West Hawk Development Corp.

West Hawk Development Corp.

August 09, 2006 03:05 ET

West Hawk Signs a Drilling and Development Agreement

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 9, 2006) - West Hawk Development Corporation (TSX VENTURE:WHD)(FWB:H5N) the "Company" or "West Hawk" through its wholly owned subsidiary, West Hawk Energy (USA) LLC (WHE), is pleased to announce that it has formally entered into a Drilling and Development Agreement for a 5120 acre property located in the center of the Piceance Basin, Colorado. Under the Drilling and Development Agreement, the Company has committed at a minimum to drill 4 wells in year 1, 8 wells in year 2, and 12 wells in year 3. The Resource Evaluation Report, in compliance with the Canadian securities commissions' National Instrument 51-101 criteria for oil and gas properties, has been completed by Gustavson Associates, Independent Qualified Reserve Evaluators, and is being filed with the TSX Venture Exchange and is viewable on SEDAR and the Company website.

A Resource calculation from the report, prepared by a Registered Petroleum Engineer with the State of Colorado, is as follows: The basin-centered gas accumulation in the Piceance basin is expected to form a continuous pool with varying degrees of technically and economically recoverable gas. This play is best thought of in terms of resources and economically recoverable reserves on a per well basis. Based on all available data, Gustavson Associates has assigned the probabilistic estimation of technically recoverable resources from the property, measured in billion cubic feet (BCF), as follows: P90% estimate of 383 BCF, P50% estimate of 529 BCF, and P10% estimate of 700 BCF.

Under the terms of the agreement, West Hawk is responsible for 100% of drilling and completion costs of the first 32 wells (160-acre spacing). In accordance with the aforementioned NI51-101 report, the cost of each of those wells is estimated at $1,600,000 per well with roughly 50% attributable to drilling and the balance to completion costs. In return, the company will earn a working interest in the property (ranging from 50% to 75%) with a 75% net revenue interest (NRI) proportionally reduced to the working interest earned.

"The Piceance Basin, with an estimated 300 trillion cubic feet (TCF), is considered one of the largest gas plays in North America. Signing this agreement follows our focus to build West Hawk Development into a significant energy producer," says Dr. William Mark Hart, President, West Hawk Development Corp.


Michael Townsend, Executive Chairman

Cautionary note

This report contains forward looking statements, particularly those regarding cash flow, capital expenditures and investment plans. Resource estimates, unless specifically noted, are considered speculative. The company is filing a National Instrument 51-101 Report. By their nature, forward looking statements involve risk and uncertainties because they relate to events and depend on factors that will or may occur in the future. Actual results may vary depending upon exploration activities, industry production, commodity demand and pricing, currency exchange rates, and, but not limited to, general economic factors. Cautionary Note to US investors: The U.S. Securities and Exchange Commission specifically prohibits the use of certain terms, such as "reserves" unless such figures are based upon actual production or formation tests and can be shown to be economically and legally producible under existing economic and operating conditions.

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