HOUSTON, June 9, 2004 (PRIMEZONE) -- Capco Energy, Inc. (OTCBB:CGYN) announces that both Capco and Mercantile have terminated talks regarding merger possibilities after due diligence for a brief period.
Capco also has agreed to participate in the drilling of two wells in the Black Warrior Basin in Alabama and has acquired a 15% interest in about 6,000 acres in the Basin. The Black Warrior Basin is a prolific gas producing area with forecasted reserves of about 1.0 BCF per well.
Capco is continuing to test the Coal Bed Methane potential in a 4,131-acre lease in North Texas, by placing on production the test well that was drilled in March, 2004. So far no conclusive results can be announced, as the well is continuing its "dewatering" phase, a standard process of testing the gas from the coal seams. If the well produces commercial quantities of gas after the "dewatering" phase, the Company plans to increase its land position for an extended phase of drilling. The lease also contains conventional gas reserves discovered by utilizing updated seismic interpretation and the drilling of two wells in 2003. An additional conventional exploration well is also planned to be drilled in July 2004.
Capco's offshore and shelf operation are on course with 4 wells in production and 13 wells to be placed in production in the remaining period of 2004. By year end 2004, the anticipated gross production from this region is expected to be about 7.5 mmcfd and 250 bopd.
Ilyas Chaudhary, CEO of Capco said that, "Upon placement of 17 wells in the Gulf Coast region into production, forecasted production levels at year end 2004 are expected to have increased significantly from 2003 levels. The production levels will increase even higher if Capco achieves success in its exploration programs. The Company is on course on its development plan and balancing its financials needs."
The Company owns and operates 49 wells in the Gulf Coast Shelf region through 17 platforms and has additional non-operated producing properties in Montana, Michigan, Louisiana and Alabama.
The information herein includes forward-looking statements based on assumptions that may prove not to have been accurate. The business activities of Capco Energy, as usual to its industry, are subject to many risks both calculable and incalculable. Included in these risks are oil and gas prices, the need to develop replacement reserves, the reliability of reserve estimates, and the feasibility of extracting reserves, environmental risks, drilling and operating risks and the ability of the Company to implement its business strategy.