In Poland, the company has successfully drilled, cased and cemented its Gapowo B-1 horizontal well with excellent gas readings regularly recorded throughout the lateral.

The well successfully drilled the targeted over-pressured, gas charged, organic-rich Lower Silurian and Ordovician shales that were originally encountered in the vertical Gapowo B-1 well. The well has approximately 5,900 ft of lateral available to fracture stimulate.

The high gas readings recorded during the drilling of the lateral were consistent with the characteristic high gas shows observed in the original vertical well, despite increased mud weight and a switch to oil-based mud.

The conclusions of the log and core data analysis and sustained elevated gas shows in the lateral validate the Company’s belief that the Lower Silurian and Ordovician shales are highly prospective for shale gas.

The company believes that it controls about 285,000 net acres that have good potential to produce natural gas and another approximately 285,000 net acres that are also prospective but have higher associated risk.

The company has prepared a completion design for this well that is based on the core analyses and knowledge obtained from previous wells and stimulations. The company’s current plan is to fracture stimulate approximately thirty percent of the available lateral length followed by an extended production test to optimize its design prior to fracture stimulating the remaining lateral.

As planned, the company recently fracture stimulated 685 feet of the 5,444 foot lateral (12.5%) in the Leila 31-2H horizontal well, to test a new stimulation technique for cost optimization purposes. Although the pilot test results were lower than expected, the information acquired will greatly assist the Company in continuing to pursue its optimal completion design and the previously disclosed $8 million estimated Caney well cost.

The Wiggins 12-8H and Barnes 7-2H Caney wells continue to perform very well. The 30 day rate of the Wiggins 12-8H well, where only half the length of the Company’s typical planned Caney well was effectively stimulated is 273 Barrels of oil per day (BOPD) or 402 Barrels of oil equivalent per day (BOEPD). The Barnes 7-2H well had a 60 day rate of 360 BOPD (469 BOEPD) from a lateral that still has 15 percent available to be fracture stimulated.