HOUSTON, Sept. 30, 2005 (PRIMEZONE) -- OMDA Oil and Gas, Inc. (Pink Sheets:OMOG), an oil and gas production company, through its Chairman, Adam Barnett, announces an update on its Young Oil Project. The operator has informed the company that the Gernt Estates #15 well has been tested and dually completed in the Fort Payne and Monteagle formations. These are the traditional zones in the area. The well is now being stubbed into the transport line and is expected to begin producing at an initial daily rate of 40 mcf in the next few days. Based on historical information about this area and thickness of the pay zones, Young expects this rate to initially increase as the well "cleans" itself by producing. They also expect ultimate recoverable reserves of 250 million cf from this well alone. Natural gas wells in this area tend to be very long lived with some producing over 20 years. If the well just maintains this level and does not show an increase, OMOG should receive its initial investment back on its 20% interest (15% net) in some eight months with an additional five to seven times return on investment over the life of the well. These estimates are based on current natural gas prices.
As mentioned in our Sept. 7th announcement, this was the first of three gas wells drilled and awaiting completion with Young in this first phase. Two of the three wells also have large sections of Natural Gas bearing shale. The Gernt Estates #15 is one of those two wells. Completions in the shale require a more aggressive "fracing" technique, which carries an additional cost beyond the original "turnkey" arrangement. Young and others have only recently begun experimenting with shale completions in other area wells, but they have reported very encouraging preliminary results. Due to the large thickness of the shale, it is very likely that a completion attempt will be made on this well; however, no firm decision has been made at this time. Should shale completions be successful, then a significant increase in both daily production and recoverable reserves would be expected. The second well is scheduled to be tested next week. The last remaining well will be stimulated next week and tested the following week. Results will be announced when they are received.
Patroon, Shelby County TX Update
Prior to Hurricane Rita's arrival last week, OMDA was notified by Texas Land & Producing (TLP) that its long awaited date for rig arrival on this exciting natural gas prospect was about to come to an end. At that time, OMDA was informed that the rig was to be "Over Hole" by this weekend; however, the eye path of Rita went straight through the western counties of Texas including Shelby County. Trees and power lines are down throughout the area. Due to the heavily wooded nature of the area, power may remain out for another month in most of these counties. TLP has informed management that outside power is not required to drill the well; however, access to the area and crew availability would delay the spud date, but for no more than two weeks. TLP is planning to survey the area today and will report their findings to us as soon as possible. OMDA will announce these findings, along with the new expected spud date, next week either in a press release or in the company's weekly newsletter. These weekly newsletters can be accessed on the company website at http://www.omogoil.com .
Adam Barnett, Chairman of OMDA Oil & Gas, stated, "I know the seemingly endless drilling and production delays have frustrated us all, but with the successful completion of this first Young well and imminent spudding of Patroon, it now appears our patience will be greatly rewarded. When we first committed and paid for our participation in these known natural gas prospects, the price of natural gas was in the $6-7 per mcf range. As of the close yesterday, the price of natural gas has more than doubled to $14.20 btu (mcf) and $15.00 btu (mcf) on the November and January contracts respectively." Barnett went on to say, "Regarding the Young deal, management was able to negotiate a written right of first refusal on any prospects in Young's inventory of over 46,000 acres. Much of this acreage is natural gas in nature. It is unlikely that Young would have granted us this right of refusal to "cherry pick" prospects had they known that the price of natural gas would have advanced anywhere near the current level. Rest assured that management will aggressively pursue our "Rights" in these gas prone areas, which represent billions of cubic feet of low risk and pipeline accessible shallow natural gas."
Barnett further stated, "I want to give a reminder to our shareholders about the potential in our Patroon project. As can be seen by reviewing the extensive Patroon material on the Company website, this is also primarily a natural gas play. We currently own a paid up 15% interest in the first of some 9-10 prospective wells on this 800 acre play. TEC Engineering Group, Inc., a third party petroleum reservoir engineering company, estimates recoverable gas reserves per 80 ac. unit of 1.226 billion cubic feet in this area. It also estimates the oil reserves at 36,000 barrels. These numbers, based on current prices, would equate to over $20 million gross per well."
About OMDA Oil and Gas, Inc.
OMDA Oil and Gas, Inc. and its wholly owned subsidiaries, OMDA Oil & Gas Management, Inc.; Texas OMDA Drilling & Operating, Inc.; and OMDA Oil & Gas, Inc. (Texas) are in the business of oil and gas production and lease acquisition. Currently, the company owns average participation interests approaching 47 percent in 355 producing and non-producing oil and gas wells in Louisiana and Texas. The company also owns 100 percent gross interest in an undeveloped 1,116 acre, horizontal play in the Panola Field, Panola County, Texas. Current projects include a 15 percent working interest in an 800+ acre play in Shelby County, Texas and a carried back-in working interest of at least 7.5 percent up to 37.5 percent in a 12 well workover play in the Concorde Dome Field in Andersen County, Texas. OMDA is also in a partnership agreement with Young Oil Corp, the largest oil and gas producer in Tennessee on 46,000 acres in North Central Tennessee, with an initial 20 percent interest in a six well program and a first right of refusal on any other prospects on the Young leases.
This release includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties including, but not limited to, statements relating to the future anticipated direction of the Oil and Gas Industry, plans for expansion, various business development activities, planned capital expenditures, future funding resources, anticipated sales growth and potential contracts.. The Company is not obligated to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.