OilVoice - Teton Energy Announces 2009 Capital Budget

Teton Energy Announces 2009 Capital Budget

Thursday, January 29, 2009

Teton Energy Corporation has announced its capital budget, drilling plans and forecasted production volumes and expenses for 2009.

Capital Expenditures for 2009
The Company's Board of Directors has approved Teton's 2009 initial capital budget of up to approximately $10.5 million. The capital budget includes $7.9 million for drilling and $2.6 million for geological and geophysical, facilities and land. The Company plans to participate in the drilling of approximately 40 gross wells in 2009 and in the completion or recompletion of an additional 19 wells drilled prior to 2009. The final number of wells to be drilled and completed will depend on oil and gas prices and project economics. The Company plans to review and revise its 2009 capital budget upward or downward on a periodic basis, depending on economic circumstances and available capital.

Karl Arleth, President and CEO, commented, "Like most exploration and production companies, we have scaled back our capital expenditures from last year to preserve liquidity until commodity prices improve and credit constraints ease. Our primary focus is to continue to develop our low-cost, operated, shallow oil assets in the Central Kansas Uplift. The Company intends to closely manage and fund our operations with cash on hand, available cash flow from operations, funds available under its bank credit facility and proceeds from the possible sale of non-operated assets. Our total capital exposure should be approximately $2.0 million higher than our cash requirements when you include capital to be spent by partners on our behalf. We have also taken steps to reduce operating costs where possible and to reduce general and administrative expenses by approximately 55 percent."

Drilling Plans for 2009
In the Teton-operated Central Kansas Uplift, the Company plans to drill 33 gross wells and do nine recompletions.

In the non-operated Piceance Basin, Teton's partner has indicated it plans to complete three of 16 wells drilled in 2008 that had not been completed at year end and recomplete an additional six of 14 wells that have additional production potential. The 16 wells waiting for completion were drilled in 2008 and the three wells planned to be completed in 2009 are being postponed until winter weather subsides to minimize completion costs.

In the non-operated Williston Basin, the Company is participating in the completion of the Viall #1-30 well, which was drilled to test the Red River, Stonewall and Winnipeg formations on its Goliath acreage block. Teton has an approximate 17 percent working interest in the Viall #1-30 well. The Company and its partners signed an agreement with Red Technology Alliance, LLC ("RTA") whereby RTA will drill from one to four horizontal wells to test the Bakken formation on the Goliath acreage at no cost to Teton. If all four wells are drilled, Teton's working interest would be reduced from 25 percent to 15 percent in the Bakken formation.

In the Teton-operated eastern Big Horn Basin, the Company plans to drill and complete one gross well. The Company has received a permit to drill its first well to test the Greybull Sandstone, which is expected to commence drilling in the second half of the year due to wildlife restrictions. While drilling the Greybull well, the Company will core the Mowry Shale as the wellbore passes through that formation. Teton has signed an agreement with a third party, whereby they will pay for 90 percent of the cost of the Greybull well to drill to casing point, as well as 60 percent of the cost of the first Mowry well to casing point, in order to earn a 50 percent working interest in the company's Big Horn acreage.

In the Denver Julesburg Basin, the Company does not plan to participate in the drilling of new wells in 2009, but will maintain its existing oil and gas production base in the Washco acreage and in southwest Nebraska.

Operational Projections
The following estimates have been prepared based on the Company's current expectations for natural gas and crude oil prices and volumes, costs and expenses, debt balances and other items resulting from the Company's 2009 capital budget. These projections are forward-looking and subject to various factors, including, but not limited to, those factors outlined in this release. The estimates do not include possible acquisitions or divestitures or other unforeseen events that may occur after this release, and are subject to upward or downward revisions if there are significant changes in the industry or the current world economic situation.

The estimated annual net production for 2009 is a range of 2.0 billion cubic feet equivalent ("Bcfe") to 2.5 Bcfe as compared to 2008 estimated annual net production of approximately 2.9 Bcfe. The estimated lower production results from the lower capital expenditure budget in all operating areas, which in turn results in fewer new wells drilled to supply additional volumes.