GulfWest Energy Inc. has entered into a joint venture with Allen Drilling Acquisition Co. (ADAC), a subsidiary of Advanced Energy Recovery Inc., a midstream natural gas and production company located in Mission, KS. The joint venture, incorporated as Elgin Holdings LLC, was formed to activate a currently inactive gas gathering system in Hardin County, TX and to develop deep rights for natural gas on non-producing acreage in Madison County, TX. In forming the joint venture, GulfWest agreed to contribute its deep rights on the non-producing acreage and its ownership of the inactive gas gathering system, and ADAC committed to provide the initial capital funding to Elgin for the projects. GulfWest holds a 47.5% interest in Elgin and will act as the operating partner of Elgin Holdings. The pipeline in Hardin County is being prepared to be operational by the end of December.

Callon Petroleum Co.‘s board has approved a 2005 capital expenditure budget of $80 million, an increase of 23% from the 2004 capital expenditure budget of $65 million. The company anticipates that cash flow generated during 2005 will fully fund this budget. “The important thing to note about the 2005 budget is that reserve additive spending has been increased by 173%, from $22 million in 2004 to $60 million in 2005,” said CEO Fred L. Callon. “During 2005, we anticipate drilling three Gulf of Mexico (GOM) deepwater prospects, including two in the area of our Medusa Field. In addition, we have already identified 14 prospects elsewhere in the Gulf of Mexico region to be drilled.” Regarding recent GOM shelf exploration activities, Callon’s North Padre Island Block 913 #1 exploratory well was drilled to a vertical depth of 8,082 feet and found apparent natural gas pay in multiple intervals. Currently, the well is being completed and will be tied back to existing infrastructure on a nearby block. Production is expected during 3Q2005. Callon is the operator and owns a 50% working interest. At High Island Block 119, a 2Q2004 discovery, the A-1 and A-2 wells are producing at a combined rate of 45 MMcf/d and 700 bbl/d of condensate. The A-3 well currently is being drilled, targeting additional reserves in a separate fault block.

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