CALGARY, Sept. 4 /CNW/ - Galleon Energy Inc. ("Galleon") is pleased to announce the successful drilling of a significant Montney horizontal oil well located in British Columbia and strong drilling results in the Central and Eastern upper Montney projects.

BC MONTNEY

Galleon's recently drilled horizontal well in north east BC tested in excess of 200 Bbl/d of 42 degrees API crude oil and 1.0 Mmcf/d of natural gas (370 BOE/d) (gross rates, Galleon's interest is 77%) over a period of 4 days. Four multistage horizontal fractures were performed. Tie-in of this well is expected within the next six weeks with completion of a natural gas line. The well is expected to be produced at an initial rate of approximately 250 BOE/d.

This is the first horizontal well that has been drilled on this Montney turbidite trend. To date, the lead vertical well on the play has produced approximately 58,200 Bbl of crude oil and 0.42 Bcf of natural gas. This vertical well has a net pay of 50 feet and 12% porosity. Based on current commodity prices, royalty rates and estimated operating costs, pay out of this horizontal well is expected to be within 1 year.

Based on 3D seismic and geological interpretation, the current pool size is estimated to be 6 miles in length and 0.75 miles in width. Approximately 35% of the pool has been delineated to date based on well logs, completions, tests and production. Galleon plans to further delineate this pool by drilling up to 12 horizontal wells under current spacing restrictions over the next 18 months. With down spacing, an additional 12 horizontal wells are planned.

Galleon has access to an approximate 68% interest in over 5,000 gross acres of land on this Montney trend within the project area.

Galleon is committed to developing its resource plays in BC in a program designed to test at least 4 additional resource fairways. Galleon has access to approximately 50,847 gross acres (35,120 net acres) of land in BC. Galleon plans to target approximately 15% to 20% of the 2009 drilling capital program in BC.

CENTRAL AND EASTERN UPPER MONTNEY

Galleon's first horizontal well drilled in the Central fairway was completed in early July 2008 in the upper Montney zone. The well (100% interest) has been on production for over one month and has produced at a stabilized rate of 3.4 Mmcf/d with 20 Bbls of crude oil over this period.

One Montney vertical well (100% interest) in the Central fairway was completed in July. The well has been on production for two weeks and is producing from two separate Mid Montney zones. The first zone is producing 1 Mmcf/d and 18 Bbl/d of liquids. The second zone is producing 1.0 Mmcf/d and 8 Bbl/d of liquids. Follow up horizontal drilling is planned in 2009.

In the Eastern Montney fairway, 8 Montney horizontal wells (100% interest) have been drilled in 2008.