Eldorado to Drill at Mesa Prospect

Eldorado Exploration said that it will drill a 7,000-foot well in Roosevelt County, New Mexico, before the end of September 2006.

The Mesa Prospect well is situated on an interbasin high between the Permian Basin to the southwest and the Tucumcari Basin to the north. The prospect combines correlative passive induced polarization (PIP) and passive reflection seismology geophysics in combination with supportive subsurface geology in delineation of a late-Pennsylvanian age reef.

The prospect will also test the underlying Montoya Dolomite, which produces oil in other parts of Roosevelt County. The PIP process identified the geophysical feature that covers over 75 square miles and is expected to produce gas if the well is successful. The records from a 1946 well drilled near the edge of the structure, suggest a potential pay thickness of 180 feet. Possible gas reserves from the reef alone could exceed 12 billion cubic ft of gas per 160-acre well location. Associated oil reserves are not calculated.

Eldorado has over 11,000 net acres out of 14,500 acres under lease. With a discovery of gas, there could be as much as 90 wells drilled on the total leased acreage, with potential reserves of near 1 trillion cubic feet recoverable. Additional acreage will be sought upon completion of a discovery. A pipeline will be needed to carry the gas to market, but interim sales may be made by liquefied natural gas (LNG) trucking to a nearby market.

Eldorado has a 37.5% working interest in the well and all follow up wells on the Mesa prospect acreage. If the gas reserves calculated are discovered, the future revenue accruing to Eldorado could exceed 2 billion dollars at a price of $7.00 MCF.