CALGARY, Alberta and DENVER, Sept. 20 /PRNewswire-FirstCall/ -- Storm Cat Energy Corporation (AMEX:SCU)(TSE:SME) today announced that its daily production reached 13,200 thousand cubic feet equivalent (Mcfe) gross, 7,050 Mcfe net, establishing a new Company record. In addition, the Company has entered into a Joint Development Agreement (JDA) with Pennaco Energy, a wholly owned subsidiary of Marathon Oil Company, to develop certain leasehold interests in the Powder River Basin coalbed natural gas (CBNG) play in Campbell County, Wyoming. The properties are located in and around Storm Cat's core Powder River operating area, allowing the Company to further benefit from economies of scale and improved operating efficiencies.
Production Rises with Drilling Activity A summary of Storm Cat's drilling activity, producing well count and gross daily production output: Total Average Average
Existing Wells Producing Gross Daily Net Daily
Powder River Basin Wells Drilled Wells Production Production
Opening Position -
2005 99
Third quarter 111 12 111 3,350 Mcfe 2,380 Mcfe
Fourth quarter 142 31 142 3,630 Mcfe 2,575 Mcfe
2006
First quarter 142 0 140 3,800 Mcfe 2,700 Mcfe
Second quarter 175 35 149 3,850 Mcfe 2,740 Mcfe
To date third
quarter 196 21 181 6,000 Mcfe 4,175 Mcfe PRB property
acquired from
Bill Barrett Corp. 81 n/a 71 7,200 Mcfe 2,875 Mcfe Totals 277 99 252 13,200 Mcfe 7,050 Mcfe In 2006, Storm has Cat drilled 56 operated-wells, of which 15 are in process of being tied-in to sales lines. The Company has made applications for a Federal Plan of Development (POD) on 53 wells and also has another 37 wells on fee and state lands to be drilled in 2006 and 2007.
As previously announced, Storm Cat has closed on the U.S. $30.7 million Powder River Basin acreage purchase from Bill Barrett Corporation effective July 1, 2006. Storm Cat has received approval for a Federal POD for 38 wells on this acreage, with 25 of these wells to be drilled in 2006. To further develop the acreage, application is being made on two Federal PODs for 2007. A total of 145 locations are anticipated to be drilled to fully develop the Barrett acreage. With the new acreage acquisition, Storm Cat now controls 39,235 gross (29,410 net) acres in the Powder River Basin.
Pennaco Energy Joint Development Agreement Storm Cat Energy Corporation entered into a Joint Development agreement with Pennaco Energy, a wholly owned subsidiary of Marathon Oil Company, to jointly develop certain lands for coalbed natural gas in the Powder River Basin, Campbell County, Wyoming. Under the JDA, Storm Cat and Pennaco Energy will establish an Area of Mutual Interest (AMI) in which Storm Cat will act as operator. Storm Cat is acquiring an undivided 50% of Pennaco's working interest and production in existing wells, leasehold and infrastructure. Storm Cat will have the option to earn an undivided 50% interest in Pennaco's leasehold within the AMI through development.
J. Scott Zimmerman, President and Chief Executive officer, said: "The JDA is a non-dilutive opportunity for the Company to acquire additional Powder River Basin leasehold adjacent and contiguous to our existing CBNG development project in our core Northeast Spotted Horse operating area in Campbell County, Wyoming. The proximity affords the Company the ability to increase our critical mass here and provides the opportunity to leverage our technical knowledge in multi-seam completion techniques while providing economies of scale associated with a larger project area. The gathering assets and existing infrastructure included in the AMI are one example of how Storm Cat can benefit by expanding its core area. Like the recently announced transaction with Bill Barrett Corp., the JDA is an extension to our current asset base and provides a foundation for future reserve and production growth in the area. Our technical team has experience in developing CBNG in the Powder River Basin and will use their expertise to efficiently exploit the leasehold while continuing to drive down finding and development costs." Subsequent to the signing of the JDA, Storm Cat has 60 days to evaluate and submit a plan of development to Pennaco and will begin developing the properties with the agreement of both parties to the plan. Additional operating information pertaining to the JDA will be released at the appropriate time.
Powder River Basin Acreage Map Visit the following link to view this map: http://www.stormcatenergy.com/prb.html Fayetteville Shale Update In Arkansas, Storm Cat continues to selectively add to its acreage position in the prospective Fayetteville shale. The Company's detailed geologic and engineering model has identified as many as six initial locations to be drilled on its leasehold sometime during the second or third quarter of 2007.
Discussing Storm Cat's Fayetteville Shale potential, Zimmerman said: "We've developed our geologic and engineering models based on regional data and drill bit success being realized by technically advanced, pioneering operators like Southwestern Energy, XTO Energy and Chesapeake Energy. We are in advanced discussions with a drilling contractor in an effort to secure a rig for our 2007 program and plan to commence our 2007 drilling on what we believe is highly prospective acreage." Elk Valley Program Drilling Ahead Pursuant to the Agreement with EnCana Corp., Storm Cat will assume a 100% operatorship of the 77,775 gross-acre Elk Valley Project effective October 1, 2006. EnCana will retain a 2.5% overriding royalty interest.
"This is a milestone event for Storm Cat," said Zimmerman. "Elk Valley establishes a core area for future production and reserve growth with a higher working interest. Storm Cat wants to first thank EnCana for this opportunity to operate and develop this asset. Their trust in Storm Cat is indicative of our engineering and geo-technical strengths. Working together, our companies have engaged in extensive technical discourse on drilling and completing the Mist Mountain coals. I know EnCana is highly confident in Storm Cat's CBNG technical prowess to develop Elk Valley, and we are eager to put more capital investment to bear here for our investors. Even though we're still drilling and testing wells and production rates, Storm Cat management remains steadfast in its belief that Elk Valley will deliver economic production for Storm Cat's shareholders in 2007." As previously announced on July 21, 2006, the Company is moving ahead drilling an additional five wells. They are: * a-73-L: Drilled in 11 days, finding 283 feet of net coal
* a-83-L: Drilled in 14 days, finding 203 feet of net coal
* b-74-L: Drilled in 11 days, finding 255 feet of net coal
* a-94-L: Currently drilling ahead
* c-53-L: Building location Mannville Coal Update
Storm Cat's technical team is evaluating the drilling results and core data retrieved from the Cessford 2-19 well, drilled vertically to test the potential of the Mannville coal. The Company's core analysis indicates that the coal's thickness and gas content quantity provide sufficient petrophysical evidence to support Storm Cat's decision to move rapidly into an exploration/exploitation phase, including horizontal wells and application of a variety of completion techniques, all with the goal of deriving the highest and best gas quantities from the project.
Building Up Storm Cat's Total Acreage Position Since October 2004, Storm Cat has assimilated a large and highly prospective set of assets, all targeting vast unconventional resources of natural gas. Excluding the JDA with Marathon Oil, the Company has operating control on more than 430,000 gross acres, or more than 250,770 net acres.
Zimmerman said: "Acreage is the foundation for an oil and gas company providing the basis to create wealth. Being the operator of such acreage provides us with the capacity to evaluate and accelerate our projects on our time schedule. 2006 is an evaluation year for Storm Cat, and the entire team believes our efforts today will deliver our desired results tomorrow." Production Hedges
Storm Cat's fixed-price natural gas hedges are summarized as follows: Fixed-priced Financial Hedges
* 1,500 MMBtu/day
* U.S.$7.15 Colorado Interstate Gas (CIG)
* August 2006 through July 2009 * 2,000 MMBtu/day
* U.S.$7.27 CIG
* October 2006 through September 2009 Fixed-price Physical Hedges
* 333 MMBtu/day, 250 MMBtu/day net to Storm Cat
* U.S.$8.31 CIG
* November 2005 through October 2006 * 1,000 MMBtu/day, 750 MMBtu/day net to Storm Cat
* U.S.$9.10 CIG, April 2006 through October 2006 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 Wyoming's Powder River Basin, exploitation and development acreage in Canada and Alaska. The Company's shares trade on the American Stock Exchange under the symbol "SCU" and in Canada on the Toronto Stock Exchange under the symbol "SME." By Order of the Board of Directors Storm Cat Energy Corporation J. Scott Zimmerman
President and Chief Executive Officer /s/ J. Scott Zimmerman Forward-looking Statements
This press release contains certain "forward-looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995 relating to matters such as the Company's 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 "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "aims," "potential," "goal," "objective," "prospective," and similar expressions, or that events or conditions "will," "would," "may," "can," "could" or "should" occur. Forward-looking statements are based on the beliefs, estimates and opinions of Storm Cat's management on the date the statements are made; including production and reserve estimates, and potential benefits to Storm Cat of such acquisitions, and 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 management's 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 receipt of necessary approval from regulatory bodies, the failure to achieve the anticipated benefits of the acquisition, the failure to close the acquisition, 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 Company's need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company's exploration and development plans, and the other risk factors discussed in greater detail in the Company's various filings on SEDAR (http://www.sedar.com/) with Canadian securities regulators and its filings with the U.S. Securities and Exchange Commission, including the Company's Form 20-F for the fiscal year ended December 31, 2005.
NO STOCK EXCHANGE HAS REVIEWED OR ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE. DATASOURCE: Storm Cat Energy Corporation CONTACT: Scott Zimmerman, President and Chief Executive Officer, or Paul Wiesner, Chief Financial Officer, both of Storm Cat Energy Corporation, +1-87-STORMCAT Web site: http://www.stormcatenergy.com/prb.html Web site: http://www.stormcatenergy.com/
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