Teton Energy Says Denver-Julesburg Basin Project Making Progress

Teton Energy

Teton Energy announced the initial results of its pilot program in the Eastern Denver-Julesburg Basin.

To date, Teton has participated in the drilling of ten wells as part of the initial pilot program with Noble Energy on its over 182,000 gross acreage block. As part of the agreement with Noble Energy, Teton will be carried on the first 20 wells. After completion of the first 20 wells, Teton and Noble Energy will split all costs associated with future drilling according to each party's working interest percentage; Teton, 25 percent and Noble Energy, 75 percent. Teton will receive 25 percent of any revenues derived from the first 20 wells.

All ten wells that have been drilled reached a minimum target depth of 2,000 feet, where the target pay is the Beecher Island Chalk, a member of the Niobrara formation. The average drilling time for each well was 1.5 days.

Four wells were drilled in the Chundy prospect area, located in Chase and Dundy Counties, Nebraska: the Jones No.12-31, Jones No.32-31, State No.44-36 and the Ambrosek No.11-5. The Jones No.12-31 has been logged, cased and is waiting on completion. The Jones No.32-31 and Ambrosek No.11-5 wells have been perforated and fracture stimulated. The fracture stimulation was successful, staying within the Beecher Island zone. The Jones No.32-31 well is currently testing gas and water production to determine commercial viability. The Ambrosek No.11-5 was testing and is currently shut-in while the test trailer is moved to the Grant area. The State No.44-36 well was plugged and abandoned based on log evaluation.

Six wells were drilled in the Grant prospect area, located in Grant County, Nebraska: the Karre No.42-26, State No.11-36, Hagan No.41-27, Karre No.31-26, Hagan No.22-26 and the Kroeker No.11-25. The Karre No.42-26 and Karre No.31-26 have been logged, cased and are waiting on completion. The Hagan No.41-27 and Kroeker No.11-25 wells have been perforated and fracture stimulated. These wells are currently cleaning up after stimulation. The fracture stimulation appears successful with the wells flowing gas during cleanup. The State No.11-36 and Hagan No.22-26 wells were plugged and abandoned based on log evaluation.

Andrew Schultz, Vice President of Operations, stated, "We are pleased with the initial progress that has been made so far in the DJ Basin. The drilling program is ahead of schedule and we are pleased with Noble Energy's operational approach. Although we have additional testing that must be completed to determine commercial viability, we are encouraged by the preliminary results to date. Teton will continue to provide company updates as significant pilot program results become available."

The pilot program may include further 2-D and 3-D seismic evaluation. A gathering system is currently under review to gain access to the Kinder Morgan pipelines, Pony Express in Chundy and Trailblazer in Grant.

Noble Energy is currently continuing the pilot program. Under the terms of the acreage earnings agreement, Noble Energy must drill ten wells by December 31, 2006 and the second ten wells by March 1, 2007.