CAPCO to Begin Drilling in Galveston Federal Waters

CAPCO Energy has agreed on farmout terms to drill an exploratory well in Galveston Federal Waters. The location was selected through 3-D seismic interpretation and similar anomalies in the region.

The exploratory well, if successful, would lead to the first major discovery by CAPCO of gas recoverable reserves exceeding 65 BCF. CAPCO has also negotiated with a pipeline company to transport its gas through their pipeline systems, if a discovery is achieved.

The well is scheduled to commence drilling before January 30, 2005 and is expected to reach total depth by mid March 2005. CAPCO is the Operator of the prospect with 60% working Interest BPO and 51% Working Interest APO in the prospect, the balance of the interest is owned by industry partners.

Ilyas Chaudhary, the CEO of CAPCO commented, "While CAPCO is successfully returning to production its ownership wells located in the Gulf of Mexico, the multiple increases of reserves, desirous by the industry, is only possible by drilling quality exploration prospect. The Galveston 297 offers us that unique opportunity.''