POST FALLS, Idaho. – January 19, 2011 - JayHawk Energy, Inc. (OTCBB: JYHW) ("JayHawk" or the "Company") President Marshall Diamond-Goldberg is pleased to announce that JayHawk has acquired leases in the Bakken and Three Forks
unconventional oil play in Divide County, North Dakota. Mr. Diamond-Goldberg stated, "JayHawk's intention has always been to eventually become involved in the Bakken due to its proximity to the Company's production presence in the state of North
Dakota. In order to proceed with the Company's recent drilling at Crosby, a quarter
section of land was acquired with Bakken rights, which allowed JayHawk a small entry
into the play. With this acquisition, the Company decided to begin the search for
additional Bakken rights. This recent acquisition is the first of what the Company hopes
to be multiple additions to its holdings in the Crosby-Bakken lands."
The Bakken and Three Forks rights acquired include 1,066.5 gross acres and 135.056
net acres in Divide County approximately 20 miles from the Crosby pool. Mr. Diamond-
Goldberg said, "This purchase is a good start for us and we intend to build upon the
acquisition to position JayHawk for future drilling in both the Bakken Formation, as well
as the separate underlying Three Forks shale. These zones are currently being thought
of as separate reservoirs based upon the independent production being taken from
the Bakken and Three Forks in wells on the same drilling spacing unit (DSU). Hess,
Continental and Whiting have all drilled wells tapping the Three Forks and Bakken
separately on single DSU's and have produced oil in quantities consistent with reservoir
separation. Based upon corporate assessments by EOG, Whiting, Oasis and others,
recoverable reserves are expected to be between 300 and 800 thousand barrels of
light sweet crude separately in the Bakken and Three Forks, making both targets
economically attractive despite high drilling and completion costs. In Divide County, the
drilling depths to the target are some 3,000 feet shallower than in areas to the south,
thus drilling costs are somewhat reduced from the average of $5-$7 million as reported
by EOG, Brigham and Whiting in their presentation materials.
JayHawk will initially focus its efforts on acquisition of additional mineral land in the
Bakken/Three Forks with an eye toward possible drilling in the fourth quarter this year.
Additional funding will be required in order to carry out this portion of the Company's
business plan. "We are at the early stages of our activity in this play; however, coming
to the game later than others has actually helped JayHawk. The Company will benefit
from improved drilling and completion technologies and JayHawk can utilize these newer
proficient techniques," stated Mr. Diamond-Goldberg. "Implementing this portion of our
business philosophy will allow the Company to grow in a new direction with a focus on
oil yielding strong economic returns."
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Investor Relations Contact
Barry Gross
Gross Capital, Inc.
(361) 949-4999
jayhawk@grosscapital.com
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About JayHawk Energy
JayHawk Energy, Inc. is a managed risk, oil and gas exploration/exploitation, development and production company with activities focused on two major projects in the Cherokee Basin, Kansas and the Williston Basin, North Dakota. For more information please visit www.jayhawkenergy.com.
Cautionary Note to U.S. Investors --
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as probable, possible and potential, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Examples of such disclosures would be statements regarding "probable," "possible," or "recoverable" reserves among others.
Management hopes these transactions will bring additional value to the shareholders of JayHawk Energy. There is no guarantee that the projects that JayHawk has recently acquired will increase the value of its shares of common stock, or that JayHawk will acquire rights to explore and operate any other such projects, or that in the event that it acquires rights to explore and operate other such projects, that these actions will be successful or increase the value of JayHawk's common stock.
This press release may contain forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. There are many factors that could cause our expectations and beliefs about our plans to acquire additional exploration or production properties, our plans to drill or our drilling results to fail to materialize: competition for new acquisitions, availability of capital, unfavorable geologic conditions, the complexity of coal bed methane exploration and production, and prevailing prices for natural gas and general regional economic conditions. JayHawk assumes no obligation to update the information contained in this press release.
