HOUSTON, Sept. 16, 2005 (PRIMEZONE) -- Northamerican Energy Group Corporation (Pink Sheets:NNYG) previously announced that it had signed a memorandum of understanding to acquire the lease holdings owned by Muddy Gas LLC, a corporation that owns these gas leases in the state of Montana.
During the due diligence phase, Northamerican Energy discovered that numerous independent operators had drilled hundreds of wells in this area in an attempt to locate another Bell Creek Oil Field, which produced in excess of 125 million barrels beginning in the late 1960s; however, all they were able to locate was natural gas in the Muddy Sandstone formation at about 1,800 feet. Since the initial production rates were between 50-900 MCFD, estimated recoverable reserves of 200-500,000 MCF per well, and natural gas prices were well under $3.00 MCF, none of the operators could justify the cost to install a 300-mile pipeline to potential markets, so the wells were plugged and abandoned.
However, as result of the coalbed methane gas discoveries in the area, the Grasslands 16" gas pipeline was built in 2003 within three miles of these leases, tying into the 48" Northern Border pipeline running from Canada to the Midwest.
"Muddy Gas LLC has identified over 80 potential well locations in the 13,000 acres encompassing these leases. With natural gas prices currently in the $11.00 MMBTU range, coupled with low-cost drilling and completion costs, the first group of 44 wells anticipates generating annual revenue of $18-$22 million, with some upside potential if the flow is better than anticipated," stated Jon Ginder, NorthamericaGroup's CEO.
"We are looking forward to closing on this valuable, gas-rich piece of property and starting our drilling program this year on the first four sites that Muddy Gas LLC has permitted," continued Jon Ginder.
Northamerican Energy Group Corporation has developed a proven growth strategy of identification, acquisition, and development of domestic hydrocarbon reserves. The company will concentrate on acquiring prospects that are, and have proven, oil and gas production which has been operating for many, many years. By acquiring working interests in proven low-risk fields, the company minimizes the risk by not "wildcatting or drilling dry-holes," and incurring any expense of building major infrastructure to get the product to market. Finally, the company's low-cost operations and low overhead structure allows the company to maximize the income and revenue from each production lease.
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