Chamaelo Exploration Ltd.
TSX : CXN

Chamaelo Exploration Ltd.

June 05, 2006 06:00 ET

Chamaelo Announces Update on Drilling Program and Completion of Exchange of Non-Voting Securities

CALGARY, ALBERTA--(CCNMatthews - June 5, 2006) - CHAMAELO EXPLORATION LTD. (TSX:CXN) ("Chamaelo") is pleased to announce a successful start to its summer Drilling Program and conversion of its non-voting shares and warrants.

Q206 DRILLING PROGRAM

A total of 12 wells (9.6 net) have been successfully drilled and cased in the second quarter (100% success rate) with 3 rigs currently employed to drill additional wells throughout the summer. Completion of the wells is currently underway with production anticipated to be put on-stream in June through August.

As previously announced, Chamaelo had shifted its capital program to specifically target light oil due to more favourable current oil prices than natural gas prices. The drilling program will shift Chamaelo's weighting to over 50% light oil. Chamaelo, however, is committed to being a balanced company over the long-term as natural gas projects will be drilled in late Q306 and put on-stream in Q406.

Pembina, Alberta

Chamaelo has drilled and cased 1 Nisku well in the Pembina area. Completion and testing of the well will take place prior to the end of June.

Wilson Creek, Alberta

Chamaelo has drilled and cased 8 wells (6.6 net) targeting light oil in the Belly River. The wells were a combination of infill and step-out locations and will result in additional locations to be drilled. Completion of these wells is currently under way with very encouraging results to date. The majority of the wells will be on production by late June.

Willesden Green, Alberta

Chamaelo has drilled and cased 2 wells (1.2 net) targeting light oil in the Viking and liquids-rich gas in the Rock Creek. Both wells encountered light oil in the Viking with one well encountering both zones. Additional locations have been identified as a result of the drilling.

Buck Lake, Alberta

Chamaelo has drilled and cased 1 well (0.8 net) targeting light oil in the Viking. Three additional locations are scheduled to be drilled by the end of Q206.

Chamaelo will continue its aggressive drilling program (targeting primarily light oil and liquids-rich gas) with wells scheduled to be drilled in West Central Alberta (Wilson Creek, Willisden Green, Buck Lake, Gosling, and Wimborne) and Northeast B.C. (Buick Creek, Goose).

CONVERSION OF NON-VOTING SHARES AND WARRANTS

In June 2005, Chamaelo issued non-voting shares and warrants to provide flexibility in its capital structure at that time. Pursuant to agreements entered into at the time of issue, the Board of Directors of Chamaelo were allowed to convert the non-voting securities at its discretion. The Board subsequently determined that it no longer needed the more complex capital structure.

On March 27, 2006, the Board, in accordance with agreements to do so, resolved that the exchange of non-voting common shares for voting common shares and non-voting warrants for warrants to acquire voting common shares would be effective upon receipt of shareholder approval and listing approval of the Toronto Stock Exchange, which were obtained on May 25, 2006 and May 30, 2006, respectively.

As of May 30, 2006, certificates representing non-voting common shares shall represent only the right to receive certificates for common shares, and certificates representing non-voting warrants shall represent only the right to receive certificates for warrants to acquire common shares.

Contact Information

  • Chamaelo Exploration Ltd.
    Robert J. Zakresky
    President
    (403) 705-3006
    or
    Chamaelo Exploration Ltd.
    Nolan Chicoine
    Vice President Finance
    (403) 705-3022
    or
    Chamaelo Exploration Ltd.
    700, 639 -5th Ave SW
    Calgary, Alberta T2P 0M9
    (403) 705-3135
    (403) 705-3130 (FAX)
    Website: www.chamaelo.ca