Powder River producer Pennaco Energy revised downward itsestimated gas production for the fourth quarter of 2000 and for2001 because of some maneuvering by competitors that has reducedits wellhead deliveries. It also has encountered some downholewater problems at a couple of its projects.

The small producer, which works exclusively in one of thehottest new production plays in the country, the Powder River,estimates that it will produce between 58 and 63 MMcf/d of gas netto its interest in the fourth quarter compared to a previous targetestimate of 70 to 75 MMcf/d.

Several Pennaco competitors in the Gillette area of the PowderRiver have recently installed mini-compressors, or blowers, at thewellhead on properties adjacent to Pennaco’s producing wells. Theblowers have increased the production rates from competitor wellsand temporarily reduced production from Pennaco wells, Pennacosaid. It is in the process of installing its own blowers on keywells and expects production from the affected wells to return toprevious levels over the next 30 days.

In addition, Pennaco’s operated production in the Felix andFitch Ranch Projects, located in the Pennaco/CMS AMI, has increasedat a slower rate than expected due to persistent downhole waterpump problems. Despite numerous pump changes, the downhole pumps inFelix and Fitch Ranch have not operated consistently due toclogging with coal and shale. Pennaco said progress is being madein both areas, however.

Pennaco also revised downward its production forecast for 2001to a range of 95 to 105 MMcf/d net to its interest as compared to aprevious target of 110 to 120 MMcf/d.

The company did report encouraging results from its deeper pilotwell projects, House Creek Project in the Gillette Area and Arvadain the Pennaco/CMS AMI. In House Creek, Pennaco has drilled threepilot projects to the Big George Coal and two pilot projects to thedeeper Wyodak Coal. The company has estimated net unrisked reservepotential of 250 Bcf in the House Creek Big George Coal and 95 Bcfin the House Creek Wyodak Coal.

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