20 New Wells at EOK South Highlights Total wells tied-in to sales to increase to 49 Current production of 1MMcf/day to increase substantially with revenue reflected in September Quarter results Plant optimization program substantially complete generating significant cost savings Plant now capable of transporting 40MMcf/day and processing 4MMcf/day without upgrading Gathering system expanded with approximately 40km of new pipeline Development to continue in 20 well phases EASTOK set to expand its mid-stream business through marketing of through-put or stranded gas Oklahoma based (ASX listed) oil and gas exploration and production company Red Fork Energy Limited (Red Fork or the Company) is pleased to provide an update on progress at the recently acquired (100% owned and operated) East Oklahoma South Project (EOK South). The Company assumed ownership and operations of the project in November 2009 and immediately established gas production at the rate of approximately 1,000,000 cubic feet of gas per day (1MMcf/day). This production level has been maintained and increased with less than a week of unscheduled downtime or production interruptions despite the severe weather conditions experienced in Oklahoma during December 2009 and January 2010. Since the acquisition, the Companys immediate focus has been on a program of work to stabilize and where possible improve production from existing wells and to improve the efficiency and profitability of the Wagoner A processing and compression facilities. This program has been successful generating initial modest increases in production and significant operating cost savings through the replacement or right sizing of equipment in the compression and gas processing sections of the plant. Continues. ASX Announcement March 29, 2010 www.redforkenergy.com.au The Wagoner A Station is now capable of transporting up to 40MMcf/day. Under the current configuration, it is capable of processing 4MMcf/day, with the capacity to upgrade to meet future requirements. The direct cost of processing at the 4MMcf/day rate is approximately US$0.31 per Mcf. The Company's wholly owned subsidiary and mid-stream company, EASTOK Pipeline, LLC (EASTOK) has also continued to expand the natural gas gathering and water disposal system at EOK South. A total of 19 miles (30.5 km) of gathering pipeline is under construction using three separate construction contractors. An additional 5.5 miles (9 km) is planned and will commence by mid-April as current projects are completed. Additional plant and system improvements are also underway to increase well production volumes, reduce costs and improve efficiencies of the system. The expansion of the pipeline infrastructure by EASTOK will enable Red Fork to bring 20 new wells into production, bringing the total number of wells currently in production to 49. This will boost production from EOK South and this will be reflected in the September Quarter 2010 revenue numbers. EASTOK has also been active in pursuing opportunities to expand its mid-stream business through the marketing of through-put or stranded gas from other operators in the immediate vicinity of the pipeline system. Successful contracting and connection of these prospects will allow EASTOK to further expand its system, increasing its footprint in the region, and provide increased cash flows from third party fees and payments. Importantly, the pipeline infrastructure and compression and processing facilities owned by EASTOK at EOK South provides the only access to the spot gas market in this part of the play. In addition, this expanded infrastructure will provide Red Fork with the ability to proceed with its planned drilling program at EOK South, connecting its wells to sales quickly and economically. The Company will expand the EOK South project in phases of 20 wells and update the market at the completion of each phase. Commenting on this announcement, Red Fork Managing Director said EOK South was a well timed strategic acquisition by Red Fork because of its existing infrastructure, production and reserves in a proven gas play that we know very well. We set about re-establishing production and improving efficiencies which we have achieved in a very short time-frame. Now we are starting to capitalize on the growth opportunities by bringing on new wells to tie directly into sales. This growth will be reflected in future revenue numbers and we look forward to up-dating the market and our shareholders as we continue to develop and expand this very exciting project. Yours faithfully, David Prentice Managing Director
RFE Price at posting:
79.0¢ Sentiment: None Disclosure: Held
