Storm Cat Energy Corporation
TSX VENTURE : SME

Storm Cat Energy Corporation

May 26, 2005 11:17 ET

Storm Cat Energy Reports on Reserve Estimates and Revenue Projections for Palo Field

CALGARY, ALBERTA--(CCNMatthews - May 26, 2005) - Storm Cat Energy Corp. (TSX VENTURE:SME) (the "Company") announces that it has received an independent reserves report on its Palo property. The report, titled "Evaluation of the Coal Gas Reserves of Palo Field, Campbell County, Wyoming", was prepared for the Company by Sproule Associates Inc. ("Sproule"), a firm of independent petroleum engineers, based on data as at January 1, 2005. Sproule's evaluation was carried out in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook and is consistent with National Instrument 51-101 requirements. The Palo field coal gas reserve estimates and revenue projections from Sproule's report are summarized in the tables below.



Summary of Oil and Gas Reserves and Net Present Values of Future Net
Revenue (Constant Case)

Natural Gas
Reserves
-------------
Gross Net Before Income Taxes Discounted
Reserves Category MMcf MMcf Present Value (MM$)
--------------------------------------
0% 5% 10% 15% 20%
---------------------------------------------------------------------
Proved Developed
Producing 2,362 1,437 4.669 4.254 3.914 3.630 3.390
Proved Developed
Non-Producing 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Proved
Undeveloped 5,880 3,969 8.387 6.489 4.995 3.804 2.841
----------------------------------------------------
Total Proved 8,242 5,406 13.056 10.743 8.909 7.434 6.231
Probable 5,378 3,594 9.187 7.072 5.489 3.744 3.354
----------------------------------------------------
Total Proved
Plus Probable 13,620 9,000 22.243 17.815 14.398 11.178 9.585
----------------------------------------------------



Total Future Net Revenue (Undiscounted Constant Case)

Future
Net
Revenue
Well Before
Operating Development Abandonment Income
Revenue Royalties Costs Costs Costs Taxes
M$ M$ M$ M$ M$ M$
-----------------------------------------------------------
Total
Proved 47,026 18,031 9,916 6,022 13,057
Total
Proved
Plus
Probable 77,704 29,436 16,163 9,862 22,243



Summary of Oil and Gas Reserves and Net Present Values of Future Net
Revenue (Forecast Prices and Costs)

Natural Gas
Reserves
-------------
Gross Net Before Income Taxes Discounted
Reserves Category MMcf MMcf Present Value (MM$)
--------------------------------------
0% 5% 10% 15% 20%
---------------------------------------------------------------------
Proved Developed
Producing 2,279 1,383 4.253 3.930 3.660 3.429 3.231
Proved Developed
Non-Producing 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Proved
Undeveloped 5,778 3,900 5.884 4.444 3.301 2.381 1.633
----------------------------------------------------
Total Proved 8,057 5,283 10.137 8.374 6.961 5.810 4.864
Probable 5,262 3,516 6.212 4.715 3.585 2.723 2.055
----------------------------------------------------
Total Proved
Plus Probable 13,319 8,799 16.349 13.089 10.546 8.533 6.919
----------------------------------------------------



Total Future Net Revenue (Forecast Prices and Costs)

Future
Net
Revenue
Well Before
Operating Development Abandonment Income
Revenue Royalties Costs Costs Costs Taxes
M$ M$ M$ M$ M$ M$
-----------------------------------------------------------
Total
Proved 42,081 16,143 9,760 6,040 10,138
Total
Proved
Plus
Probable 68,207 25,853 16,048 9,957 16,349


These reserve estimates and revenue projections are intended to supplement the disclosure on the Company's reserve estimates and revenue projections for its Jamison and Twenty Mile fields contained in a Form 51-101F1 dated May 2, 2005.

The constant gas price scenarios employed the Henry Hub December 31, 2004 gas price of US $6.50/mmbtu, while escalated gas price scenarios used the 5-year NYMEX strip, then flat after 2010. The forecast prices used in preparing the Company's reserves data are set out in the table below.



Henry Hub Price $/MMBtu

2005 $6.74
2006 $6.48
2007 $6.08
2008 $5.70
2009 $5.41
2010 $5.49
2011 $5.58
2012 $5.66
2013 $5.75
2014 $5.83
2015 $5.92

(Escalation Rate of 1.5% thereafter)


The Company acquired the Palo field through its wholly-owned subsidiary, Storm Cat Energy (USA) Corporation, Palo Petroleum, Inc. of Dallas, Texas on February 28, 2005 for a cash purchase price of US $8,550,000. The Palo field is located on the eastern portion of the Powder River Basin, approximately 35 miles northwest of Gillette, Wyoming. It presently consists of 71 producing wells (69 operated) currently producing approximately 2.6 MMcfd from various Fort Union coal seams. There are 6,320 gross contiguous acres of which over 80% is either undeveloped or partially developed.

By Order of the Board of Directors

Storm Cat Energy Corporation

J. Scott Zimmerman, President

Caution Regarding Forward Looking Statements

This publication contains certain "forward looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995. Such statements are based on the Company's current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by it; and involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company's operations, markets, products and prices and other risk factors. Words such as "anticipates", "expects", "intends", "plans", "believes" or similar expressions are intended to identify forward-looking statements. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the volatility of natural gas prices, the possibility that exploration efforts will not yield economically recoverable quantities of gas, accidents and other risks associated with gas exploration and development operations, the Company's need for and availability of additional financing, and the other risk factors discussed in greater detail in the Company's various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company's Form 20-F dated June 23, 2004.

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

Contact Information

  • The Kottmeier Resolution Group
    Kris Kottmeier
    Investor Relations
    Toll Free: 1-87STORMCAT (1-877-867-6228)
    info@stormcatenergy.com