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Northern Utes Form New E&P Company, Partner with Questar, Barrett, Berry

The Northern Ute Indian Tribe has officially launched a new exploration and production company, Ute Energy, which announced several partnerships Thursday with Questar, Bill Barrett Corp., Berry Petroleum and Fidelity Investors Management LLS. The new company will develop oil and gas resources on tribal lands in northeastern Utah.

"Ute Energy is the beginning of a great movement for the Northern Utes," said Maxine Natchees, chairman of the Tribal Business Committee. "This company is part of progressive financial plan, set in place four years ago, that led us to becoming active partners for the first time in the development of our land and resources. This translates to great things for our tribe, surrounding communities and the state." The new company has named John Jurrius its CEO and Robert Ogle, CFO.

The company unveiled the first component Thursday of a four-year strategy to develop 236,000 acres on its reservation in Utah's Uintah Basin. To date, the tribe has been restricted to offering leases to drilling companies in return for bonus payments and royalty interests, thereby eliminating the tribe's role in land development and forfeiting associated benefits. But in a historic move, the tribe has successfully negotiated its right to develop its land.

Gayle McKeachnie, advisor to Utah Gov. Jon Huntsman and rural affairs coordinator lauded the move. "Ute Energy is important to Utah's economic development," McKeachnie said. "We commend the Northern Ute Indian tribe for seizing the opportunity to tap into the area's wealth of resources, helping us become less reliant on foreign energy supplies."

A key move for the tribe was to negotiate a partnership arrangement with the other energy companies with leases on tribal lands. These companies have expertise and the capital required to successfully develop the assets.

Charles Stanley, CEO of Questar Market Resources, sees "significant potential" in the Northern Ute acreage in eastern Utah. "In addition to our joint exploration and production activities, Market Resources has also signed a letter of intent to form a joint venture to build a gas-gathering system on a portion of the Ute Tribe's lands including the areas we are jointly exploring with the tribe," Stanley said.

During the next year, Ute Energy will participate in nearly $60 million of mineral development with wells between Naval Oil Shale Reserve and Brundage areas. Ute Energy also expects to announce future projects in the Wolf Flat and Lake Canyon areas.

The move by the Northern Utes follows a similar action last by the Southern Utes in the early 1990s. The Southern Utes started their own production company, Red Willow Production, in 1992, and over the past 10 years the company has become one of the top five coalbed methane (CBM) producers in Colorado (see NGI, Sept. 27, 2004). Last year, Red Willow was producing about 750 MMcf/d of CBM all in Colorado.

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