Vulcan Minerals Inc.
TSX VENTURE : VUL

Vulcan Minerals Inc.

October 31, 2006 10:51 ET

Vulcan Minerals Inc.: Medicine Hat Approval

ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(CCNMatthews - Oct. 31, 2006) - Vulcan Minerals Inc. ("the Company")(TSX VENTURE:VUL), is pleased to announce that it has been advised by the operator of its Medicine Hat Alberta gas project that the continuation of its natural gas lease has been approved by the Alberta Department of Energy in respect to all seven sections of land. Field operations will consist of re-completing existing wells and drilling new wells as soon as equipment can be mobilized. The project has two suspended wells in the reservoir target which have been flow-tested as previously announced on October 24, 2006. In addition, the Company has acquired the surface leases from a previous operator on three abandoned wells that appear to contain bypassed gas zones. One of these wells was re-entered and the target reservoir was perforated but not frac stimulated. That well delivered surface pressures consistent with potential commercial gas flow. The Company plans to re-complete all three previously abandoned wells as part of its development program.

An evaluation report on the exploration potential of the Medicine Hat project by Chapman Engineering Ltd (Chapman) of Calgary has been completed and is accessible on the Company's website (http://www.vulcanminerals.ca/updates.html). The Chapman Report concludes that the total project has a best estimate of prospective resources of recoverable gas in place of 20.9 billion cubic feet (BCF), a low estimate of 6.9 BCF and a high estimate of 49.5 BCF, based on historic data from offsetting production in the Medicine Hat gas field. Vulcan's share is 85% before payout and 75% after payout as per the news release dated June 21, 2006. Based on forecast prices and costs, Vulcan's share of the project on a potential unrisked basis is valued at $42,236,000 for the best estimate of 20.9 BCF and on a potential risked basis is valued at $12,246,000. These valuations are based on cumulative cash flow discounted at 10% per year. The main risks to recovering commercial gas from the lands relate to reservoir quality and the efficiency of hydraulic fracture stimulation of the reservoir. The Chapman Report should be consulted for complete project evaluation.

Shares issued: 37,318,384

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

Contact Information

  • Vulcan Minerals Inc.
    Mr. Patrick Laracy
    President
    709-754-3186
    709-754-3946 (FAX)
    info@vulcanminerals
    www.vulcanminerals.ca