Rocky Mountain Gas Inc. (RMG) upped its potential in the Powder River Basin after signing an option agreement to acquire nearly 40,0000 net acres of undeveloped coalbed methane (CBM) properties in northeastern Wyoming.

RMG, a subsidiary of U.S. Energy Corp. and Crested Corp., has until May 1 to complete its due diligence, raise sufficient capital to exercise the option and enter into a definitive agreement for purchase and sale of the subject properties.

The optioned properties include 10 completed wells defining the targeted coals. A portion of the property offsets production from adjoining properties belonging to other parties. Pipelines traverse portions of the properties and all but 600 acres of the properties are privately owned. RMG is contracting an independent geologic consultant to provide volumetric reserve analyses.

Additionally, RMG is conducting exploration activities on the company’s properties in the Montana portion of the Powder River Basin. A four-well exploration program is under way with two wells already drilled and completed. Management said it was encouraged by initial gas shows and an individual coal thickness of more than 50 feet.

RMG said the complete results from the exploration program will dictate the extent of follow-up pilot programs tentatively scheduled for later this year. Two additional wells that were previously completed have undergone further testing as required by the U.S. Bureau of Land Management, and water analysis and production testing of these two wells have yielded positive preliminary results.

“We’re gearing up to expand the pace and scope of our exploration and development programs this year,” said Peter G. Schoonmaker, RMG’s president. “Our production volumes are increasing at our Bobcat, WY project,” and he said that as of Thursday (Feb. 6), RMG has begun selling a portion of its natural gas for more than $4.00/MMBtu ($4.50 on Feb. 6). “With more normal winter weather finally reaching the Rockies, we’re encouraged for the possibility of more of the same going forward.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.