Galaxy Reports on Piceance, Powder River Activities

Galaxy Energy Corp. has issued the following update on its activities in the Piceance Basin in Colorado and the Powder River Basin in Wyoming:

The Piceance Basin
Galaxy controls approximately 6,175 (1,545 net) undeveloped acres in the Piceance Basin through its wholly owned subsidiary, Dolphin Energy Corp. and in partnership with Exxel Energy Corp. The company currently has drilling or completion activities underway on four of its operated wells in the basin.

In the Biscuit Ranch 10-31D well, all completed zones within the overall interval from 7294' to 8462' have now been commingled, 2 3/8" production tubing has been installed, fracture treatment fluids have been partially recovered, and gas coming from the well has been flared. The well is currently shut in preparing to run a wireline production log. Galaxy plans to move in a completion rig to lower the tubing string, check for sand fill across perforated and treated intervals and continue flowing the well to complete clean up. The company has a 25% working interest in this well.

Completion activities are underway in the Mulvihill 15-32D well, with the first stage hydraulic fracture treatment having been completed within the overall interval from 8514' to 8818'. Approximately 40% of the treatment fluids have been recovered while flowing the well back up the 4 1/2" casing. The company is preparing to set a temporary bridge plug and move up hole for second stage hydraulic fracture treatment. Galaxy will have an 18.75 to 25% working interest in this well, depending upon a participation election by an unrelated working interest owner.

After reaching total depth of 9373', the Purkey Ranch 13-31B experienced hole cave-in problems in its shallow intervals, which have precluded the running of 4 1/2" production casing to total depth. Galaxy is currently preparing to set a cement plug at approximately 3400' and plans to sidetrack the hole or replace it. It has a 25% working interest in this well.

Galaxy is currently drilling the BR 03-03B Biscuit Ranch directional well, at which 8 5/8" surface casing has been set and cemented to a depth of 1150'. This well is currently drilling ahead below 6600' with the directional drilling having been completed and the wellbore back to its vertical trajectory. The company has a 25% working interest in this well.

At this time, it is too early to estimate initial flow with respect to any of these wells.

In addition, the company--through Dolphin--has varying working interests in several non-operated wells. These non-operated wells currently include one producing well operated by Williams Production RMT Co., two wells operated by Bill Barrett Corp. that are in the completion phase, as well as one well in the completion and evaluation phase, which is operated by Antero Resources Co.

The Powder River Basin
In Sheridan County, Wyo., dewatering operations continue from Galaxy’s Pipeline Ridge completed producing wells. Increased water handling capacity is planned for this area with the implementation of a managed irrigation project on adjacent private property, which will include installation of at least three center pivot sprinkler units. Based on the results of the Pipeline Ridge project, the same approach for handling of increased produced water volumes will be considered for the Leiter and Ucross areas of Sheridan County, where the company currently has 49 wells in various stages of completion with inadequate water handling capacity for the projected dewatering rates.

Galaxy’s producing wells located on the eastern side of Wyoming, in Campbell County, continue to generate production and gas sales, currently at the rate of 825 mcf per day.

Galaxy Energy Corp., a development-stage oil and gas exploration and production company, is focusing on acquiring and developing coalbed methane in the Powder River Basin of Wyoming and other unconventional natural gas properties in the Piceance Basin of Colorado, in addition to exploration activities in Germany and Romania. The company conducts its exploration activities through two wholly owned subsidiaries: Dolphin Energy Corp. and Pannonian International, Ltd.