Epsilon Energy has initiated natural gas natural gas production on its Highway 706 project in northeastern Pennsylvania, which is focused on the Marcellus shale.

This represents a very significant milestone for Epsilon, as it is the Company's first domestic project in which it is the operator and holds a 100% working interest. The commencement of natural gas production from Highway 706 signifies the culmination of two and a half years of work, in which the Company acquired approximately 12,000 acres of prospective Marcellus shale leasehold, assembled 25 miles of pipeline right-of-way, drilled a combination of 3 vertical and 5 horizontal wells, and hydraulically fractured and completed 5 of those wells to date.

The Company has initiated natural gas production from the Poulson #1H and is currently working out related start-up issues. The Poulson #2H will be hooked up for production next. Both wells lie between the compressor site to the north and the tap into the Tennessee Gas Pipeline to the south (see map). Epsilon is currently extending its gathering system to the north of the compressor site in order to bring on three wells that have previously yielded a combined natural gas production rate of 8.5 Mmcf per day. This section of the gathering system is expected to be completed in approximately 60 - 90 days. The Company currently has compression facilities on location and expects to have the ability increase its compression capacity as warranted in order to handle increased production as more wells come online.

Zoran Arandjelovic, Epsilon's Executive Chairman and interim President/CEO, stated "This is a most significant development for Epsilon. After a lot of hard work, we are now in the position to rapidly increase our daily natural gas production rate and to make substantial additions to our reserve base in the Marcellus shale. We plan to continue developing Highway 706 in a systematic manner in order to fully exploit the potential of this project".

Tags: Epsilon Energy Ltd