Rocky Mountain Energy Corp. (RMEC) said Friday that it has obtained $5 million in development financing dedicated to its recently acquired fields in Wyoming which will enable it to immediately generate cash flow from its proved gas reserves in the state.

The company said terms of the funding obtained through Aust Financial include securitization by a first mortgage on the property and $5 million drawn in $1 million segments as work progresses. The funding agreement is subject to final board approval of RMEC.

The fields were acquired from United States Oil Co. (Denver) and are located in Sweetwater County, Winton and Crook Counties in Wyoming. “The CBM lease is central to our development as a company,” said John N. Ehrman, RMEC CEO. “The CBM development is very predictable and safe as we are essentially drilling into a ‘blanket’ formation. It is low-risk and low-cost to get at, with very attractive returns.

“Once peak production of 500 Mcf/d is reached per well, the wells pay out in less than five months. The production is long-lived (15-20 years) at a very modest 9% decline. Once all 40 wells are on line, further development of up to additional 160 wells will continue, funded with existing revenue. The 40 CBM wells should produce some $1,000,000 per month at current prices.

“Our G&A and related budget is less than $500,000 per year. At $17.5 million EBITA and 22 million shares outstanding, we are off to a good start.” Ehrman said further funds are scheduled to be advanced to drill another 40 locations for coalbed methane development. “We continue to look for other acquisitions with similar properties to our Wyoming fields in the Rocky Mountain core regions and look forward to closing other sales in the near future.” RMEC is an emerging developer of proven oil and gas reserves in the Rocky Mountains.

©Copyright 2002 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.