QMAC Energy Discovers Larger Than Expected Gas Reservoir

QMAC Energy reports that production results from the company's two, 25% working interest, natural gas wells are considerably better than expected. The wells are located in the Lake Frances field, Pondera County, Montana. The Operator's Engineering and Geological analysis indicate that the field's 4th Bow Island Cretaceous reservoir exhibits much higher permeability and porosity characteristics than originally anticipated, consequently there is a high probability of a larger gas reservoir. Over the past three months, both wells, producing under a conservative long term production regime, have sustained much higher flow rates than expected. In addition there has been no evidence of the anticipated 30% first year production decline that is normal to most Bow Island reservoirs. Consequently, the company's reserves could be 25% to 30% greater than originally projected.

The company is ready to embark upon a 5 well in-fill drilling program within the Lake Francis field. This program will allow the operator to further evaluate the full potential of the reservoir. The new wells will employ air drilling techniques rather than standard fluid drilling methods which risk damaging the reservoir as a consequence of drilling fluid plugging the porosity and permeability of the pay zone.

After payback of the company's drilling and completion costs, the company will own a full 50% working interest in the new wells, rather than the 25% working interest which it holds in the two existing wells.

Altamont Oil & Gas Inc., our operator, is the largest gas producer in Pondera County, and has grown from 42nd largest amongst state-wide producers to within the top 20 over the last three months. Altamont is a fully integrated northern Montana based, "hands-on" producer which conducts all of its land acquisition, exploration, development, and production activities in-house. Altamont and its associated company own all of the gathering and production facilities in both the Frances Lake field and the nearby Williams field. Altamont is the largest lease holder in Pondera County. We are confident that our association with Altamont will contribute to the ongoing fast-tracking of our growth.