Fellows Energy Begins Production on First Creston Well

Fellows Energy has commenced daily production from the four pay horizons in the first well in the Creston project. Initial production of oil and gas is being attained while the workover fluids are simultaneously being removed from the well bore. Oil and gas production is derived from the Wasatch, Wasatch/Green River Transition, Lower Green River and Upper Green River formations. Stabilized oil and gas production rates had not yet been reached as of the time of this press release. It is anticipated that the well will reach stabilized production levels within 7 to 10 days. Previously indicated daily production potential in all four horizons was estimated at 206-216 gross BOE per day, although no assurances can be given that such levels of production will be achieved.

Gas transportation and sales facilities have been installed and a gas sales contract is in place. Oil will be sold at the wellhead on a weekly basis into tanker trucks from storage tanks installed at the site. Evaluation of the next wells to be returned to production in the ongoing program continues concurrently.

The well is the first of an up to 45-well reworking program predominantly located in the Altamont-Bluebell Field, which historically has produced over 350 million barrels of oil equivalent. Due to the over-pressured, fractured nature of the reservoir in the field, as well as the large vertical extent of potential pay zones, many of the wells have formation damage resulting from traditional completion methods. Fellows plans to employ a strategic mix of conventional and innovative proprietary techniques to attempt to reduce or reverse the effects of formation damage and achieve oil and gas recovery.

Production of natural gas also continues from the recently acquired Carbon County Project. Fellows is planning a reworking program on one of the producing wells and one of the shut-in wells along with its partner, MBA Resource Corporation, which will be the first in many steps aimed at achieving sharp production increases. Fellows management believes that this work has the potential to increase the production of the subject wells by as much as ten times or more. An independent engineering report indicates excellent potential for outstanding production from wells on the project's undrilled acreage. Consequently, a plan for drilling up to 20 additional wells in the project area is presently being considered. Gas is marketed and sold through the project's gathering and compression system into the transmission pipeline of Questar Gas Resources that crosses the project acreage.

Fellows president George Young said: "The new production from our Creston Project marks a significant point in our progress in generating cash flow, and gives us a second producing project, along with the Carbon County project, and a balance of oil and gas production. We are focusing our current efforts as a company on developing additional cash flow on both projects, and anticipate ongoing increases to production and cash flow with each aspect of work we complete."