Hemi Energy Group Inc. (fka HMGP)

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Hemi Energy Group, Inc. Kansas and Texas Update
Dec 18, 2007 9:45:00 AM
Copyright Business Wire 2007
ADVERTISEMENTView More AdsFORT WORTH, Texas--(BUSINESS WIRE)--

Hemi Energy Group, Inc. (Pink Sheets:HMGP):

Kansas Leases

We are seeing improved response from 53 reworked oil wells which have resumed production in October. The dewatering of the Purcell, Tebbens, Orth-Silvey, Reno and Bennett leases has yielded increased oil production, and nine of the wells are reporting improving natural gas cuts. This sets the stage for a continued increase in oil production as the gradual dewatering of the Woodson County leases, continues. Simply put, in the new wells we drilled during 2007, we noted the oil water contact point had changed from when our older mature wells were drilled and completed. The influx of formation water, raised the oil water contact point above the existing well perforations, which displaced oil with water. The dewatering of this formation has advanced to a point where increased oil production is now seen at the producing wells. As of today we have lifted and disposed of over 10,000 barrels of water from the producing formation. We have maintained a water injection rate at 200 barrels of water per day. Additionally, we have noticed an increase in natural gas pressures in the southern and western areas of these leases. To date, we have not attempted to sell this natural gas, choosing instead to leave it in place in order to help with the re-pressurization of these oil fields.

The Montgomery County lease currently has three mature oil wells that have returned to production on the Sturgeon lease. The new well drilled on the Sturgeon lease earlier this year primarily showed more amounts of natural gas than oil in the lower Bartlesville formation. Given the lack of natural gas infrastructure and pipelines in the area, this natural gas cannot be economically produced when compared to crude oil. Therefore we are preparing to come uphole and recomplete the well in the upper Bartlesville payzone. This recompletion work is expected to be conducted in January, pending weather and equipment availability issues.

Texas Leases

In December we acquired 125 acres of property in Throckmorton County, Texas (the Bailes lease) on which the discovery well was located. We have the exclusive opportunity to lease approximately 700 acres of additional land contiguous to our lease. There are three mature wells on this lease, and each produced more than 100 barrels per day for several years. They were abandoned for economic reasons in the mid-1980s, although each was producing approximately 30 barrels per day (which is consistent with the normal Texas decline curve for this type of formation). Management's experienced opinion is that re-pressurization of this geological formation has occurred after more than 20 years of no production or new wells on this lease. We have detailed drilling records and well logs of the three wells that show three to four producible pay zones.

Several oil and gas companies have expressed interest in acquiring or developing our lease acreage in Sabine County, TX. and we are currently exploring all options (joint venture, farm out, partnership and royalty positions) in the development of our leases that possess proven gas pay zones. We have the well records from the drilling & logs that shows detailed information about the multiple gas pay zones.

We have acquired five-year leases on the Barnett Shell formation located in urban Fort Worth. We are actively negotiating with several other owners to acquire additional leases. These leases are wedged between two major urban drilling programs that are being developed and expanded by two large New York Stock Exchange oil companies with home offices in Fort Worth and Oklahoma City. Each gas well in the Texas Barnett Shell formation is a multi-million dollar project and requires large acreage spacing in order to be legally and economically produced. Management strongly believes our leases will be needed, integral parts of the pooling these major development drilling programs.

Hemi Energy Group is an independent crude oil and natural gas producer employing a unique business model capitalizing on technological advances to exploit mature fields with millions of barrels of proven oil remaining in the ground, using attractive lease/royalty packages Hemi has secured in its history of tens of thousands of acres of productive domestic projects. The company's forward-thinking strategy has placed it in an enviable position at a time when prices and global demand for oil continue to rise.

Building on decades of experience in enhanced oil recovery, Hemi has successfully amassed a substantial and attractive portfolio of these high quality domestic properties. By streamlining operations through cutting-edge technologies, Hemi has the ability to operate more effectively and efficiently than larger oil companies.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

Statements in this press release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments, and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors inherent in doing business. Forward-looking statements may be identified by terms such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "forecasts," "potential," or "continue," or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The company has no obligation to update these forward-looking statements.

For additional information please go to http://hemienergy.com.Source: Hemi Energy Group, Inc.



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Hemi Energy Group
Inc.
John Kelly
817-566-0351
http://hemienergy.com