Victory Energy Corporation, a developmental stage petroleum company primarily dedicated to energy-related opportunities, provides an update on drilling and production progress at its Canyon Sandstone natural gas field in the Texas Permian Basin.

Jon Fullenkamp, President of Victory Energy Corporation, stated, "We are pleased with the progress of our nine producing Canyon Sandstone gas wells. All are producing natural gas in accordance with historical information from the gas field. While the initial outcome at our first deep Strawn well was not as anticipated, we will continue the drilling as a large horizontal well. We have successfully negotiated with our drilling contractor who has conceded to work within our agreement."

The first deep Strawn well (V154-6) was drilled to approximately 12,000 feet in depth when the drill string was lost in the well bore, requiring the well to be plugged back to the Canyon Sandstone formation at approximately 5,200 feet. Based on this development and the site's broad 40 acre spacing, the decision has been made to complete (V154-6) as a large horizontal well. The drilling contractor has discounted the horizontal drilling fee by approximately 50% of the cost of a standard horizontal well and has agreed to drill a replacement deep Strawn well during 2009 at no additional cost to Victory Energy.

The second deep Strawn well (V-127) is an immediate offset to the first deep well. The Corporation anticipates similar strong natural gas shows from this well in the Strawn formation at approximately 12,500 feet. The drilling rig to take the well to the target depth of 12,500 feet is due to arrive on location before the end of the first quarter of 2009.

The horizontal laterals to be drilled in two other wells (V153-8 and V115-7) targeting the Canyon Sandstone formation at approximately 5,200 feet, will commence as rig availability permits. The Corporation is actively seeking a qualified horizontal drilling expert to be on location during execution of the lateral drill.

Tags: Victory Energy Corporation