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January
26, 2006
Storm
Cat Energy Corporation Provides Operational Update;
Company Sets Initial 2006 Capital Program at US$32
Million
CALGARY and DENVER â (PR Newswire) â January
26, 2006 â Storm Cat Energy Corp. (AMEX: SCU;
TSX.V: SME)
today provided an update on the Companyës U.S. and Canadian
operations. The highlights of the Companyës operations
are:
Storm Catës Board of Directors
has approved an initial CAPEX budget of approximately US$32
million for drilling, leasehold and geologic work in 2006. In
2005, the Company spent approximately US$20 million. The
Company is producing 4.0 million cubic feet per day (MMcfd)
from 138 wells on its Powder River Basin properties. Storm
Cat entered into a letter of intent to purchase approximately
3,550 net acres in the Powder River and 4,308 net acres in
Alberta. Both areas are prospective for coalbed natural gas
(CBNG) drilling and production. In
British Columbia, the Company is rapidly moving forward with
drilling to determine commerciality on the Elk Valley farm-in. Storm
Cat has re-activated three wells, drilled two wells on the
northern portion of the pilot and permitted to drill six
wells for the next phase of development. In
Alaska, a rig is secured with drilling to commence in February
2006. Storm Cat will drill the Northern Dancer #1,
its first onshore Cook Inlet Basin well. Permits
have been submitted to drill three wells on Storm Catës Moose
Mountain acreage in Saskatchewan. Although a drilling
rig has not yet been secured, the Company is confident it
will secure a rig in the near future. On
January 25, 2006, the SEC declared effective the Companyës
registration statement filed on Form F-3 pursuant to the
registration rights agreement dated October 20, 2005.
The Companyës operational update:
Powder River Basin â Wyoming
Storm Cat Energy is developing
coalbed natural gas on over 7,800 gross acres in the Jamison/North
Twenty Mile and Northeast Spotted Horse areas, located in Campbell
County, Wyoming, USA. Geologically, these fields are located
on the northeastern flank of the Powder River Basin coalbed
natural gas region.
Originally placed in production
in early 2002 and acquired by Storm Cat in 2004, the Jamison/North
Twenty Mile properties are currently producing at a rate of
approximately 750 thousand cubic feet per day (Mcfd) of natural
gas from 28 producing wells (26 operated). Current production
derives from the Anderson and Canyon coal seams. Storm Cat
has 100% working interest (81.5% net), in 1,481 acres at Jamison/North
Twenty Mile.
A total of six coal seams exist
in the Jamison/North Twenty Mile area, including the Anderson
and Canyon. The Company believes two of the lower coal seams,
the Cook and the Wall, provide sufficient thickness to warrant
testing and development through the drilling of new wells.
Storm Cat is currently preparing a Plan of Development for
submission to the BLM with the intent to begin drilling up
to 20 multi-seam Cook/Wall wells in 2006. In addition, the
Company feels the shallow Smith coal seam is a good candidate
for re-completion of certain existing wells.
The Company acquired the Northeast
Spotted Horse properties in 2005. The field is located approximately
35 miles northwest of Gillette, Wyoming. Storm Cat owns 6,320
gross contiguous acres. Originally placed on production
in 2001, it presently consists of 110 producing wells (108
operated). Production is climbing and is currently over
3.25 MMcfd from various Fort Union coal seams.
As of January 2006, Storm Cat
drilled 43 new wells at Northeast Spotted Horse, including
29 multi-seam completion wells in a combination of the Cook,
Wall and Pawnee coal seams. Multi-seam completion techniques
help economically capture incremental reserves in a single
wellbore, significantly reducing finding and development (F&D)
costs. The remaining 14 wells are completed in only the shallower
Canyon coal seam on an experimental 160-acre pattern. Well
analysis on the 160-acre pattern is showing improved economics
by capturing reserves with fewer wells than the normally accepted
80-acre pattern. The Company is actively continuing its drilling
and development activity and is on track to complete its 120-well
drilling program by early second quarter 2006.
Powder River Basin Transactions
Storm Cat Energy entered into
an agreement to acquire a 90% working interest in approximately
3,550 net acres in the Powder River Basin, Campbell County,
Wyoming. Pending due diligence review, the transaction
is set to close by the end of the first quarter 2006. Storm
Cat Energy plans an aggressive drilling program, subject to
regulatory requirements, after closing. Transaction terms
were not disclosed.
Storm Cat Energy and PRB Gas Transportation,
Inc. (PRB) have closed on an asset sale in which PRB has purchased,
from a wholly-owned subsidiary of Storm Cat Energy Corporation,
certain gathering assets in Northeast Spotted Horse for an
undisclosed amount. PRB will provide natural gas gathering
and compression services for Storm Catës Recluse-area development
properties including Northeast Spotted Horse. This transaction
will allow Storm Cat Energy to focus its capital and operations
on drilling and production activities.
Elk Valley â British Columbia
In June 2005, Storm Cat entered
into a Farm-in and Joint Venture agreement on 77,775 gross
acres in the Elk Valley area of southeastern British Columbia.
Prior to Storm Catës involvement, 17 stratigraphic and exploratory
wells were drilled in two pilot areas. Targeting coals in the
Mist Mountain formation, the wells encountered over 300 feet
of coal in 14 seams. Production testing from 2001 to 2004 resulted
in over 300 Mcfd from the best well. Storm Cat re-activated
three wells in the Elk Valley western pilot, adding a new coal
interval to the completion in two of three wells. Currently,
the three wells are producing approximately 180 Mcfd into the
projectës production facilities.
Two new wells north of the pilot
project were drilled in nine and seven days, respectively. Focusing
on the shallower part of the Mist Mountain section, the wells
encountered between 175 feet and 207 feet of coal between 600
feet and 2,400 feet deep. Both wells are in the process of
being completed and prepared for tie-in to the pilot facilities.
These newly drilled wells are expected to be placed on production
test in February 2006. Six additional well locations are being
surveyed and permitted for the next phase of exploration.
Cook Inlet Basin â Alaska
Storm Cat Energy acquired extensive
Petroleum and Natural Gas leases in the Cook Inlet region of
Alaska. Over 7.0 Tcf of natural gas have been produced from
this prolific basin since hydrocarbons were discovered in the
1950s.
The Company now owns 100% interest
in more than 35,000 acres of onshore lands leased from the
State of Alaska and the Alaska Mental Health Trust approximately
30 miles north of Anchorage and on-trend with recent gas discoveries
in the region. Storm Catës first Alaska well, Northern Dancer
No. 1, will be drilled on Alaska Mental Health Trust lands
to a depth of approximately 7,500 feet to test the natural
gas potential of the Tyonek formation. This initial exploratory
well is expected to spud in February, 2006.
Alberta Plains â Canada
Storm Cat acquired two separate
prospects in South Central Alberta. The first is located
in the Cessford area of Alberta. Storm Cat secured access to
3,200 gross acres (2,240 net acres) through a drill-to-earn
agreement. The lands are prospective for gas from the Belly
River and Upper Mannville Coals, as well as gas from tight
Mannville sands. The first well on this prospect will be drilled
prior to March 31, 2006, pending rig availability and suitable
weather.
The second prospect is located
in the general Red Deer area of Central Alberta, within the
rapidly emerging Mannville Coal fairway currently being developed
between Calgary and Edmonton. Storm Cat acquired a 100% working
interest in 2,067.8 acres of land in the December 14, 2005
Alberta Crown Land sale. The lands have a lease-term of five
years and are prospective for gas from the Upper Mannville
Coal formations, as well as gas from tight Upper and Lower
Manville sands. Storm Cat is currently planning to drill a
horizontal Mannville CBNG well in the fourth quarter of 2006.
Moose Mountain â Saskatchewan
Storm Cat completed its geological
review of the Moose Mountain project in east/central Saskatchewan
where the data suggests analogy to widespread producing areas
in western Saskatchewan. Storm Cat has submitted licenses
to drill three wells to evaluate the potential of the Second
White Specs formation and is currently awaiting the availability
of a drilling rig to begin drilling.
About
Storm Cat Energy
Storm Cat Energy is an independent
oil and gas company focused on the pursuit, exploration and
development of large unconventional gas reserves from fractured
shales, coal beds and tight sand formations. The Company has
producing properties in Wyomingës Powder River Basin, exploration
and development acreage in Canada and Alaska, and high-risk,
high-reward exploration acreage in Mongolia. The Company's
shares trade on the American Stock Exchange under the symbol ÒSCU'
and in Canada on the TSX Venture Exchange under the symbol ÒSME.'
Company Contact:
Scott Zimmerman, President and Chief Executive Officer
Paul Wiesner, Chief Financial Officer
Phone: 87-STORMCAT
www.stormcatenergy.com
By Order of the Board of Directors
Storm Cat Energy Corporation
J. Scott Zimmerman
President and Chief Executive Officer
Forward-looking
Statements
CAUTIONARY
STATEMENT: This publication contains certain Òforward looking
statements', as defined in the United States Private Securities
Litigation Reform Act of 1995 relating to matters such
as the Companyës drilling and other exploration plans and
projected well economics. Forward looking statements
are statements that are not historical facts; they are
generally, but not always, identified by the words Òexpects,' Òplans,' Òanticipates,' Òbelieves,' Òintends,' Òestimates,'
'projects,' Òaims,' Òpotential,' Ògoal,' Òobjective,' Òprospective,'
and similar expressions, or that events or conditions Òwill,' Òwould,' Òmay,' Òcan,' Òcould'
or Òshould' occur. Forward-looking statements are based
on the beliefs, estimates and opinions of Storm Catës management
on the date the statements are made; they involve a number
of risks and uncertainties. Consequently, there can
be no assurances that such statements will prove to be
accurate and actual results and future events could differ
materially from those anticipated in such statements. Storm
Cat undertakes no obligation to update these forward-looking
statements if managementës beliefs, estimates or opinions,
or other factors, should change. Factors that could
cause future results to differ materially from those anticipated
in these forward-looking statements include, but are not
limited to the volatility of natural gas prices, the possibility
that exploration efforts will not yield economically recoverable
quantities of gas, accidents and other risks associated
with gas exploration and development operations, the risk
that the Company will encounter unanticipated geological
factors, the Companyës need for and availability of additional
financing, the possibility that the Company may not be
able to secure permitting and other governmental clearances
necessary to carry out the Companyës exploration and development
plans, and the other risk factors discussed in greater
detail in the Companyës various filings on with
Canadian securities regulators and its filings with the
US Securities and Exchange Commission, including the Companyës
Form 20-F dated July 1, 2005.
THE
TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT
ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY
OF THIS RELEASE.
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