SOURCE: UnionTown Energy Inc.

UnionTown Energy Inc.

April 08, 2011 14:43 ET

UnionTown Energy Inc. (UTOG) Completes Acquisition of New Miami Oil Property

The Company Increases Its Overall Estimate of Recoverable Oil Reserves to Over 12.8 Million Barrels

BILLINGS, MT--(Marketwire - Apr 8, 2011) - UnionTown Energy Inc. (OTCBB: UTOG) is pleased to announce that it has completed its acquisition of the New Miami Property, comprising more than 1,480 gross acres in the Sweetgrass Arch area of northwest Montana.

As previously announced on March 28th, 2011, UnionTown has reviewed the reports of previously drilled wells on the property. Two of the wells have already determined the New Miami sits atop a shallow oil accumulation. The New Miami property is considered by the Company to be a high-potential acquisition that could be brought to production quickly, at low cost and low risk.

UnionTown believes that the property could accommodate up to 17 shallow horizontal oil well drill zones and may contain an estimated recoverable oil reserve of more than 2.4 million barrels, as stated in a third party, non-commission, report provided to the Company. The Company believes that its recently acquired Musselshell Property may contain an estimated recoverable oil reserve of up to 10.4 million barrels. Thus, the Company's total estimated recoverable oil reserve now exceeds 12.8 million barrels.

To date, more than 300 million barrels of oil and 500 billion cubic feet of natural gas have been produced within a 50-mile radius of the New Miami. Just 4 miles from the property, a single producing oil field has yielded in excess of 30 million barrels of oil.

Under the terms of the acquisition agreement, UnionTown has paid $300,000 cash and has committed to paying full development costs, leaving the leaseholder with a 25% net revenue interest in the property. It is estimated that drilling and completion costs for each well on the property will be approximately $1 million. The Company is planning to commence drilling activity immediately.

"The Company is pleased to complete the closing ahead of our mid-April deadline," stated Mr. Patrick Smyth, Director of Corporate Communications. "Timing is everything in Montana today. It is owing to the strong working relationships with the leaseholders and operators alike that we can seize upon these high potential prospects. We have drilling operations contractors standing by to begin the necessary work to advance these properties to production."

Added Mr. Smyth, "The IMF noted on Thursday that strong growth in oil demand from emerging market economies, combined with worries about potential supply disruptions from the Middle East, have pushed prices up more than 25% in the past year. We are pleased to be moving forward with our business plan at the right time, and Montana is the ideal place."

New Miami Geology

The Pondera field is a combination structural/stratigraphic trap, resulting from pre-Jurassic truncation and folding of the Sun River (Mississippian Madison) Dolomite. At Pondera field, the Sun River Dolomite is a very heterogeneous pay zone averaging 10 feet of pay. The Sun River Dolomite oil pool at the New Miami property was discovered in 1988 by Smoky Oil Company (True Oil Company subsidiary). The discovery well, known as the H&W Ranch #31-20, was drilled on a seismic anomaly as a 5,318 foot Cambrian basement test. Subsequent to the discovery, 3 additional vertical well completions have been drilled at New Miami, with oil and gas successfully tested or produced from the Sun River Dolomite.

About UnionTown Energy Inc.

UnionTown Energy Inc. (UTOG) is focused on the acquisition, exploration, development and production of oil and natural gas properties. Our strategy is to build a portfolio of energy producing assets in known and producing oil and gas fields throughout North America. With the completion of our acquisitions of the Musselshell Property and New Miami Property, we're moving rapidly to bring the first wells to production. We're also in advanced stages of acquisition of other oil and gas properties, and we have a pipeline of additional potential acquisitions under consideration. For more information about our company, please visit www.uniontownenergy.com.

Safe Harbor

Except for historical information contained herein, the matters set forth above may be forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to UnionTown, the potential reserves, production and ability to establish wells on the Musselshell and New Miami Prospect, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors such as the nature of business negotiations, the operational details of oil and gas properties, the competitive environment within the industry, the ability of UnionTown to expand its operations, the level of costs incurred in connection with UnionTown's expansion efforts, economic conditions in the industry and UnionTown's financial strength. UnionTown does not undertake any obligation to update such forward-looking statements. Investors are also directed to consider all other risks and uncertainties.

Contact Information

  • Contact

    Patrick Smyth
    Director of Corporate Communications
    UnionTown Energy Inc.
    Phone: (702) 530-3241