Cygam Energy Inc. announced that a contract was signed with Hydro Drilling International S.p.A. (Hydro Drilling) on March 23, 2007 to drill a 1000 meters well in the Posta Nuova permit in southern Italy.

Regulatory approval for all drilling operations has been received and construction of the surface lease has commenced. Cygam has already acquired long delivery items such as wellhead, casing and related equipment. Drilling is expected to start towards the end of April, after Hydro Drilling completes its contract obligations with another operator and mobilizes the drilling rig from a nearby location.

Cygam has a 100% working interest in the Posta Nuova permit located onshore, in the Puglia region of southern Italy, along a trend of major onshore gas fields (Candela-Palino, Monte Stillo, San Salvo-Cupello, etc.). The Corporation acquired and re-interpreted available 2-D seismic data in order to confirm the size of the structural target where a former operator drilled a well in 1993.

That well, Cervaro 1, tested gas at a rate of 1.3 MMcf/d from a middle Pliocene sand at a depth of approximately 950 metres but was abandoned because of lack of gas transmission infrastructure at the time.

Cygam plans to drill the new well in a structurally higher position, approximately 200 meters away from the Cervaro 1 location, to a minimum total vertical depth of 1,000 metres, to test the primary middle Pliocene sandstones target. Additional shallower sandstone reservoirs will be tested as well, pending log evaluation.