K2 Energy Begins Next Phase of Bow Island Drilling Program

K2 Energy Corp. has finalized plans to commence the next phase of drilling operations in late June to extend the Palmer Bow Island gas play on the Blackfeet Indian Reservation in north central Montana. A total of 18 locations are in the final stages of regulatory approvals and it is intended that the next phase of drilling will proceed in three to five well stages. Each set of three to five wells will be open-hole completed and tied into the Corporation's recently constructed pipeline. Pipeline access right-of-ways are in the process of being obtained for the new drill locations in order to facilitate the immediate tie-in of the new gas production.

In addition, the Corporation continues clean-up activities on the initial seven wells tied into the gathering system in April 2003. Production remains unstable with cumulative field rates currently ranging from 200 to 250 mcf/d. After deducting the base volumes used to fuel the field compressors, sales volumes in May ranged from 125 to 175 mcf/d. It is anticipated that with the combination of further clean-up efforts and the drilling of additional wells, production volumes will increase significantly.

Finally, technical work has commenced to identify a test-well location in the Gunsight anomaly located approximately six miles north of the Palmer development area. In addition to shallow gas potential at Gunsight, a feature imaged on 2-D seismic shows a gentle fold in the Cambrian, Devonian, and Mississippian strata. A well drilled in the early 1950's penetrated the Three Forks and Lodge Pole Formations and swabbed up to 50 barrels of oil from each respective zone. A follow-up well confirmed the presence of oil in the Three Forks and Lodge Pole Formations as well as testing gas at a rate of 1.3 mmcf/d from the Madison Formation. The Corporation expects that this first test location could be drilled as early as late summer or early fall 2003.