Stallion Group: Red Bug #2 Will Be a Producer

The Stallion Group said that the recently drilled Red Bug #2 well has been completed as a gas well.

The well encountered 10 feet of net pay at a depth between 2,630 and 2,640 feet. The permeability is over 1,000 mdarcies and the porosity is above 30%, which is excellent in comparison to most Frio gas wells. Stallion expects the production rate to normalize between 225,000 and 250,000 cubic feet of sweet natural gas per day. The well's production rate is the highest rate incurred of the four wells completed to date. The estimated gross reserves are estimated to be approximately 0.35 Billion Cubic Feet. This well has been completed and will be tied into our existing pipeline system as quickly as possible.

The success of this well has proven the importance of using our advanced Bright Spot Technology when interpreting our extensive 2D and 3D seismic portfolio. Our contract drilling rig has been moved to the next drilling location. Drilling of the next well (Buffalo River #2 - F33) commenced on Friday, May 18, 2007. The Company will announce the results of this well upon completion.

The company plans to drill an initial 50 wells within the area of mutual interest (AMI). Over 7500 miles of 2D seismic and 250 square miles of 3D seismic is in various stages of geophysical review as the Company continues to select precise drilling locations. Stallion holds a 30% gross interest in this AMI (area of mutual interest) in Mississippi and Louisiana.

The Stallion Group is an independent oil and gas company focused on developing proven energy rich areas of North America.