Emerald Oil & Gas produces first gas

Shares in West Perth-based Emerald Oil & Gas have risen after the company produced first commercial gas from its Appalachian project in the United States.

The company said the gas was produced from the first two of eight wells in Kentucky two days ago.

Shares in Emerald climbed 1.3 cents or 28 per cent to six cents at 13:10 AEDT.

The announcement is below:

Highlights:

Appalachian Project (Kentucky & West Virginia

- 2 wells producing in Magoffin County, Kentucky
- Kentucky frac to earn program increased to 8 wells

Emerald and Gas NL is pleased to announce its first commercial gas production commenced from the first two of eight wells in Magoffin County, Kentucky, on April 1, 2009. This is a significant first step in Emerald's plans to establish a significant gas production position from its Appalachian gas assets in 2009.

These are the first two of eight wells, which include six wells purchased by Emerald in 2008 and two additional wells recently acquired from P&J Resources.

In all cases an 80% working interest is earned by completing the wells with production casing and fracture stimulation treatments. No initial well purchase was required for the two additional wells.

Gas rates from the two producing wells is being gradually increased for production. This will be followed by up to three more wells in April and the remaining three wells by end Q2, 2009.

All the wells are tied into a gathering system that links to the Jefferson Energy pipeline. Gas prices will range from 80% to 90% of the Appalachian Index price, which is at a premium to the Henry Hub price.