All those Sanjel trucks spotted at the Comfort Inn near Pony Village Mall are to start a fracture stimulation program at wells along Beaver Hill and Radio Hill.

On October 6, 2004, a multi-hole coring program was commenced on the Methane Energy Corp. leases. Coring was needed to collect coal samples so that accurate gas content data could be measured. Cores were collected, desorption work was done on the coals and evaluation completed by mid 2005. This data, as well as other geologic information, was provided to Sproule Associates, Inc., an international reservoir engineering firm, for an independent evaluation. To date, natural gas analyses performed on samples from Methane Energy Corp. coal samples and wells indicate that the gas is pipeline quality and that the coals are fully saturated with gas. It is important to note that technically recoverable gas volumes do not necessarily qualify as proved reserves, and we have not recorded any proven reserves at any of our projects at this time.

Drilling and testing programs were then initiated at three pilot sites-Beaver Hill, Radio Hill and Westport. A total of twelve exploratory wells have been drilled. Five exploratory wells were drilled and completed at Beaver Hill; two exploratory wells were drilled at Radio Hill with one completion; and five exploratory wells were drilled at Westport with four of the wells completed.

In August 2008, the Company retained Baker Energy Services of Sheridan, Wyoming, to provide field management services with respect to a well work-over and fracture stimulation program scheduled for up to five wells located in the Company’s Westport area in Coos Bay, Oregon. The proposed fracture stimulation program is expected to commence in mid-August 2008 and will include injection of proppant sand and a variety of stimulation fluids to test and determine the most effective fracture stimulation technique for use in subsequent wells. Following the stimulation program, the five wells will be placed on a testing program to first recover the injected stimulation fluids then commence a two month period of reservoir production analysis. As of August 14, 2008, $1,640,000 has been advanced to Baker Energy Services for the fracture stimulation program.

Fracture stimulation is a common operation performed on both conventional and unconventional gas reservoirs including coal bed methane projects. To date, none of the Company’s wells have been treated with a fracture stimulation utilizing a proppant. The purpose of the fracture stimulation program is to increase permeability within the reservoir and enhance well productivity. A successful fracture stimulation program is key to confirming the “proof of concept” of the Company’s coal bed methane project in Coos Bay, Oregon.

Methane Energy filed for bankruptcy protection earlier in the year.

(hat tip/Jody)