Message #9 From:
NewsBot Date: July 10, 2006 02:52:00 AM
FLWE News Fellows Energy Doubles Production at Carbon County from Workover Operations to Date; Additional Workovers and New Drilling Planned
BROOMFIELD, Colo.--(BUSINESS WIRE)--July 10, 2006--Fellows Energy Ltd. (OTCBB: FLWE; "Fellows") an early stage oil and gas company focused on exploration and production of natural gas and oil in the Rocky Mountain Region, announced today that it has doubled production as a result of its recently-completed preliminary workover operations on its Carbon County project, along with its joint venture partner, MBA Resource Corp. Fellows performed preliminary work in early May on the GCS 1A-18-14-8 well. Recently completed work on the GCS 1-19-14-8 included repairing parted rods, exposing previously perforated formations, and repositioning the pump. Production in the GCS 1-19-14-8 well has increased from around 65 mcf per day to over 525 mcf per day. The field now produces a total of approximately 40 million cubic feet of natural gas per month, up from 20 million per month at the time of acquisition by Fellows in March.
Previous work on a third well performed by Fellows, consisting of preliminary replumbing and reconfiguring of the water and gas systems, has increased gas production in that well by 50% to date. In all, the project hosts eight previously-drilled wells, four of which are producing. Fellows plans to perform additional workovers on the shut-in wells prior to drilling on the undrilled acreage, which will consist of up to 20 additional wells on 160-acre spacing.
The Carbon County project comprises 5,953 gross acres (4,879 net acres) with production derived from the Ferron sandstone, the same formation from which the adjoining Drunkards Wash field operated by Conoco/Phillips derives its production. The project also includes an associated gas gathering system and a six mile pipeline and compression facility. Gas is marketed into the transmission pipeline operated by Questar Gas Resources, which crosses the project acreage.
Sproule & Associates of Denver, Colorado completed a "Reserve and Economic Evaluation" of the project in October 2005. Sproule reported that production from the four currently producing wells can be significantly enhanced through operating improvements and that the four shut in wells also have potential to be brought into profitable production similar to the adjacent Drunkards Wash field. Sproule also concluded that the acreage contains potential for up to an additional 20 wells on 160-acre spacing, with total proven, probable and possible reserves of 20 billion cubic feet ("Bcf") and a net present value of $65 million. In addition to the acreage for which the $65 million valuation was returned, Fellows also owns rights to adjacent acreage, covering in excess of an additional 5,000 acres, which it believes will also has similar potential.
"We are proving our theories about the potential of the wells and the effectiveness of our inexpensive workover operations," said George Young, President of Fellows Energy. "We believe we are well on our way to increasing cash flows from production and proving up the $65 million value determined in the Sproule report. We have doubled production in the short span of four months since acquisition, and have learned valuable information to prepare us to drill new wells this fall on the open acreage of the project."
About Fellows Energy Ltd.
Fellows an early stage oil and gas company led by an experienced management team focused on exploration and production of natural gas and oil in the Rocky Mountain Region using traditional and new technologies. Current strategy is to pursue both short- and long-term opportunities to leverage the 230,000 acres of current assets that management believes are characterized by reasonable entry costs, favorable economic terms, high reserve potential relative to capital expenditures and the availability of existing technical information. For additional information please go to www.fellowsenergy.com.
Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as probable, possible and potential, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-KSB, File No. 0-33321, available from us at 370 Interlocken Boulevard, Suite 400 Broomfield, Colorado 80021. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
Examples of such disclosures would be statements regarding "probable," "possible," or "recoverable" reserves among others.
Management hopes these transactions will bring additional value to the shareholders of Fellows Energy. There is no guarantee that the projects 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 or production 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.
