Red Cloud Exploration, LLC

October 01, 2009 09:00 ET

Red Cloud Exploration, LLC: 3Q Update-Crimson Energy Acquires Approximately 5,000 Acres and Producing Wells in the Cherokee Basin

LAWRENCE, KANSAS--(Marketwire - Oct. 1, 2009) - Crimson Energy, a majority owned subsidiary of Red Cloud Exploration, acquired approximately 5,000 acres, several producing wells, and service equipment in the Kansas Cherokee Basin (Woodson and Montgomery Counties) from Hemi Energy Group, Inc. for undisclosed amount of cash. The transaction closed early Q3 2009.

In addition to existing production, Crimson Energy believes there are opportunities to enhance current production through workovers, equipment maintenance, and infield drilling.

Managing Director and CEO of Red Cloud Exploration commented "This deal allows Red Cloud to accomplish several critical items: (1) enter the Cherokee Basin with existing infrastructure and knowledgeable field support, (2) provides an opportunity to grow production incrementally, and (3) continue to prove up additional reserves and extend our foot print in Eastern Kansas."

Crimson Energy has commissioned an ongoing geological and reservoir study to assist and provided the necessary information to commence its drilling campaign for Q4 2009. The company has identified in excess of 50 offset drilling locations, along with over 200 additional locations of interest.

After extensive geological work post acquisition the company believes the properties contain exploration upside from deeper formations for the production of oil, and that presence of other hydrocarbons such as natural gas, coal gas, and shale exists in the acquired acreage block.

The company believes the current economic climate provides an excellent opportunity to selectively acquire producing properties with tremendous upside from liquidity challenged and leveraged operators. The company will continue to look for opportunistic bolt-on acquisitions that will allow it to leverage off its operational infrastructure and technical expertise in the area.

Red Cloud Exploration is a privately held mid-continent oil and gas exploration company based in Lawrence, Kansas with a specific focus on Eastern Kansas.

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