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Fellows Energy Ltd. Acquires Two New Shallow Oil and Gas Projects; Company Continues to Expand its Portfolio of Near-Term Revenue Generating Properties
Fellows Energy Ltd. (OTCBB: FLWE)("Fellows") announced today that it has acquired two new shallow oil and gas projects through its exploration agreement with Thomasson Partner Associates, Inc. of Denver, Colorado. Fellows has acquired the Platte and Badger projects in Nebraska and South Dakota, respectively, which it believes have excellent low-cost exploration potential for shallow biogenic gas discoveries.
"The Platte and Badger projects will complement the recently acquired interests in the Kirby and Castle Rock projects in the Powder River Basin," said George Young, President of Fellows Energy. "While we expect the Kirby project to commence production soon and Castle Rock is also scheduled for a sizeable drilling program this year, we are also excited to advance with Platte and Badger to delineate drill targets this year. With energy prices at record levels, we will use our strengthened balance sheet to generate projects and cash flow to accelerate our growth strategy."
The Platte and Badger projects were generated after extensive analyses of surface fracture data and reservoir and production studies of analogous fields currently in production. Work performed by Thomasson demonstrated identical geological characteristics between the Platte and Badger areas and nearby producing fields with substantial production histories. The Platte project targets the Dakota Sandstone at shallow depths, with additional targets at shallow depths in the Niobrara formation in the same structures. The Badger project targets the Dakota formation at depths of less than 2,000 feet.
Fellows' exploration agreement with Thomasson gives it access to numerous projects generated by the staff of exploration geologists, each of whom has from 25 to 47 years' experience in oil and gas exploration in the Rocky Mountain and Midwest areas of the United States. Fellows has the first right to acquire projects generated by Thomasson. Projects recently acquired by Fellows include the Bacaroo project in Colorado and the Carter Creek project in Wyoming, as well as the Weston County and Gordon Creek projects that were joint ventured to JMG Exploration, Inc.
The agreement calls for TPA to present to Fellows eight projects per year with an area of interest of 10,000 to 80,000 acres per project with a reasonable potential of at least 200 hundred billion cubic feet of natural gas reserves (200 BCF) or 20 million barrels of oil reserves (20 MMBO).
Fellows Energy Ltd. Improves Balance Sheet Through Project Restructuring
BROOMFIELD, Colo.
Fellows Energy Ltd.
George S. Young, 303-327-1525
or
CEOcast, Inc. for Fellows Energy
Ed Lewis, 212-732-4300
Fellows Energy Ltd. (OTCBB: FLWE) ("Fellows") announced today that it has received the final payment from the sale of its Circus project and assigned its remaining working interest in the Weston County and Gordon Creek projects to JMG Exploration, Inc. The transactions, under which the Company paid off the balance of a $780,000 loan from JMG, provide Fellows with working capital and strengthen the Company's balance sheet.
Repayment of the JMG loan was accomplished by the assignment to JMG of Fellows' interest in the two projects, subject to the right retained by Fellows to reacquire those interests for approximately $390,000 on or before June 30, 2005. The receipt of the final payment from the sale of the Circus project completes that transaction, as stated in the Company's recently filed Form 10-QSB, in which the Company posted a gain of $0.02 per share for the first quarter of 2005. The working capital the Company has generated from the sale will allow it to pursue several of its other coal bed methane projects, including the Bacaroo, Carter Creek and Overthrust projects.
Fellows President George Young said: "We are pleased to be free of the loan obligation and in a position to carry our projects forward in a logical sequence. In addition to our current portfolio, we have an excellent source for new projects through our relationship with Thomasson Partners. As we have demonstrated, those projects themselves can be a source of financing for us. We look forward to executing our business plan and achieving strong future growth."
Fellows Energy Ltd. Gives Corporate Update
BROOMFIELD, Colo.
Fellows Energy Ltd.
George S. Young, 303-327-1525
Fellows Energy Ltd. (OTCBB: FLWE) ("Fellows") is pleased to provide this corporate update of its activities.
Overthrust Project. The Company recently received final data on the gas content from the drill core taken from the Crane 6-7 well on its Overthrust Project (see press release of April 13 and May 11, 2005). Previous data announced by the Company of 253 cubic feet of gas per ton of coal on a dry, ash-free basis have been confirmed in the Bear River Formation from the Crane 6-7 core hole. Gas contents of up to 193 cubic feet per ton in situ with a storage capacity of 316 cubic feet per ton in the Bear River Formation were also measured. Perhaps more importantly, coal rank for the Bear River Formation was determined to be high volatile B bituminous to high volatile A bituminous. This coal rank is similar to the San Juan Basin and Drunkards Wash producing coal bed methane fields. The Company is now preparing to select drilling locations and is conducting permitting activities for a pilot coal bed methane field in the Murphy Ridge area and is acquiring 2-D seismic data across selected areas of the project to select drilling locations targeting conventional natural gas from reservoir quality sands encountered in wells drilled in the Crane 6-7 area.
Bacaroo Project. The Company has commenced an intensive leasing and acquisition program at the Bacaroo Project. The commencement of work on the Bacaroo Project represents a major step in the establishment of Fellows' exploration and drilling operations in areas outside the thrust belt in the Rocky Mountains. Bacaroo represents a mid-continent type of exploration activity. The Company expects to evaluate existing seismic data to enable the identification of drilling targets later in the year, with the assistance of the professionals at Thomasson Partner Associates, Inc. of Denver.
Carter Creek Project. The Carter Creek project was obtained by the Company through its agreement with Thomasson Partner Associates, Inc., and is undergoing advanced evaluation for the delineation of drill sites and permitting. The Company plans to undertake drilling activities on its own later this year. However, it has receive a number of inquiries relative to a joint venture on the project, and will consider such an arrangement if deemed advantageous.
Weston County and Gordon Creek Projects. JMG Exploration, Inc. ("JMG") is the operator under a joint venture agreement with the Company on the Weston County and Gordon Creek projects. The Company continues to work with JMG in expectation of advanced exploration and drilling later this year. The Company believes these projects have excellent potential for production in the near term.
About Fellows' Projects. Fellows now has a variety of projects, from coal bed methane to conventional and unconventional oil and gas projects in the Rocky Mountains to a mid-continent type of project in the Bacaroo project. Fellows will simultaneously have activities in the Overthrust Project in which it is the operator, as well as on the Weston County project and Gordon Creek project, in which JMG is the operator, as well as operations on the Carter Creek project and the Bacaroo project.
The Overthrust project is a 183,000 acre project covering coals in three seams in the same geologic formations and with similar depositional characteristics as the coal in the Drunkard's Wash project. Fellows will test the three identified coal seams that run through much of the area. Previous drilling has included seven exploratory wells that identified multiple coal seams of Tertiary and Cretaceous age that appear to be prospective for coal bed methane.
The Weston County project is a 19,290-acre project on the east flank of the Powder River Basin. The Weston County project contains previously-identified drill locations based on extensive seismic evaluation targeting the Turner Formation, in near proximity to producing fields. In addition, the parties will target the nearby locations with potential in the Minnelusa and Dakota Formations.
JMG will also drill on the 5,242-acre Gordon Creek project, recently acquired by Fellows from The Houston Exploration Company (NYSE: THX). The Gordon Creek project is in an area of known coal resources in Carbon County in eastern Utah near other operating coal bed methane projects, such as the Drunkard's Wash field.
Fellows also recently purchased the 10,678-acre Carter Creek Project in the southern Powder River Basin. Fellows plans to commence drilling in the near future at the Carter Creek Project, in which Fellows has a 100% working interest. Fellows believes Carter Creek hosts a low risk hydrocarbon project. Based on its analysis of the geologic structure of this region, Fellows expects to find productive sections in the Cretaceous, Niobrara, Turner (Frontier) and Mowry layers, in that several existing wells in the Carter Creek area currently produce oil.
Fellows president George Young said, "We have progressed rapidly on our projects in spite of the recent market downturn. We posted earnings of $0.02 per share in the first quarter and have progressed in our financing. We will carry out our plans and advance to the production level later this year, while we also evaluate and acquire additional strategic, quality projects to add value to our already substantial holdings. We are also working hard toward the final acquisition of interests in the Kirby and Castle Rock projects in Montana (see press release of March 4, 2005), which will give us production in the short term. We believe we have successfully laid the foundation of a dynamic energy company in a very short time frame, and we will continue to identify and acquire projects that enhance the value of our shareholders and our aggressive program of growth and development on our coal bed methane projects."
Fellows Energy Ltd. Reports Earnings of $0.02 per Share for the First Quarter and Completes $1,062,000 Private Placement
BROOMFIELD, Colo.
Fellows Energy Ltd.
George S. Young, 303-327-1525
Fellows Energy Ltd. (OTCBB: FLWE) today announced earnings of $0.02 per share for the first quarter of 2005 with the filing of its Form 10 QSB. First quarter earnings of $713,430 were posted, compared to a first quarter loss in 2004 of $696,388, or $0.02 per share. Earnings derived from a gain on the sale of oil and gas leases purchased in November of 2004 for $487,000 and sold in February of 2005 for $1,980,000. Subsequent to the quarter end, the Company also completed an equity private placement in the amount of $1,062,000.
Fellows president George Young said: "We are pleased to report earnings from our investing activities in oil and gas projects, and expect to continue with our operations and drilling to also begin to post earnings from operations. Our ability to identify quality projects is evidenced by the gain on the sale just accomplished, and we are excited to continue with operations on other projects in our portfolio."
Fellows intends to use the proceeds of the offering to fund a portion of its ongoing exploration, drilling and working capital needs.
Fellows Energy Ltd. Receives Additional Gas Content Results on the Overthrust Project
BROOMFIELD, Colo.
Fellows Energy Ltd.
George S. Young, 303-327-1525
or
CEOcast, Inc. for Fellows Energy
Ed Lewis, 212-732-4300
Fellows Energy Ltd. (OTCBB: FLWE) ("Fellows") announced today additional results from gas desorption tests on coals from the Overthrust project. Previous data announced by the Company of 253 cubic feet of gas per ton of coal on a dry, ash-free basis have been confirmed in the Bear River Formation from the Crane 6-7 core hole. Gas contents of up to 193 cubic feet per ton in situ with a storage capacity of 316 cubic feet per ton in the Bear River Formation were also measured. Perhaps more importantly, coal rank for the Bear River Formation was determined to be high volatile B bituminous to high volatile A bituminous. This coal rank is similar to the San Juan Basin and Drunkards Wash producing coal bed methane fields, although indicated gas content is somewhat lower.
Winter wildlife restrictions were lifted in April from the Overthrust project, allowing Fellows to implement permitting activities for a pilot coalbed methane project around the Murphy Ridge 1-32 well. Previous work conducted by Fellows' partner, Quaneco LLC, indicated 50' of coal in the Bear River Formation as compared to an average 24 feet of coal at Drunkards Wash. The Murphy Ridge 1-32 tested 18 MCF/day and 235 pounds of shut-in pressure after stimulation and dewatering for one week in 2002.
Fellows activities will also include the acquisition and re-processing of existing high quality 2-D seismic lines across selected areas of the project to select drilling locations targeting conventional natural gas from reservoir quality sands encountered in wells drilled in the Crane 6-7 area.
The Overthrust project is a 183,000 acre project covering coals in three seams in the same geologic formations and with similar depositional characteristics as the coal in the Drunkard's Wash project. Fellows will test the three identified coal seams that run through much of the area and appear to be prospective for coal bed methane. Previous drilling included seven exploratory wells that identified the coal seams of Tertiary and Cretaceous age.
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 240,000 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, and the Bacaroo project in Colorado. Fellows is also negotiating to finance and acquire interests in the Kirby and Castle Rock projects in Montana, as previously announced.
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 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 in over 450,000 acres of coal bed methane and conventional oil and gas projects it has 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.
