| ||Thu Sep 16, 2004|
Pennant Enters Into Agreement to Drill Well in Kabob, Alberta Area
| ||Pennant Energy Inc. ("TSX Venture Exchange - PEN") ("Pen") is pleased to announce that it has entered into a farmout agreement to drill an exploratory well in the Kabob Field area of west central Alberta. The Kabob Field is firmly established with significant oil and gas production reservoirs from surface to basement. The Kabob exploration well is to be drilled to a total depth of approximately 1800 meters to test for gas and oil potential in the Notikewin and Triassic formations respectively. Large, prolific Notikewin reservoirs are found in this area. The prospect location lies approximately 2 miles directly north of the northern edge of EUB designated Notikewin "E" pool; individual well recoveries from the pool range from 3 to 12 BCF. Initial production rates often exceed 5 mmcfd. The exploration play was generated based on a seismic defined anomaly which was interpreted as a template to the prolific Notikewin "A" pool well 12-01-65-19W5, which has produced a cumulative 25.4 BCF (billion cubic feet) of gas from 1970 to date. Where structurally favourable, the Triassic formation can yield significant oil reserves. The Triassic "B" pool found in the northeast of Township 64 Range 19W5 immediately south of the Notikewin 12-01 well, is estimated by the EUB to contain 22 million barrels of oil in place with recoverable reserves in the 2 million barrel range.|
The terms of the farmout agreement call for Pennant to contribute 18% of the costs to drill and complete a test well at the above location to earn a before payout interest (BPO) of 18% reverting to 10.8% after payout (APO) of said costs subject BPO gross overriding royalties of 15% on natural gas and natural gas liquids and a sliding scale royalty of 1/150(5% to 15%) on oil production. In addition, Pennant will have the option to drill an additional Option Well under the same earning terms described above. The estimated gross cost to drill and complete a well is estimated to be $1,084,000. The initial test well is scheduled to be drilled upon freezeup, forecast to be in late November or December. Upon satisfying the earning terms and conditions of the farmout agreement and further development is warranted, Pennant will have the option to participate at the APO working interest in an area of mutual interest.
Management has granted incentive stock options to a consultant, subject to the approval of the TSX Venture Exchange, for the purchase of up to 50,000 common shares of the Company at a price of $0.30 per share for a period of two years.
Thomas Yingling, president of PEN stated, "We are very pleased to have selected our second project for Pennant. After the huge success we have had in Manitoba so far we look forward to starting our next project, particularly next to such a prolific field as the Kabob. We will have flow rates on the remaining wells completed in the Daly field shortly."
ON BEHALF OF THE BOARD OF DIRECTORS OF
PENNANT ENERGY INC.
Mr. Thomas Yingling
President - Director
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
You can view the Next News Releases item: Tue Oct 12, 2004, Pennant to Drill Four More Wells
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