Message #7 From:
NewsBot Date: November 3, 2005 03:26:00 AM
FLWE News Fellows Energy Ltd. Provides Update on Uinta Basin Projects; Projects to Provide Near-Term Cash Flow to Support Development Activities
BROOMFIELD, Colo.--(BUSINESS WIRE)--Nov. 3, 2005--Fellows Energy Ltd. (OTCBB: FLWE) ("Fellows") today provided an update on its Uinta Basin projects. Fellows expects that these projects will provide near-term cash flow to enable continuing work and development of its large, coal bed methane projects in other areas.
"We believe these two projects represent an excellent opportunity to generate significant cash flow," said George S. Young, Fellows Energy's Chief Executive Officer. "Both of these areas have a history of substantial production, and we believe that our rework/recompletion activities will enable us to benefit from these prolific areas."
Creston Project
Fellows has completed initial title due diligence and commenced field operations on the rework/recompletion project with a potential of up to 45 wells in the Uinta Basin of Utah. This undertaking is through a participation agreement with Creston Resources Ltd. and its wholly owned subsidiary Homeland Gas and Oil Ltd. Fellows will operate the rework/recompletion program under the State of Utah-approved Operator Mountain Oil and Gas, Inc. The initial well to be returned to production will tap the potential of 3 previously tested and produced zones in the Green River and Wasatch formations as well as new completions in never before perforated pay zones. Initial Wasatch formation pay zones averaged 30 barrels of oil per day in their last 24 months of daily production before being shut-in due to the low oil prices of 1986. The initial pay zones in the Green River formation averaged 89 barrels of oil per day in their last 12 months of daily production before being shut off when the well was deepened to the prolific over-pressured Wasatch formation. An additional pay zone in the Green River formation has a tested gas rate of up to 432,000 cf/day, but was never produced due to the low gas prices at the time of the last test. These three previously proven zones have a total proven daily potential of 191 barrels of oil equivalent per day. Additional zones will also be completed in the Green River formation for a further increase in daily production potential. It is anticipated that the well will be returned to daily production before the end of November 2005. Gas transportation and sales facilities have been installed and a gas sales contract is in place. Evaluation of the next well to be returned to production in the 45 well program continues concurrently.
The project is located across 17,000 acres primarily within the prolific Altamont-Bluebell Field, which historically has produced over 350 million barrels of oil equivalent. Due to the over-pressured, fractured nature of reservoir in the field, as well as the large vertical extent of potential pay zones, many of the wells have formation damage resulting from high drilling mud weights and cementing operations. These conditions have left many zones unable to produce to their potential. Fellows and Creston will employ a variety of conventional and innovative proprietary techniques to reduce the effects of formation damage and increase oil and gas recovery.
Carbon County Project
Fellows previously entered into activity in the Uinta Basin on its Gordon Creek Project, in which is currently maintains a joint venture and a 50% interest with JMG Exploration, Inc. Fellows has completed its title and technical due diligence on the Carbon County project, a producing gas field in Carbon County, Utah, and is scheduled to close the acquisition of the project on November 30, 2005. A favorable engineering study has been completed by Sproule & Associates verifying the proven, developed producing reserves and undeveloped reserves. The Carbon County project is currently producing approximately 30 million cubic feet of natural gas per month. The field comprises 5,953 gross acres (4,879 net acres) with three gas wells currently producing and an additional six wells that are presently shut-in. Production is derived from the Ferron Sandstone formation, and the gas is marketed into the adjacent gas pipeline operated by Questar Gas Resources. The field has potential for 20 additional well sites on 160 acre spacing on the undeveloped acreage. The property is adjacent to the Gordon Creek project and to the very successful Drunkards Wash field originally developed by River Gas Corp.
About the Uinta Basin
The Uinta Basin of Utah is currently one of the most active oil and gas producing areas in the onshore United States. The majority of activity in the basin is focused on the Wasatch and Green River formations, which are the primary producing formations in the Altamont-Bluebell Field. Fellows believes that the large areal extent, both horizontal and vertical, of hydrocarbon occurrence in the Uinta Basin makes for a lower risk project than exploration in unproven areas.
About Fellows
Fellows combines a seasoned management team with exploration targets focusing on coal bed methane, shallow gas and low-risk oil and gas potential.
Fellows has interests in over 500,000 acres of oil, gas and coal bed methane rights, including interests in the Weston County and Carter Creek projects in Wyoming, the Gordon Creek and Overthrust projects in Utah, the Kirby and Castle Rock Projects in Montana, and the Bacaroo project in Colorado.
Fellows recently completed its option under an Exploration Services Funding Agreement with Thomasson Partner Associates, Inc. of Denver, Colorado under which it will continue with project evaluation and acquisitions. Fellows has the first right to projects generated by Thomasson for up to a 100% basis on projects selected. Projects recently acquired by Fellows include the Bacaroo, Gordon Creek, Weston County, Platte, Badger and Carter Creek.
The agreement calls for TPA to present to Fellows an average of eight (8) projects per year with an area of interest of 10,000 to 80,000 acres per project with a reasonable potential of at least two hundred (200) billion cubic feet of natural gas reserves (200 BCF) or twenty (20) million barrels of oil reserves (20 MMBO).
As new projects are acquired, Fellows will add diversity to the interests previously optioned.
Management hopes these transactions will bring additional value to the shareholders of Fellows Energy. There is no guarantee that the agreement with TPA or the leases that Fellows has recently acquired will increase the value of its shares of common stock, or that Fellows will acquire rights to explore and operate any other such projects, or that in the event that it acquires rights to explore and operate other such projects, that these actions will be successful or increase the value of Fellows' common stock.
This press release may contain forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. There are many factors that could cause our expectations and beliefs about our plans to acquire additional exploration properties, our plans to drill or our drilling results to fail to materialize: competition for new acquisitions; availability of capital; unfavorable geologic conditions; the complexity of coal bed methane exploration and production; and prevailing prices for natural gas and general regional economic conditions. Fellows assumes no obligation to update the information contained in this press release.
