Fellows Energy, Ltd. is engaged in the exploration, extraction, processing and reclamation of coalbed methane, natural gas, and oil projects within the Western United States.
Press Release Source: Fellows Energy Ltd.
Fellows Energy Completes Financing and Joint Venture for Purchase of Carbon County Project Friday March 10, 9:55 am ET Company to Acquire 50% for No Additional Investment
BROOMFIELD, Colo.--(BUSINESS WIRE)--March 10, 2006--Fellows Energy Ltd. (OTCBB:FLWE - News; "Fellows") announced today that it has completed all financial and other arrangements for the acquisition and closing of the Carbon County Project, with the final closing now set for Monday, March 13. Fellows will acquire the project jointly with an industry partner, MBA Resources Corp. of Canada ("MBA"). MBA will pay $1.5 million and has arranged third party financing of $1 million toward the $3 million purchase price in exchange for a 50% interest in the project. Fellows previously paid a deposit toward the purchase price and has received production credits since October 1, 2005. Fellows will thus acquire a 50% interest in the project without further payment. Fellows and MBA will form a joint operating company to carry out gas production and drilling operations as well as gas gathering activities for both project gas and adjacent third party production.
ADVERTISEMENT Adblock Sproule & Associates of Denver, Colorado, completed a "Reserve and Economic Evaluation" of the project in October 2005. Sproule reported that production from the three currently producing wells can be significantly enhanced through operating improvements and that the five shut in wells also have potential to be brought into profitable production. Sproule also concluded that the acreage contains potential for up to an additional 20 wells on 160-acre spacing, with total proven, probable and possible reserves of 20 billion cubic feet ("Bcf"). Sproule reported a net present value for the project of $65 million using a 10% discount rate and based on its enhanced "P2" scenario. Under this scenario, Sproule projected net cash flow for the first 12 months of full production in excess of $30 million.
"We are pleased to complete the arrangements with MBA to acquire this property without any dilution to shareholders, and we look forward to a strong relationship in the operation of the project," said George S. Young, Fellows' president. "We believe within a short period of time we will be able to increase production significantly. We plan to commence reworking operations immediately on the existing wells and start drilling new well sites in the spring. We also plan to finance with industry partners many of the other projects acquired through our strategic relationship with Thomasson Partner Associates, thus avoiding shareholder dilution on those developments as well."
Carbon County comprises 5,953 gross acres (4,879 net acres) with three gas wells currently producing approximately 20 million cubic feet ("Mcf") of natural gas per month as well as five shut in wells, three of which have previously produced. Current production is derived solely from the Ferron Sandstone, and none of the wells has yet been completed in the Ferron coals. The acquisition also includes an associated gas gathering system and a six-mile pipeline and compression facility servicing the project and adjacent production. Gas is marketed into the transmission pipeline operated by Questar Gas Resources that crosses the project acreage.
Carbon County is an extension of the very successful Drunkards Wash field originally developed by River Gas Corp. and currently operated by Conoco/Phillips. Drunkards Wash currently produces approximately 4 Bcf of natural gas per month from wells completed in both the Ferron Sandstone and Ferron coals on 160-acre spacing covering approximately 65,000 acres. Fellows' Vice President of Operations, Steven Prince, previously served as Operations Manager on the Drunkards Wash project for River Gas and was involved in drilling, completion, and production operations for over 200 wells in that field. Fellows plans to complete wells in both the sandstone and the coals in the project area, since the same coal seams have been prolific producers at Drunkards Wash but have not yet been exploited in the project acreage.
Earlier this week, Fellows completed comprehensive title due diligence and other pre-closing diligence review matters and closing documentation for the purchase. Fellows believes from its own analysis and from the Sproule evaluation that it can significantly increase current production in the three producing wells and initiate profitable production in the five shut-in wells. Fellows also believes that many of the 20 additional well sites can be drilled and produce gas from the Ferron formation (sandstone and coals) in excess of the production rates currently experienced in the existing wells.
About Fellows
Fellows combines a seasoned management team with exploration targets focusing on coal bed methane, shallow gas and low-risk oil and gas potential.
Management hopes these transactions will bring additional value to the shareholders of Fellows Energy. There is no guarantee that Fellows will acquire the rights described in this press release or that the leases 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.
Contact:
Fellows Energy Ltd. George S. Young, 303-926-4415 Shane Reeves, 303-926-4415
Posts: 1335 | Registered: Oct 2003
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Trading sideway before the run...good sign...! Price still under MA50 but it is just a matter of time now...and others news should hit press room soon...
I like this kind of sentence...
"We are pleased to complete the arrangements with MBA to acquire this property without any dilution to shareholders, and we look forward to a strong relationship in the operation of the project," said George S. Young, Fellows' president.
Posts: 1335 | Registered: Oct 2003
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So I am not alone and this one...!This is a CO with great potential. TA speaking News will bring more volume and bring back pps upper..trade sideway since last week
Posts: 1335 | Registered: Oct 2003
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hey guys... i've been in this since .34 on the way down... jelly spotted it a long while back and posted on the hot stocks free for all board... i'm hoping we get some good news and a nice run up, i'm hoping over .50 soon...
-------------------- Can I have some money now?
- DC Posts: 488 | From: Northern California | Registered: Dec 2005
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Chart look good price over MA20...this stock can do more than only .50 cent in one day...At this point, it is just a matter of days.
Posts: 1335 | Registered: Oct 2003
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