SignalEnergy Inc.

September 27, 2005 23:59 ET

SignalEnergy Inc. (TSX-SGI) announces operations update and property acqusition

CALGARY--(CCNMatthews - Sept. 27) - SignalEnergy Inc. ("Signal") is pleased to provide shareholders with an update of ongoing operations and to announce a property acquisition in Redwater. Signal has been very active completing and evaluating the wells drilled in the summer program in which a total of 16 gross (8.2 net) wells were drilled at a 100% success rate. To date, 13 gross (5.1 net) wells have been successfully completed, evaluated and released for tie-in.


Signal has agreed to acquire from a private company additional interests in the Redwater area immediately offsetting company lands and operated infrastructure. The acquired asset consists of one producing well plus a location to be drilled in November 2005 at a 35% working interest. Signal will acquire 480 gross (192 net) acres on which it has identified a potential 5-7 additional wells increasing the number of drilling locations in Redwater to 22 wells based on 40 acre spacing.

Redwater represents Signal's largest core area with current production of 500 - 550 Boe/d from 24 gross (14.1 net) wells and related production facilities. Operations during the third quarter included the drilling of five (2.8 net) new wells of which two have recently been placed on production. The remaining three wells have been successfully completed and are expected to add net 100 boe/d from the area as tie-ins are finished in Q4-2005. Signal is preparing to drill an additional seven wells in the fourth quarter with the expectation of increasing Redwater production to 900-1,000 Boe/d.

In addition to Redwater activity, operations have been focused in Carrot Creek-Kaybob and Bashaw-Chigwell with results briefly summarized as follows:

Carrot Creek-Kaybob

Signal has successfully drilled and cased four gross (1.4 net) wells in its Carrot Creek core area with a 100% success rate. Completion operations have been concluded with one new oil well (40% working interest) placed on stream providing net 60 Boe/d of light sweet crude oil. Of the remaining three wells, two have been successfully completed and pipeline construction is underway. Production is expected to commence in the fourth quarter adding approximately net 150 Boe/d.

Signal has also completed the first of two zones in Grizzly resulting in a gross test rate of over 300 Boe/d. Completion of an upper formation is currently underway while the tie-in to a nearby gathering system has commenced. Signal owns a 25% working interest in the well and 100% working interest in an offsetting section. The Grizzly well is expected to be on-stream in the fourth quarter adding an estimated net 50 Boe/d.


Since the end of the second quarter a total of nine gross (3.42 net) wells have been drilled on the property at a 100% success rate. The summer drilling program targeted the initial phase of CBM locations on Signal's lands. A total of eight gross (2.52 net) CBM wells out of an inventory of 16 gross locations have been successfully drilled so far with two wells completed and awaiting tie-in. The remaining six CBM locations plus a successful Belly River well (35% working interest) are expected to be placed on stream in the fourth quarter adding an estimated net 70 Boe/d.


Signal current production is 1,700 to 1,800 Boe/d consisting of 75% natural gas and 25% light crude oil and natural gas liquids. Combined rate adds from the successful summer drilling program are expected to add an additional 325 - 375 Boe/d. Signal is also planning for continued aggressive development in the fourth quarter with plans to drill 11 gross (10.2 net) wells primarily in Redwater and Carrot Creek.

Caution to Reader

This news release contains forward-looking statements and the reader is cautioned not to place undue reliance on these statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predications, forecasts, projections and other forward-looking statements will not occur.

This news release is not for dissemination in the United States or to any United States news services. The common shares of Signal have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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