Galaxy Energy Completes 155 CBM Wells in Powder River Basin

Galaxy Energy provides an interim production and operations update for its coalbed methane (CBM) operations in the Powder River Basin in Wyoming and southern Montana.

Galaxy has completed a total of 155 coalbed methane natural gas wells on its Wyoming properties and has another 45 wells in various stages of completion. Seventeen of these wells are now producing natural gas at a rate of approximately 600,000 cubic feet per day while the wells continue to dewater. Sixteen additional wells have commenced testing and dewatering operations and another 84 wells are scheduled to begin the testing and dewatering process in the next few weeks. Coalbed methane gas is a form of natural gas that is trapped in coal seams by water. Gas production is expected to begin as pressures are reduced during the dewatering process.

Glasgow and West Recluse properties - Campbell County, Wyoming

Eight of the fifteen new wells in the Glasgow area that commenced dewatering in early November started producing gas very quickly, and production rates have continued to increase. The remaining seven wells which are completed as lower zone Wyodak producers continue to dewater.

Nine wells are producing gas to the sales pipeline in the West Recluse area. Construction of the gathering system and required infrastructure for thirteen additional new wells is nearing completion. Some delays having been experienced due to winter weather conditions. All of the new wells will begin dewatering over the next few weeks.

Current gas production from these two areas is approximately 600 mcf (thousand cubic feet) per day. Gas production levels will increase as dewatering operations continue.

Pipeline Ridge - Sheridan County Wyoming

Thirty-one production wells and five water disposal wells have been drilled and completed in this area southeast of Sheridan, Wyoming. Although winter operating conditions have slowed work in this area, gathering system and infrastructure facilities have been completed to most of these new wells over the last few months. Six of these wells have commenced testing and dewatering operations, and all remaining wells will do the same in the next few weeks. Installation of a compressor station to handle gas sales into the adjacent Bighorn pipeline is nearing completion.

Ucross Ranch and Leiter properties - Sheridan County, Wyoming

These two areas now contain forty-nine completed wells. Construction of gathering systems and field facilities for both areas are in various stages of completion. The first three wells in the Leiter area have begun testing and dewatering. All other production wells will begin testing and dewatering over the next several weeks.

Remaining properties - Sheridan County, Wyoming

Five additional areas now contain thirty-eight completed wells and forty-five additional wells in various stages of completion. Negotiations are underway for the necessary pipeline extension to access sixty of these wells, which will then allow the construction of gathering system infrastructure and the drilling of additional new wells in 2005 to develop multiple deeper coal zones. Galaxy is also developing plans to include 23 previously drilled wells in expanded pilot projects, which is then expected to be followed by full development of the related properties.

Kirby and Castle Rock properties - Southern Montana

In the southern Montana portion of the Powder River Basin, Galaxy is participating in the first phase of a planned development for the Kirby Area. Operations are underway on an initial eighteen well pilot program, with most wells having been drilled, and field facilities construction having begun. A second pilot project is scheduled to begin this year in the Castle Rock area of southern Montana. Negotiations are underway for construction of gas sales pipeline projects to both of these areas.

"We are very pleased with the rapid progress we have made over the past 12 months to drill wells and build gas gathering infrastructure on our Powder River Basin properties. As we await the completed wells to dewater, we are continuing to drill new wells on our Wyoming and Montana properties. We look forward to seeing increasing cash flow from gas production during 2005 as more wells are dewatered and come on line," said Marc E. Bruner, Galaxy's chairman and president.