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Press Release Source: Fellows Energy Ltd.
Fellows Energy Mobilizes Second Phase Workover Operations at the Carbon County Project
Wednesday September 6, 7:17 am ET
Production Estimated to Reach 60 Million Cubic Feet per Month
New Drilling Also Planned
BROOMFIELD, Colo.--(BUSINESS WIRE)--Sept. 6, 2006--Fellows Energy Ltd. (OTCBB: FLWE; "Fellows") an oil and gas company focused on exploration and production of natural gas and oil in the Rocky Mountain Region, announced today that it has commenced the second phase of its workover operations to increase existing production on its Carbon County project, along with its joint venture partner, Thunderbird Resource Corp. Fellows' preliminary work, beginning in early May through early July on the GCS 1A-18-14-8 and the GCS 1-19-14-8 wells, doubled production from approximately 20 million cubic feet per month at the time of the acquisition in March to 40 million cubic feet per month beginning in July. The second phase of workovers is expected to increase production to in excess of 60 million cubic feet per month by the end of September.
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Following the completion of the workovers, Fellows plans to mobilize the recently-sourced drilling rig previously working on the Drunkards Wash project to drill and complete two new wells now being permitted on project acreage for a total of six producing wells. Provided permitting is completed by September 30, and with continued rig availability, Fellows expects the two new wells can be completed by the end of October. Production from the new wells is expected to add an additional 60 million cubic feet per month of production, for a total field production at that time of 120 million. Up to an additional 18 new well sites on 160-acre spacing will be evaluated for later drilling following the completion of the two planned wells.
The second phase of the workovers consists primarily of making permanent the modifications and work on the rods, pump and tubing previously performed on the 1-19-14-8 well, as well as treatment of the upper water zones to block water entry, lowering bridge plugs to allow production from the lower gas zones, and lowering pumps to enable more effective water removal in three of the existing producing wells.
The Carbon County project comprises 5,953 gross acres (4,879 net to Fellows and joint venture partners) 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. 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 have worked methodically and with patience to make each step of the process count toward demonstrating the high potential of the Carbon County field," said George Young, President of Fellows Energy. "With increased workover and drill rig availability in September and this fall, we can now move more quickly to increasing cash flow from the workovers and from new production, and work to prove up the $65 million value determined in the Sproule report. As of the end of these workovers, we will have tripled production since acquisition, and will be fully-prepared to drill new wells this fall on some of 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.
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