Oil Drilling Expertise Fashioned In Alberta Translates To Hard-won Acceptance In Tennessee

Since the turn of the 20th century, the green hills of Tennessee have largely remained a patchwork of small, undisturbed private land holdings. Consequently, any oil exploration of note has been done by family businesses and small to intermediate oil and gas companies, while Big Oil has largely passed the Appalachians by for larger, easier pickings in Texas, Oklahoma, Kansas, Louisiana, and California.

Besides not having to deal with so many small landowners, amassing large land packages was a motivator for looking elsewhere in the early years of US oil exploration. More often, according to sources like the US Geological Survey, it was the technical nature of finding oil in the Appalachians.

Montello Resources Ltd. (TSX.V:MEO) is one of only a handful of oil & gas companies to commence a multi-million dollar oil and gas exploration program in the technically challenging Appalachians Mountains and Foothills. The upstart company from Calgary, Alberta, recently won over government approval besides local resident support to earn a shot at re-drilling two of the most exciting oil prospects that the State of Tennessee has seen in decades. Montello is undaunted by the prospect of being one of the few companies to drill far deeper than most would contemplate in this under-developed but emerging oil & gas state.

Bill Cawker, who heads Montello, rightly echoes country comedienne Minnie Pearl: We're just so proud to be here, he says, because the advice, experience, smart field savvy, overall execution and technical expertise of our Alberta professionals goes such a long way here.

Everyone we work with says, You have such a professional well site! It's amazing that you are a little company from Calgary. Anyone coming here would think this is run by Conoco, Phillips or Shell, not a small Canadian company like yourselves.

Cawker says he believes that if Montello had not posted photographs of its well site on the company's website, some people might not believe the progress they've made. Montello has chiseled a well site 250 feet by 250 feet by some 30 to 40 feet deep out of the rock.

This is the type of project normally tackled by a company much, much bigger than ours, so we come by the upstart or underdog tag honestly here. We like proving ourselves and relish the fact that we are showing up all the naysayers to date.

Montello's drill site is situated at the heart of a scenic farming region that offers few discernable clues as to the potentially prolific oil reserves that are believed to exist completely untapped thousands of feet below Morgan County's lush green pastures. Hence, the State of Tennessee Department of Environment and Conservation, Division of Geology, Oil and Gas Program, has officials monitor Montello's work, closely and constantly. Cawker says Montello welcomes the assistance of top flight geologists from the state while drilling the John Bowen #2 Well.

A drill permit application on the Morgan Highpoint Project #1 well (officially known as the John Bowen #2 Well) was granted by the Department of Environment and Conservation, in July. Construction of the well site was completed to the satisfaction of the Department and its oil and gas inspector walked the site and presented a hard copy of the approved Drill Permit in person on Monday, July 23.

Montello and its joint venture partners are drilling on the property, 164 acres that adjoin the Howard family farm property near the community of High Point in rural north-central Tennessee, one hour and 40 minutes drive north of Knoxville. The drill location is a mile from the site of Pryor Oil's Howard White #1 well the original name of an over-pressurized gusher that came to be known as the Blowout Well. The oil released from the well was a light crude oil (38.1 API) with low to medium viscosity. It flowed at up to 750 barrels per hour, acccording to the well's operator. But the subsequent blow-out caused a fire and a minor oil spill that essentially put the operator out of business.

The well has languished in a legal limbo ever since. 

However, a nearby well named the John Bowen #1 Well (originally called the TexFlora well) also struck pay-dirt of up to 800 bpd in November 2003, but encountered problems of an entirely different nature and entirely unrelated to the well's potential for commercialization: After the well was shut-in during the fall of 2003, owner Jerry Walsack took a Thanksgiving vacation at his home in Florida. While there, he died unexpectedly and as a result the John Bowen #1 was never put into production.
Now it's Montello's turn to tap into Morgan County's previously elusive oil reserves. And this plucky junior is no stranger to major challenges and high stakes rolls of the dice, as recently appointed company president, Bill Cawker, is keen to point out.

Montello has been around just about forever, he says. In 20 to 25 years the company has gone through three or four incarnations, with at least three different management groups doing mineral exploration, such as diamonds in North Alberta, shallow oil and gas, and so on.

The current 2007 drilling programs in Tennessee and Pincher Creek, Alberta could be the company's elusive ticket to the next level. Judging from the demonstrated oil and gas structures that caused the Howard White #1 blowout, John Bowen #2 has the potential to provide major shareholder growth.
The company and its management team have certainly risen to the occasion for their shareholders as they've devoted considerable time and energy, as well as big dollars to ensure that the company is marshalling the best technological know-how, the best equipment and the best consultants in the business to get the desired results from this high-impact drill program.

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