K2 Seeks to Expand Agreement with Blackfeet Reservation, Begins Pipeline Construction

Calgary-based K2 Energy Corp. said Monday that it has begun construction of the pipeline that will tie in its Bow Island gas wells on the Blackfeet Reservation in northern Montana.

Completion of the six-mile, four-inch, steel line is scheduled for early April and will connect the Bow Island Palmer Field to the main transmission line owned by Northwestern Energy. K2 Energy awarded the construction contract to a local contractor based in Cut Bank, MT.

Upon completion, K2 Energy said it will tie in eight existing wells that were drilled on the original 3,000 acres of the Palmer Unit on the eastern edge of the Reservation. In addition, a new drilling program is planned for the spring that will evaluate the Bow Island potential of the offsetting 100,000 acres that the company has leased from the Blackfeet Indians, pending final approval by the Bureau of Indian Affairs (BIA).

In early January, K2 Energy announced that it had entered into an agreement with the Blackfeet Tribal Business Council amending its existing Indian Mineral Development Agreement. Under the amendment, K2 Energy has acquired the rights to an additional 100,000 tribal mineral acres with consent to lease an additional 100,000 acres of lands within a designated 200,000 acre block on the Blackfeet Reservation. Subject to approval by the BIA, K2 Energy will have increased its rights on the reservation to approximately 550,000 acres of exploration and development lands.

Upon approval, the company said it will deposit the land bonus payment of $1 million with the BIA.

Of the eight wells, five have been completed with a multi-zone fracture stimulation, two wells were completed open hole and will remain unstimulated, and one well was previously stimulated over a single zone. The company noted that three additional wells within the field are awaiting fracture stimulation prior to tie-in. The three additional wells are anticipated to be completed simultaneously with the commencement of the company's next drill program in the spring.

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