St. Mary provides interim operational update
  by: OilOnline
  Thursday, March 27, 2008

St. Mary announces that its first operated horizontal Cotton Valley well at Carthage Field in East Texas was a success. The Boise Southern 1-H (SM 98% WI) had an initial ten-day average sales rate of 4.8 MMCFE per day. The well targeted the Basal Cotton Valley sand at a vertical depth of 9,375 feet, and utilized seven fracture stimulation stages over an approximately 3,800 foot lateral.

Also in East Texas, St. Mary announces that it has closed on the previously disclosed acquisition of producing and non-producing oil and gas properties in Panola County at Carthage Field for $49 million. The acquired properties are near the Boise Southern well and other St. Mary assets where the current focus is on the Cotton Valley and Travis Peak formations. Highlights of the acquisition include the following:

• Meaningful addition to inventory of 15 vertical locations and 7 horizontal locations
• 3,000 gross acres/2,700 net acres
• Estimated net proved reserves of 25 BCFE, 73% of which is proved undeveloped
• Probable and possible reserves of 12 BCFE
• Current net production of 2 MMCFE per day, primarily natural gas

The acquisition was financed using existing cash on hand and borrowings under the Company’s existing credit facility. As a result of the successful Boise Southern well and the bolt-on acquisition in the area, St. Mary plans a multi-rig program to drill 6 additional horizontal wells and 14 vertical wells in Carthage in 2008.

The Company also continues to see solid results in its operated James Lime program. The St. Mary operated Mast LB 1-H (SM 42% WI) was recently completed and had an initial ten-day average sales rate of 6.2 MMCFE per day. The well was the second successful extension well drilled at the Company’s Loco Bayou prospect, which is approximately 75 miles southwest of St. Mary’s James Lime development activity at Huxley and Spider. The Company’s James Lime acreage currently stands at approximately 50,000 net acres, and leasing efforts remain ongoing.

St. Mary’s operations in the Cotton Valley and the James Lime are both managed by the ArkLaTex region in Shreveport, Louisiana. The Company’s exploration and development budget in the ArkLaTex region remains unchanged at $161 million for 2008. With the increase in the Carthage drilling program, certain operated projects in the James Lime have been deferred to ensure that the Company’s total capital investments remain within expected cash flow for 2008.

HORIZONTAL WOODFORD PROGRAM EXPANSION

St. Mary announces that it is increasing the capital investment budget in the Mid-Continent region from $135 million to $155 million in order to expand its 2008 operated horizontal Woodford shale program in the second half of the year. Recent well results continue to affirm the Company’s well design and geotechnical understanding of the play. The last eight wells completed with meaningful production histories have averaged estimated ultimate recoveries of 2.7 BCFE, which the Company believes compares favorably to other wells completed throughout the play. The expanded program will keep two operated drilling rigs running in the field through 2008, with the potential for a third rig being added in the later half of the year. An additional seven gross horizontal Woodford wells are being added to the budget for a total of 16 wells in the 2008 program.

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