US-focused oil and gas exploration and production company Red Fork Energy Limited provides update the market on its reserve position as at June 30, 2010 following independent certification by petroleum engineers, Lee Keeling & Associates, Inc (Lee Keeling).

This year the Company has again successfully increased its total reserve position with total proved, probable plus possible (3P) reserves increasing to 197.6 Billion cubic feet equivalent (Bcfe), up from 106.5Bcfe in the previous year.

Proved plus probable reserves (2P) increased to 143.1Bcfe (up from 72.8Bcfe in 2009), while proved reserves (1P) reached 79.9Bcfe (up from 22.4Bcfe in 2009).

Importantly, the Company has now confirmed an initial independently certified 2P reserve of 78.4Bcf for its shallow biogenic shale discovery at East Oklahoma.

The majority of this initial reserve increase can be attributed to the strategic EOK South acquisition which was successfully closed late last year.

Red Fork acquired the EOK South assets (which included over 60,000 acres, extensive gas gathering, compression, processing, pipeline and sales infrastructure, existing gas production and a large drilling inventory) in November 2009. Based on this latest independent review, this acquisition has already delivered almost US$80 million in proved and probable (2P) PV10 value.

Since the initial discovery was made and the productive capacity of the shallow shale was established, the Company has been working to refine its drilling and completion methods on this project with the goal of maximizing production and reserves at the lowest possible cost.

Red Fork is utilizing its operational experience and expertise at East Oklahoma to establish a very low finding, development and operating cost base on which to unlock the full potential of the very large multi TCF gas resource within the discovery area.

The Company's most recent drilling and completion work (at East OK Central) has delivered success and Red Fork is continuing to work with its preferred service companies to improve results and lower costs as development continues.

Using this latest completion method, a single well can be drilled, completed and tied-in to sales for approximately US$100,000. This represents a saving of US$50,000 on the Company's previously published drilling and completion costs per well.

Importantly, this has allowed Red Fork to adjust its single well economic model for East Oklahoma to reflect these lower costs, with total direct "finding and development" costs now estimated to be less than US$0.50 per thousand cubic foot of gas produced ("Mcf").

In a notional 1,000 well development scenario for East Oklahoma, this drilling and completion method would deliver capex savings of approximately US$50 million and the Company expects that economies of scale would drive costs even lower in a full development scenario.

Managing Director David Prentice noted that: "It is important to remember that reducing the cost of drilling and completing a well has the economic effect of increasing the price received for gas produced over the life of that well. These breakthroughs in reducing drilling and completion costs are effectively "permanent hedges" against future gas price fluctuations.

We are very pleased to achieve such significant cost reductions enabling Red Fork to exploit the large scale resource at East Oklahoma at the lowest possible cost and achieve a higher return on our investment."

The economics of shale gas plays highly favor operators like us that invest in engineering and ongoing refinement of their drilling and completion methods for each project. It is recognized across the industry that the best operators statistically produce up to 4 or 5 times more gas from the same formation as an inefficient operator."

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