Milagro Energy Makes Light Oil Discovery at Judy Creek

Milagro Energy has made an oil discovery on its Judy Creek property which is located 45 kilometers northeast of Whitecourt in West Central Alberta.

An exploration well, MIG Judy 7-29-63-9 W5M, which is owned 100% by Milagro, was drilled on a geological concept analogous to the Mitsue and Nipisi Gilwood oil fields to the northeast. The 7-29 discovery well was drilled to a depth of 2560 meters and encountered 3.5 meters of pay. During completion the 7-29 discovery well flowed 382 barrels of clean oil, with no water. The oil is light sweet 42 degree API. Based on pressure and well data from the area, including data from Milagro's original test well located to the south at 2-17-62-9 W5M which was drilled last winter, (which tested gas and oil at economic rates from the Gilwood before being abandoned due to a completion problem) Milagro estimates that the aerial extent of the oil column could be approximately 14 kilometers in length. Additional drilling and production information will be required to delineate the pool, and to confirm the amount of oil in place and the applicable recovery factors.

The 7-29 discovery well is in the vicinity of existing oil and gas infrastructure and is expected to be equipped and on production by the end of January 2005. Milagro holds working interests in 50 contiguous sections of land (49 net sections) in the Judy Creek area and plans additional drilling during 2005.