Gastem Begins Utica Shale Program In New York State

Gastem has begun Phase I of its 2 phase development program on the Utica Shale Properties in New York State. In this initial phase, Gastem will proceed to drill and frac three vertical wells during Q2 2008. Following results from a full program of logging and coring, this will be followed during Q3-Q4 2008 by Phase 2, with the drilling of two additional vertical wells and a horizontal well.

According to the option agreement with Utica Energy Gastem will earn a 65% interest in the 29,000 acre properties and Utica Energy (formerly Covalent Energy) will retain a participating 35% interest and a 5% GORR upon Gastem completing the program prior to January 2009. Utica Energy has during the summer of 2007 drilled, completed and tested two Utica Shale wells with encouraging results.

At present, a detailed technical overview, budgetary evaluations and schedule have been completed. Review work on wells drilled and fractured by Utica Energy have also been completed as well as regional compilations. Rig and other services have been secured and permit applications are being submitted for Phase I.

Other prospective intervals identified during logging will also be tested for potential gas production, notably the Marcellus and the Oneida. Pipelines and related infrastructures are in immediate proximity.

All Gastem operations in the US are owned, administered and directed by Gastem USA, a wholly owned subsidiary of Gastem.