Milagro Energy Inc.
TSX : MIG

Milagro Energy Inc.

September 22, 2005 14:48 ET

Milagro Grows Production at Judy Creek

CALGARY, ALBERTA--(CCNMatthews - Sept. 22, 2005) - Milagro Energy Inc. (TSX:MIG) is accelerating its drilling activity in the Judy Creek area as a result of its recent exploration success and has completed a strategic acquisition at Judy Creek.

The Company has increased its capital expenditure program to $19.3 million from $15.25 million, $19 million of which is allocated for Judy Creek. Milagro is currently drilling 2 wells at Judy Creek. After these 2 wells are drilled the Company will reduce to 1 drilling rig and thereafter plans to drill a minimum of 4 additional wells before year end. One of the 6 wells to be drilled will be to a shallower depth targeting up-hole gas potential which was recently identified by Milagro as a result of its drilling operations this past summer.

Milagro is also pleased to announce that is has completed the acquisition of all of the issued and outstanding shares of a private oil and gas company with operations in the Judy Creek area. As a result, Milagro has acquired interests in 4 producing gas wells and 8 sections of land in the Judy Creek area, producing net volumes of 200 mcf per day plus approximately 5 bbls per day of liquids (39 boe per day) and a 50% operated ownership in a gas plant capable of processing 4.0 Mmcf per day. The current through-put in the plant is 500 mcf per day. The acquisition is strategically located within Milagro's Judy Creek land block and will accelerate the tie-in of solution gas from Milagro's oil wells and will provide processing capacity for any of Milagro's future non-associated gas production from the area.

To date Milagro has drilled 4 wells at Judy Creek which has resulted in a current aggregate production rate of 143 bbls of oil per day with an estimated 25 boe per day of solution gas which is expected to be tied-in before the end of Q4 2005. Tie-in operations connecting the Company's wells to Milagro's newly acquired Judy Creek facilities are expected to commence in 4 to 6 weeks. Once connected, the combined production from these 4 wells will be approximately 168 boe per day, which together with the recently acquired production, will result in 207 boe per day, net to Milagro exclusive of the 6 well program currently underway.

All 4 Judy Creek wells drilled to date are on production. The well at 7-29-63-9W5M is producing 13 bbls of oil per day and has 3 boe per day of solution gas to be tied-in. The well at 6-28-63-9W5M is currently producing 90 bbls of oil per day and the solution gas from this well, after being tied-in is expected to add an additional 13 boe per day. The well at 12-29-63-9W5M is currently producing 34 bbls of oil per day and will produce an additional 6 boe per day after solution gas is tied-in. The well at 6-29-63-9W5M is currently producing 6 bbls of oil per day and the solution gas, after tie-in, will add an additional 3 boe per day. All of the wells are in a very high pressure reservoir regime and are expected to have a long production life as is indicative of analogous production in this area.

Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Milagro is an exploration and production company engaged in the acquisition, exploration, development and production of oil and gas reserves in western Canada. Milagro is listed for trading on the Toronto Stock Exchange.

Contact Information

  • Milagro Energy Inc.
    Jeffrey Rekunyk
    President and CEO
    (403) 693-4000
    or
    Milagro Energy Inc.
    Brad Haack
    CFO
    (403) 693-4000
    Website: www.milagroenergy.com