Heartland Oil and Gas Corporation Provides Operational Update on Cherokee Basin Assets
Thursday June 14, 9:05 am ET
DENVER--(BUSINESS WIRE)--Heartland Oil and Gas Corp (OTC BB: HOGC, "Heartland," or "the Company") has initiated drilling activities on three locations, beginning what the Company plans to be a new phase of drilling on the approximately 90,000 acres it owns in the northern Cherokee Basin of eastern Kansas. The wells directly offset and expand Heartland's Lancaster Battery ("Lancaster") and are expected to be completed by the end of the month.
Lancaster is currently producing approximately 290 thousand (gross) cubic feet of gas per day ("Mcfgpd") from 16 wells. Gas produced from Lancaster is gathered, transported, processed and compressed by Heartland Gas Gathering LLC, a wholly owned subsidiary of Heartland. The gas is then sold to Enbridge, where the Company receives the equivalent of Southern Star pricing. Including gas from eight wells still awaiting hook-up, the Company is currently producing approximately 490 Mcfgpd.
Heartland also disclosed supplemental (unaudited, for informational purposes only) reserve estimates from Malkewicz Hueny Associates, its independent reserve engineers, to help investors assess the impact of pricing and more established production histories on its estimate of proved reserves.
12/31/05 @ 12/31/06 @ 12/31/06 @ 12/31/06 @
$7.71/Mcf $5.35/Mcf $7.00/Mcf $7.71/Mcf
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Disc Disc Disc Disc
Net Net Net Net Net Net Net Net
Gas Income Gas Income Gas Income Gas Income
MMCF M$ @ MMCF M$ @ MMCF M$ @ MMCF M$ @
10% 10% 10% 10%
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Proved developed
producing 285 $838 620 $792 793 $1,352 848 $1,606
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Proved developed
non-producing 0 0 0 0 317 $580 337 $686
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Proved
undeveloped 762 $478 0 0 1,991 $1,293 2,106 $1,914
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Total proved 1,047 $1,316 620 $792 3,102 $1,778* 3,293 $2,758*
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* Net of $1,448 M for pipeline expenditures
Phil Winner, chief executive officer, said, "We are very pleased with the sustainability of our production and increasing maturity of the assets. While our 2005-to-2006 reserve comparisons were negatively impacted by lower gas prices at the end of 2006, we believe the combination of shallow decline under a more reasonable price scenario strengthens our overall reserve base."
He added, "We have productive pilots and acreage across a 12 mile swath, and still have not seen productive limits. Should we obtain necessary financing from our new parent corporation, Universal Property Development and Acquisition Corporation (OTCBB:UPDA - News; FWB:UP1) (BCN:UP1) (GER:UP1) (MUN:UP1) (STU:UP1), or other sources, we plan to expand our pipeline to increase sales from vented gas and drill additional wells."
About Coal Bed Methane
Coal bed methane ("CBM") generally consists of 95% methane, with the balance being made up of primarily nitrogen (N2) and carbon dioxide (CO2). CBM is often associated with gas produced from adjacent shales. Due to the corrosive nature of carbonic acid, removal of CO2 is generally required to get the gas to pipeline quality. CBM is considered an unconventional natural gas resource because it is adsorbed to the coal (or shale), and does not rely on buoyant forces found in more 'conventional' trapping mechanisms such as a fault, anticline, or stratigraphic trap. Adsorption is an efficient storage mechanism as coals can contain as much as seven times the amount of gas typically stored in a conventional natural gas reservoir. CBM production typically has a low rate of production decline and a long economic life of from 10 to 40 years. Currently, natural gas from coal beds accounts for approximately 7% of total natural gas production in the United States.
For further information, visit
www.heartlandoilandgas.comStatements contained in this press release that are not based upon current or historical fact are forward-looking in nature. Such forward-looking statements reflect the current views of management with respect to future events and are subject to certain risks, uncertainties, and assumptions, including availability of financing. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, or should the company be unable to obtain financing, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, or described pursuant to similar expressions.
Contact:
Heartland Oil and Gas Corporation
Jack Baker, Investor Relations, 561-630-2
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