Digital Gas, Inc.(fka DIGGQ)

[Buckey]

2004-06-04 07:42 ET - News Release



NEW YORK -- (Business Wire) -- June 4, 2004

Please replace the release with the following corrected
version due to multiple revisions.

¶ The corrected release reads:

¶ DIGITAL GAS AGREES TO ACQUIRE GAS SUBSIDIARY OF SUNWEST PETROLEUM
INC. FOR $15.75 MILLION

¶ Digital Gas, Inc. (OTC Pink Sheets:DIGG) -- Digital Gas, Inc. and
SunWest Petroleum, Inc. of Dallas, Texas, have entered into an
agreement whereby Digital will purchase SunWest SEK LLC, which
contains producing gas wells, pipelines and a gathering system, as
well as other highly prospective drillable acreage and assets in the
Midwest, from SunWest for $15.75 million.
¶ Digital Gas will submit final documentation to its financial
agents as soon as several new wells have been completed and put online
and it receives an updated engineering report on the approximately
10,000 acres owned by SunWest. At closing, Digital Gas anticipates
having just fewer than 40 producing coal methane wells with a total
gas production of in excess of 2.5 million cubic feet per day. An
additional 125 wells could be drilled and put online on the remainder
of SunWest's property. Gas is currently selling for $6.50 per Mcf in
the area.
¶ Under the terms of the agreement, Digital Gas can request that
SunWest drill, log, pipe-set and cement 25 additional wells in certain
highly prospective existing acreage included in the deal. It is
anticipated that the additional wells, which Digital Gas would pay for
and own, could add in excess of 1.56 million cubic feet per day. The
additional 100 wells to be drilled on the property are projected to
produce in excess of 6.25 million cubic feet per day. Totally drilled,
the property is anticipated to produce in excess of 10.5 million cubic
feet per day. Although management expects these production numbers,
there is no guarantee that the future wells will perform as those
currently producing for SunWest at a rate in excess of 75 million
cubic feet per month.
¶ Digital Gas, which is currently in negotiations to purchase other
gas assets and companies, anticipates raising $25 million of debt
financing with a ten-year term to pay for the purchase price of this
acquisition, the development of the 125 wells and for working capital.
At closing Digital Gas will pay SunWest $10.75 million in cash and 1
million shares of its common stock at an accepted value of $5.00 per
share.
¶ Digital Gas intends on placing the assets into Digital Energy &
Farming and eventually convert the operation into an electric company
by building solid oxide fuel cell (SOFC) plants at a main gathering
system which will then convert the gas into electricity and heat.
Management anticipates that this will increase gas revenues by a
minimum of 300% based on selling the electricity at just $.07 kw. The
utilization or sale of the heat will increase revenues further still.
Digital Energy & Farming may apply for a listing on the AMEX through
the agency of an investment banking firm after the closing of this
transaction and before the 125 wells are fully completed,

¶ For further information: call Brian Smith [phone] or email
[e-mail]
Contacts:

Digital Gas, Inc. for Digital Energy & Farming, Inc.
Brian Smith, 732-927-4073
[e-mail]
Source: Digital Gas, Inc.