Gastem Inc.
TSX VENTURE : GMR

Gastem Inc.

March 30, 2007 09:36 ET

Gastem: Progress Report on Amber Bank Project-West Virginia

MONTREAL, QUEBEC--(CCNMatthews - March 30, 2007) - Gastem (TSX VENTURE:GMR) is pleased to announce that twelve of the anticipated 28-30 wells have been drilled in its joint development program with Epsilon Energy Ltd. (Epsilon) on the Amber Bank Prospect (Amber Bank) located in Jackson and Roane Counties, West Virginia. Following an on-site visit on March 27th with Epsilon, Gastem is very satisfied with the drilling program progressing according to schedule and encouraged by production results obtained so far.

The operator, Hard Rock Exploration Inc. (Hard Rock), is expecting all twelve wells drilled to date to generate natural gas production and is currently at varying stages of connecting the new wells to its existing gathering system. As of March 26th, three wells were already tied-in and metered for commercial production. Gastem is anticipating that initial revenue from the Amber Bank project will be recognized from July towards Q3 2007.

In Amber Bank, there are typically three potential gas targets in any given well. The first is the Salt Sandstone, a shallow tight gas formation between 500 and 1500'. The second is the Mississippian Berea Sandstone, also tight gas sandstone but encountered in zones at depths of up to 2400'. The third is comprised of organically rich shales, in the Devonian Lower Huron, Rhinestreet and Marcellus (DHRM) formations which are seen at depths of up to 5200'. Both sandstone and shale formations are typically stimulated through hydraulic fracture to enhance productivity of the well, although the sandstones will not necessarily be completed in every well. When the Salt Sandstone is encountered while drilling the shallow section of a well bore, high pressure open-flows can be seen for a short time and are typically allowed to produce until depleted. A rig is then brought back to location in order to finish drilling the intended deep well and allow for production of the organic shales.

Two of Gastem's three already connected wells are currently producing from the Salt Sandstone reservoirs under controlled pressure of 50 mcf/d. The third connected well was completed in the Berea Sandstone and the DHRM and is currently producing 60 mcf/d. The well will have production tubing installed within a few weeks to isolate the shale production from the Berea Sandstone production. This technique, common in the Amber Bank area, will likely increase the wells eventual total production. Ultimate recoverable gas from previously drilled, producing wells in the Amber Bank ranges from 225 MMCF to 370 MMCF, per total well. The range is, in part, due to variations in zones completed from well to well.

Gastem's 25% participation in Epsilon's interest equates to an average of 12.5% working interest in 28 to 30 wells in the prospect. The AFE (authorization for expenditure) for wells drilled through the shale section is approximately $375,000 (US) per well. Where the Salt Sandstone is encountered, the AFE for putting the shallow reservoir into production is approximately $175,000 (US). Gastem participates in these costs according to its working interest in each well. With four (4) drilling rigs currently in the field, it is estimated that all 28-30 Gastem wells should be drilled, and if successful, completed and connected to the gathering system by August 2007. The company also expects that its relationship with Epsilon will continue to develop on other wells and projects.

Hard Rock is a private company based in Charleston, WV. It was founded in 2003 and operates mostly unconventional wells in West Virginia and Virginia. It also operates its own pipeline and drilling rigs.

Epsilon is a private Alberta company with interests in Quebec and in three Appalachian Basin areas in West Virginia, Ohio and New York for approximately 62,000 net acres. Epsilon has a capital expenditure budget of $35,000,000 forecasted for 2007, which is providing for the drilling of 120 wells, and expects to produce around 1700 MMCF in 2007. Epsilon may apply for listing during the present year.

Gastem is an independent public oil and gas exploration company based in Montreal, Canada. The company holds exploration and storage rights to 313,524 hectares (757,788 acres) of land in the St Lawrence Lowlands and the Gaspe Peninsula in Quebec, along with the participation in the Amber Bank Prospect in West Virginia.

Dan Billman (MSc., West Virginia U.) a certified petroleum geologist, is responsible for the technical information of this release and is Gastem's consulting geologist for the Amber Bank project. He is AAPG certified, a registered geologist in the state of Pennsylvania, and a member of numerous oil and gas organizations in the Appalachian basin.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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