Epsilon Energy Ltd.

Epsilon Energy Ltd.

December 05, 2007 07:30 ET

Epsilon Energy Ltd. Announces its Near-Term Operations Update

CONCORD, ONTARIO--(Marketwire - Dec. 5, 2007) -


Epsilon Energy Ltd. ("Epsilon" or the "Corporation")(TSX:EPS) provided a near-term operational update today. A summary of Epsilon's focus by operational area follows:

Republic of Yemen

Block 41

Epsilon has commenced its Block 41 operations by hiring an in-country management team to lead its efforts as outlined below:

General Manager: Hamed Mohammed Amer; former Personal Advisor to the Ministry of Minerals ("MOM") and Chairman of the Petroleum Exploration and Production Authority ("PEPA").

Exploration Manager: Abdul Sattar Othman Nany; former Senior advisor to PEPA and MOM.

CFO: Ahmad Omar Shehadeh; former Financial Manager of CalValley Petroleum Inc.

A drilling rig has been secured, along with MOM approval, to drill the Al Waya 2 well, for which Epsilon anticipates drilling operations to begin within the next three to six weeks, dependent upon when the rig is released from the well it is currently drilling. The Al Waya 2 is a step-out to the Al Waya 1 discovery well. In addition, Epsilon just completed acquiring 362 kilometres of additional 2D seismic to further enhance the East Mahrawa, West Mahrawa and Kininah prospects that are slated to drill in 2008.

Appalachian Basin, United States

Highway 706, Pennsylvania

On its Highway 706 project, Epsilon has drilled its initial test well of the Marcellus Shale, which was drilled vertically. During December, Epsilon plans to conduct a large water frac and completion of this well. In addition, Epsilon is currently permitting to drill its next two test wells in the project, both of which will be drilled horizontally.

Amber Bank and Blue Jacket, West Virginia

All of the wells drilled to date in West Virginia are either producing or are waiting on pipeline tie in. To date, production performance has been at rates considered typical of the basin, but short of the production rates Epsilon is striving to attain. Epsilon has employed several different drilling and completion techniques in an attempt to increase typical basin production rates, including drilling vertical wells with low cost nitrogen fracs, drilling high angle deviated holes and drilling horizontal wells with a multi stage fracs. Preliminary production results do not appear to have resulted in raising production rates enough to justify the incremental costs associated with the aforementioned drilling and completion techniques. However, due to pipeline constraints in Amber Bank and nitrogen issues from newly fraced wells in Blue Jacket, the Corporation has not been able to fully evaluate the performance of these projects. Epsilon's near-term plans in West Virginia are comprised of two primary components. First, for its few remaining committed wells, Epsilon plans to drill each of them as an open hole horizontal well, which in turn, will result in substantially less capital cost per well. Secondly, Epsilon will evaluate production rates over the next ninety days from its existing wells prior to commencing any further drilling operations. Epsilon will utilize the data gathered from the two aforementioned items in determining its future exploration and development plans for these projects.

Baileys Mill, Ohio

Phillips Production Company, the operator of the Baileys Mill project, recently brought the Boan well on line and has finished completing the Marcum well, which is expected to be hooked up and producing gas by the end of the year. We plan to evaluate the production results from these wells while simultaneously stepping out and drilling two additional wells in the project. Favourable results could warrant further drilling in 2008.

Empire Project, New York

Fortuna Energy, Inc. (a wholly owned subsidiary of Talisman Energy Inc.) has drilled the Winter G1-A in Tioga County, New York, which targeted the Trenton-Black River trend. Epsilon has an 11% working interest and 8.8% net revenue interest in this well. Drilling operations on the Winter G1-A have been completed and testing should commence within the next forty-five days. Additional wells are being planned in this project by other operators that include Epsilon acreage. Also, Epsilon has identified some seismic leads that could utilize a majority Epsilon leasehold block and lead to Epsilon's first operated well in the Trenton-Black River trend.

About Epsilon Energy Ltd.

Epsilon is engaged in the acquisition, exploration, development and production of oil and natural gas reserves in the Middle East and North America. The Corporation has exploration, development and production rights to approximately 1,400,000 (791,000 net) leasehold acres in the Republic of Yemen and 910,000 gross (274,000 net) leasehold acres in the United States and Canada.

Future Operational Updates

In the future, as conditions warrant, Epsilon anticipates posting regular operational updates on its website at www.epsilonenergyltd.com. Epsilon's web site will be updated at least twice per month and more often if warranted.


Epsilon Energy Ltd. an international oil and gas exploration and production company based in Toronto, Ontario. Epsilon is listed on the Toronto Stock Exchange, trading under the symbol "EPS". This press release may contain forward-looking statements including, without limitation, financial and business prospects and financial outlooks, and such statements may be forward-looking statements which reflect management's expectations regarding future plans and intentions, growth, results of operations, performance and business prospects and opportunities. Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue", and similar expressions have been used to identify these forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management. Forward-looking statements involve significant risk and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including, but not limited to, changes in general economic and market conditions and other risk factors. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, management cannot assure that actual results will be consistent with these forward-looking statements. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof. Forward-looking statements and other information contained herein concerning the oil and gas industry and Epsilon's general expectations concerning this industry are based on estimates prepared by management using data from publicly available industry sources as well as from reserve reports, market research and industry analysis and on assumptions based on data and knowledge of this industry which Epsilon believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While Epsilon is not aware of any misstatements regarding any industry data presented herein, the industry involves risks and uncertainties and is subject to change based on various factors.

Contact Information