Howard White # 1 Well, that was drilled in 2002, resulted in a Blowout flowing over 500 barrels / hour of light crude oil (12,000 barrels of oil per day for two days) before being capped. Environmental and legal issues relating to the Blowout have to date precluded the re-drilling of the Howard White # 1 Well.

After encountering hydrocarbons below the intermediate casing in the Morgan Highpoint #3 Test Well, as a precautionary measure, Montello has secured the well and suspended operations. The drilling rig has been released and moved to the Morgan Highpoint # 4 Test Well location. Montello is now mobilizing additional safety and under balanced equipment to be placed on the Morgan Highpoint # 3 Test Well after which drilling operations will recommence.

Montello and the joint venture partners are encouraged to have encountered hydrocarbons in the Morgan Highpoint # 3 Test Well. Although we cannot definitively state that we have a commercial well, we are pleased with the results that have been encountered in the Morgan Highpoint # 3 Test Well to date. It is anticipated that the Morgan Highpoint # 4 Test Well will spud this week once all regulatory approvals are in place.


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