CALGARY, Alberta and DENVER, Nov. 30 /PRNewswire-FirstCall/ -- Storm Cat
Energy Corporation (Amex: SCU; TSX.V: SME) provides a year-to-date update on
the Company's operations. Highlights include:
* A production increase of 33% from 121 Storm Cat operated wells;
* As of September 30, 2005, total proved net reserves on the Company's
Powder River Basin acreage are estimated at 9.932 bcf (billion cubic
feet), an increase of 5% from the year-end 2005 estimate;
* Storm Cat initiated its drilling program on July 19, 2005 and has now
drilled 26 wells of a 120 well program;
* Re-activated three wells on the Elk Valley acreage in British Columbia,
and drilled two new wells north of the pilot project which encountered
thick, gas-charged coal seams;
* Secured a drilling rig for the Alaska project;
* Commencing a three well drilling program at Moose Mountain,
Saskatchewan.
Powder River Basin, Wyoming
Current Powder River daily production remains at approximately 4 MMCFD
(million cubic feet per day) of natural gas from its coalbed methane (CBM)
play located in Campbell County, Wyoming. This marks a 33% increase since
taking over the properties in March 2005. To date, 26 wells have been
drilled, including 17 multi-seam completion wells in a combination of the
Cook, Wall and Pawnee coal seams. The remaining nine wells are completed in
only the shallower Canyon coal seam, but drilled on 160-acre pattern versus
the normally accepted 80-acre pattern. The 26 wells drilled to date are in
various stages of dewatering and are currently producing approximately
400 MCFD (thousand cubic feet per day) which is consistent with Storm Cat's
internal production model. Multi-seam completion techniques help economically
capture incremental reserves in a single wellbore, significantly reducing
finding and development (F&D) costs. Well analysis on the experimental Canyon
160-acre pattern is also showing improved recoveries by capturing hydrocarbons
with fewer wells.
Storm Cat currently has three drilling rigs working in the Powder River
Basin. The rigs will continue to exploit the Powder CBM leaseholds where the
Company is currently drilling on its first 37-well Federal Plan of
Development. A second Federal Plan of Development, which totals 68 wells, has
been filed and is in the final process of approval which should secure ample
Powder River Basin drilling activity going forward. As previously announced,
the Company is on track to complete its 120-well program by early second
quarter 2006. Storm Cat's projected well economics for its Northeast Spotted
Horse program is less than $0.88 per MCF in F&D costs with an overall project
rate of return in excess of 70%.
Powder River Basin Reserves at September 30, 2005
Storm Cat also announces results from its recently completed reserve
report for the period ending September 30, 2005. The reserves in the report
only represent the Company's Powder River Basin assets. Total proved reserves
were estimated at 9.932 bcf equivalent as compared to 9.450 bcf equivalent at
December 31, 2004. Estimated probable reserves were 4.109 bcf as compared to
4.420 bcf at December 31, 2004. Storm Cat's estimated, pre-tax future net
revenue discounted at 10% (commonly known as the SEC PV-10 figure) for proved
reserves at September 30, 2005 was $44.6 million USD versus $13.9 million USD
at year-end 2004. The PV-10 calculation used net commodity prices of
$11.005 CIG Rocky Mountains per million British thermal units (MMBtu) of
natural gas.
Storm Cat's total proved reserve estimates are prepared by independent
reservoir engineering consultants, Netherland, Sewell & Associates of Houston,
Texas, and conform to the definition as set forth in the SEC Regulation S-X
Part 210.4-10 (a) as clarified by subsequent Commission Staff Accounting
bulletins. The proved reserves are also in accordance with Financial
Accounting Standards Board Statement No. 69 requirements.
Reserve mix for the Powder River Basin is 100% natural gas, with 28%
categorized as proved developed and 62% proved undeveloped. In accordance
with SEC guidelines, proved reserve estimates do not include any probable or
possible reserves which may exist for Storm Cat's Powder River properties.
Further, Netherland, Sewell & Associates has not provided probable or possible
reserves estimates for Storm Cat's other properties at this time.
Storm Cat Energy Powder River Basin, Wyoming Proved Reserves at
September 30, 2005
Net Reserves Future Net Revenue (M$/USD)
Category
Gas (MMCF) Total Present Worth
Undiscounted at 10% Discount
Proved Developed 2,197.1 13,898.5 11,918.0
* Producing 1,665.5 10,252.8 9,065.8
* Non-Producing 531.6 3,645.7 2,852.2
Proved Undeveloped 7,734.5 44,179.3 32,718.5
Total Proved 9,931.6 58,077.8 44,636.5
Total Probable 4,109.2 25,015.4 19,194.9
Assumes commodity prices of $11.005/MMBtu CIG Rocky Mountains
Elk Valley, British Columbia, Canada
As announced in the June 9, 2005 news release, Storm Cat entered into a
Farm-in and Joint Venture agreement, with EnCana Corporation, on 77,775 gross
acres (31,110 gross hectares) in the Elk Valley area of southeastern British
Columbia. To date, Storm Cat has re-activated three wells in the Elk Valley
western pilot, adding a new coal interval to the completion in two of three
wells. During the 12 months the pilot was shut-in, reservoir pressures had
rebounded to the point that a significant volume of water must be produced
before pre-shut-in gas rates are expected from the original coal seams.
Currently, the three wells are producing approximately 95 MCFD of gas and
300 BWPD (barrels of water per day).
Storm Cat and EnCana drilled two new wells north of the pilot project.
The ECA Stormcat Mosquito d-85-L/82-J-2 was drilled to a total depth of
2,388 feet (728 meters), encountering 175 feet (53 meters) of coal in nine
coal packages between 656 and 2,333 feet (200 and 711 meters). The ECA ECOG
GREENHILLS a-84-L/82-J-2 was then drilled to 2,421 feet (738 meters), with
207 feet (63 meters) of coal in the same nine coal packages between 856 and
2,352 feet (261 and 717) meters deep. Gas shows were recorded in the coals.
The new wells were drilled faster and straighter than the original pilot
wells. The d-85 well was drilled, cased and cemented in eight days, seven
hours. The a-84 well was drilled, cased, and cemented in seven days,
10 hours. Both wells are being prepared for initial completion and tie-in to
the pilot facilities at this time. These newly drilled wells are expected to
be placed on production test in mid-January 2006. With success in the
exploratory wells and in the pilot reactivation, Storm Cat will establish a
second core CBM operating area.
Alaska
Storm Cat now owns 100% interest in over 35,000 acres on-shore Cook Inlet.
Negotiations with drilling contractors are currently underway in order to
secure a rig for drilling the initial test well. A location for the Northern
Dancer No. 1 has been selected. The well will be drilled to a depth of
approximately 7,500 feet to test conventional targets in the Tyoneck formation
as well as evaluate the shallower coalbed methane potential. Spud date on
this initial exploratory well is estimated for mid-January.
Moose Mountain, Saskatchewan, Canada
Storm Cat completed its preliminary geological/engineering review of the
Moose Mountain, Saskatchewan area. Storm Cat holds a 30% WI on a 236,000-acre
block. The Company now intends to focus its attention on the Second White
Specks formation. Geological and engineering data indicate the Second White
Specks in the Moose Mountain area has similar characteristics to widespread
producing areas in western Saskatchewan. Storm Cat plans to drill three
exploratory wells in mid-December or early January, 2006, depending upon rig
availability.
Mongolia
Storm Cat continues evaluating the reserve potential and emerging markets
for its coalbed methane exploration licenses which encompass more than
18 million acres. In the fulfillment of its Production Sharing Contracts (the
"PSC"), Storm Cat mapped the surface geology in four basins; Tsaidam, Nalaikh,
Baga, and Tugrug, constructed cross sections in Tsaidam basin, and conducted
geophysical surveys (Vertical Electrical Surveys) in Tsaidam and Tugrug
basins. During the field mapping, Storm Cat geologists trenched the coals,
mapped outcrops, recorded faults and re-surveyed some of the original
coreholes to better understand the coal stratigraphy and re-map the surface
geology. During the winter season, Storm Cat will be analyzing this data to
define future operations.
Management Comments
J. Scott Zimmerman, President and Chief Executive Officer, said:
"Increased activity during the first two months of the fourth quarter has set
the tone as we move toward a busy 2006. The recent equity financings have
provided Storm Cat with approximately $25 million USD in its treasury,
allowing management to execute the development and expansion of its high
potential portfolio of unconventional gas opportunities. Specifically, we
believe the expansion of our drilling operations in Elk Valley, to the north,
finds a highly prospective area within the EnCana farm-in acreage. We will
put the drilling results here under a rigorous evaluation before claiming
victory, but, for the time being, we're pleased by our early well analysis.
The reduction in the drill and completion time for the first wells exceeds our
internal expectations. We hope to improve on drill rates as we gain greater
knowledge of the play. I've said before, the Elk Valley play has vast
potential for Storm Cat's shareholder value and, as such, we are focused on
proving its potential in 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/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 as
"SCU" and on the Toronto Venture Exchange as "SME."
By Order of the Board of Directors
Storm Cat Energy Corporation
J. Scott Zimmerman
President
Forward-looking Statements
This press release contains certain forward-looking statements within the
meaning of Section 27A of the Securities and Exchange Act of 1933, as amended,
and Section 21E of the Securities and Exchange Act of 1934, as amended, which
are intended to be covered by the safe harbors created therein. Investors are
cautioned that all forward-looking statements involve risks and uncertainties,
including but not limited to those discussed in the company's Annual Report
for the year ended December 31, 2004. Although Storm Cat Energy believes the
assumptions underlying the forward-looking statements contained herein are
reasonable, there can be no assurance that the forward-looking statements
included in this press release will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion herein should not be regarded as a representation by the
company or any other person that the objectives and plans of the company will
be achieved.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE Storm Cat Energy Corporation
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Related links:
http://www.stormcatenergy.com
CONTACT:
Scott Zimmerman, President and Chief
Executive Officer, or Paul Wiesner, Chief Financial Officer, both
of Storm Cat Energy Corporation, +1-87-STORMCAT
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