U.S. Energy Corp. and Crested Corp. Update Their Rocky Mountain Gas, Inc. Subsidiary's Coalbed Methane Activities
October 27 2003 - 12:47PM
PR Newswire (US)
U.S. Energy Corp. and Crested Corp. Update Their Rocky Mountain
Gas, Inc. Subsidiary's Coalbed Methane Activities RIVERTON, Wyo.,
Oct. 27 /PRNewswire-FirstCall/ -- U.S. Energy Corp. and Crested
Corp. (BULLETIN BOARD: CBAG) , d/b/a USECC, today provided an
update on the coalbed methane activities of their subsidiary, Rocky
Mountain Gas, Inc. (RMG) in the Powder River Basin of Wyoming and
Montana and southwest Wyoming. "I am pleased to report significant
progress on our portfolio of coalbed methane projects since we
announced the formation and initial capitalization of Pinnacle Gas
Resources, Inc. on June 25, 2003," commented Mark Larsen RMG's new
President. "We are now participating in the development of over
310,000 gross acres of coalbed methane (CBM) leases through our
direct working interest participation in the Oyster Ridge, Wyoming
and the Castle Rock, Montana properties indirectly through
Pinnacle. RMG currently owns a 22+% equity interest in Pinnacle.
While much remains to be accomplished in the coming quarters, we
are making notable progress towards our stated goal of becoming a
significant CBM producer in the Rocky Mountain region," Mr. Larsen
added. Regarding RMG's CBM interest in Montana, Galaxy Energy
Corporation (OTC:GAXI) (BULLETIN BOARD: GAXI) announced on October
7, 2003 that it had recently raised $5.6 million and planned to use
a portion of the proceeds to exercise an option to purchase
approximately 50,000 net acres in the Kirby and Castle Rock
prospects in the Powder River Basin (PRB) from Quaneco, LLC of
Sheridan, Wyoming. If the option is fully exercised, Galaxy would
own an undivided 25% working interest in both of the prospects.
Such ownership would not affect RMG's or Pinnacle's current working
interest in those prospects. RMG holds a 43.75% working interest in
the Castle Rock prospect and Pinnacle holds a 50% working interest
in the Kirby prospect. "We are pleased to welcome Galaxy into the
Castle Rock prospect. Their entrance into Montana represents an
expanding interest by a company with senior level personnel that
have participated in the growth of both Pennaco Energy and Ultra
Petroleum," Mr. Larsen stated. "We look forward to working with all
of our associates in the Castle Rock prospect and in developing a
unified plan of development on this large acreage position," he
added. Pump testing is currently underway on three wells at RMG's
Oyster Ridge prospect in southwestern Wyoming. Over the course of
the past several months, RMG has been negotiating with Anadarko
Petroleum to enter into a modified farmout agreement whereby the
terms of RMG's existing agreement with Anadarko have been improved,
such that RMG can conduct more meaningful drilling programs at
Oyster Ridge. Mr. Larsen stated, "The earn-in provisions of the
previous agreement were not as beneficial as the new terms are
expected to be and should lead to a greater developmental focus on
this prospect." As part of the negotiations with Anadarko, RMG and
CCBM, Inc., a division of Carrizo Oil & Gas, Inc. (NASDAQ:CRZO)
agreed to relinquish 15,240 acres to Anadarko, that were not
prospective for CBM development. The prospect now consists of just
over 50,000 gross acres. Upon completion and review of the testing
program now underway, RMG intends to further delineate the prospect
with a drilling program for the 2004 spring/summer consisting of a
minimum of 12 wells. In June 2003, Pinnacle was formed through a
contribution of CBM properties and producing assets from both RMG
and CCBM, Inc. Pinnacle was capitalized by an initial investment
from a major institutional investor of up to $30 million, a portion
of which was used to close on an acquisition of additional CBM
properties from Gastar Exploration, Ltd. (TSE:YGA). To date,
Pinnacle has focused the majority of its efforts on maximizing
production from approximately 120 producing wells on the Gastar and
adjacent Bobcat properties in Wyoming (most of which are in the
early stages of dewatering) as well as drilling additional wells on
the properties. Current gross production from the Pinnacle
properties is approximately 5 million cubic feet of methane gas per
day. In certain areas, the company is employing completion
technology and procedures that allow multiple coal zone completions
and production within a single well bore. In a recent (October
2003) Oil and Gas Investor magazine article, Pete Schoonmaker,
Pinnacle's new chief executive officer, was quoted as saying, "Our
program is based on multiple-zone completions. We want as few wells
as possible that are as productive as possible." In addition to the
ongoing drilling program in Wyoming, Pinnacle has submitted a plan
of development to the State of Montana to drill an 8-well pilot
program on its Kirby property in Montana. Keith Larsen, U.S.
Energy's President commented, "Let me first congratulate Mark
Larsen on his new position as President of our RMG subsidiary. Over
the last four years, Mark has played an integral role in virtually
all of RMG's milestone achievements including the recent formation
and capitalization of Pinnacle. U.S. Energy's management and board
of directors have every confidence that Mark possesses the skill,
motivation and integrity that will be required to manage the
extraordinary growth potential anticipated by RMG in the coming
years. Mark's efforts will be supported by a newly formed
management team at RMG that includes Philip Johnson, V.P. of
Engineering and Operations; Chris Healey, V.P. of Geology, and
Larry Sare, V.P. of Land. The formation of this management team,
which has extensive experience in both CBM development and in the
Rocky Management Region in general, was necessary to replace the
key personnel that transitioned into Pinnacle, and is a critical
step in RMG's current business plan that initially seeks to
adequately finance the company so that it may embark on an
aggressive exploration, development and acquisition program of its
own. In this regard, RMG continues to work with Sanders Morris
Harris of Houston, TX, who acted as our financial advisor in the
Pinnacle transaction." ABOUT U.S. ENERGY CORP. AND CRESTED CORP.
U.S. Energy Corp. and its majority owned subsidiary, Crested Corp.,
are engaged in joint business operations as USECC. Through their
subsidiary Rocky Mountain Gas, Inc., they own interests in over
310,000 gross acres prospective for coalbed methane (CBM) in the
Powder River Basin of Wyoming and Montana and acreage adjacent to
the Greater Green River Basin in southwest Wyoming. Certain
properties are subject to a definitive agreement with CCBM, Inc., a
division of Carrizo Oil & Gas, Inc. of Houston, TX to develop
and expand RMG's CBM properties dated July 10, 2001. U.S. Energy's
and Crested's subsidiary, Rocky Mountain Gas, Inc. owns a minority
equity interest in Pinnacle Gas Resources, Inc. USECC owns control
of Sutter Gold Mining Company, which owns properties in California
prospective for gold. USECC also owns various interests in uranium
properties in Wyoming and Utah. This press release includes
statements, which may constitute "forward-looking" statements,
usually containing the words "believe," "estimate," "project,"
"expect," or similar expressions. These statements are made
pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements
inherently involve risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements.
Factors that would cause or contribute to such differences include,
but are not limited to, future trends in natural gas and mineral
prices, the availability of capital for development of natural gas
and other mineral projects, competitive factors, and other risks
detailed in the Companies' periodic report filings with the
Securities and Exchange Commission. By making these forward-looking
statements, the Companies undertake no obligation to update these
statements for revision or changes after the date of this release.
For Further information, please contact: Keith G. Larsen, President
U.S. Energy Corp. at (307) 856-9271 Investor Relations contact:
Riches In Resources, Inc., Neal Feagans at (303) 449-1184
DATASOURCE: U.S. Energy Corp. CONTACT: Keith G. Larsen, President
of U.S. Energy Corp., +1-307-856-9271; or Investor Relations, Neal
Feagans of Riches In Resources, Inc., +1-303-449-1184, for U.S.
Energy Corp.
Copyright