Rally Energy Spuds First Well on Prince Edward Island

Rally's Irishtown Well #2, located nine kilometers northeast of Kensington, Queen's County, Prince Edward Island spudded earlier this week. This natural gas exploration test is on Permit 96-06, one of eight permits covering 708,000 acres onshore Prince Edward Island. Estimated time to complete drilling is four weeks.

During 2002, Rally Energy completed an extensive study of data from previously drilled wells, reprocessed all seismic data on its Prince Edward Island acreage, and acquired 127 kilometers of new seismic data. The Irishtown #2 well is being drilled vertically to a depth of 1,566 meters to test multiple stacked sandstones throughout the Cable Head, Green Gables and Bradelle formations. The well was located based on the new seismic data, up-dip from the Spring Valley #1 well which was drilled in 1997 and showed good porosity and permeability in the target sandstone formations. Estimated closure on the top of the Bradelle formation is approximately fifteen square kilometers.

Of the 17 deeper wells previously drilled in Prince Edward Island, the majority were drilled in the 1970's and targeted deeper oil targets. These wells had gas shows and log indicated bypassed gas pay. The East Point E-49 well, located 26 kilometers offshore northeast of Prince Edward Island, drillstem tested 5.5 million cubic feet per day of natural gas from one sand zone in the Cable Head formation. This well is currently held under a significant discovery license with 77 BCF of estimated reserves.

A second well, Rally et al Sea View #1, will be drilled immediately following the Irishtown well, weather permitting, with three follow-up locations contingent on the success of the first two wells. Additional data gathering and further exploration drilling is planned later in 2003 on other seismically identified structures on Rally Energy's Prince Edward Island permits. Rally has a 55% working interest.