Admiral Bay Resources Inc.
TSX VENTURE : ADB

Admiral Bay Resources Inc.

July 28, 2006 13:54 ET

Admiral Bay Provides Operational Update

DENVER, COLORADO--(CCNMatthews - July 28, 2006) - Admiral Bay Resources Inc. (TSX VENTURE:ADB) is pleased to provide an update on the ongoing development of its unconventional gas projects in Kansas and Pennsylvania.

Admiral Bay's 2006 Development Program is now well underway. Since the end of December 2005, the Company has drilled over 120 wells which has focused development at the Shiloh and Mound Valley projects. Drilling under the Development Program is now approximately 30 days ahead of schedule for the year.

Admiral Bay has a total of 80 wells connected to the pipeline and selling gas. The Company is now beginning to catch up on completions that have been delayed from earlier in the year, due to severe weather conditions which limited field access. In order for the Company to minimize development costs, especially in times of lower gas prices, Admiral Bay has taken the prudent approach of not using bulldozers to move heavy equipment during periods of severe weather, but to limit field access and to catch up in better weather periods. This methodology reduces well development costs significantly. The Company is currently fracing 5-8 wells per week, as pressure pumping services are currently in tight supply with the amount of development activity taking place in the Cherokee Basin. Once this fracing process is complete, the wells are connected to the pipeline and put online, generally within 7 days.

Since May at the Mound Valley project, the Company has drilled more than 35 wells in anticipation of its new compressor/tap facility being completed. This week Admiral Bay is finishing five road bores to run its gas and water pipelines under the county roads. This is the final piece required for the project to begin selling gas directly into the Southern Star Pipeline through its own tap, increasing the Company's netback by over 50%. This part of the project has been delayed for over a month while the Company has been awaiting county approval and additional equipment to arrive. Additionally at the project, Admiral Bay has entered into an agreement with a third party to take their gas production of up to a 1 MMCFGPD. Under this contract Admiral Bay receives a fee equal to 30% of the dollar amount it receives for the third party's gas sales. The Company expects to begin taking gas under this agreement within 60 days.

At the Shiloh project, the Company has drilled 82 wells since the end of December, with 41 of the wells on line and dewatering. The system is presently at or near maximum in terms of gas sales. The Company is expecting the delivery of a third compressor over the next two weeks that will increase its sales capability from 1.6 MMCFGPD (million cubic feet gas per day) to 3.1 MMCFGPD. Delivery of this compressor was expected in early July, but has been delayed until the middle of August, due to availability.

At the Devon Project, Admiral Bay and its partners, through its partly owned subsidiary, Bourbon County Pipeline, has increased third party purchases to 500 MCFGPD. Within two weeks a second compressor should be added that will increase sales to a maximum of 1 MMCFGPD from third parties. Both third parties continue to add new wells at their respective project areas.

At the Santa Rita project, the Company is pleased to announce that both the Huntington 12-22 and Huntington 16-20 wells have been drilled and cased. Initial results from drilling and desorption indicate that the lower coals contain sufficient gas to warrant testing. Desorption of the coals will continue over the next month as potential preparations for completion continue.

At Revloc project in Pennsylvania, permits to drill have been submitted for a five well pilot program. Approval of the permits, if no issues are raised by the State of Pennsylvania, are expected by the end of August. Due to rig availability in the area, drilling companies will not generally commit to drilling wells until permits are in hand. Once these permits are approved, the Company will be able to get into one or more drilling companies drilling order. The company still expects to have the wells drilled and completed some time in the fall.

Admiral Bay Resources Inc. (www.admiralbay.com) is an emerging unconventional gas production company focused on the development of projects in the Cherokee Basin in southeast Kansas and the Appalachian Basin in Pennsylvania. Admiral Bay is listed on the TSX Venture Exchange under the symbol ADB.

Statements in this release that are not historical facts are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned that any such statements are not guarantees of future performance and that actual developments or results may vary materially from those in these "forward-looking statements".

The TSX Venture Exchange does not accept responsibility for the adequacy of this release

Contact Information