AMERICAN PETRO-HUNTER has acquired a 25% working interest in the gas play is located west of Modesto in the Central Valley of California, near Sacramento. Potential Recoverable Reserves have been calculated to be 42 BCF at a depth of 7,400 feet within sands that are indicated by 2D seismic to be in excess of 50 feet of gross pay.

Estimates by the play generator, a private third party engineering group, is that if the pay zone is 100% gas filled and the well is brought into commercial production that an IPR (initial production rate) of 5,000 Mcf per day may be achieved. American Petro-Hunter would anticipate similar rates to commercial wells in the region at analog fields that produce on a daily basis between 2,000 to 4,000 Mcf per day. Natural Gas wells in these analog field’s exhibit long life, relatively stable rates of production and predictable decline.

The Central Valley in the Sacramento region of California is called “California’s Gas Country” and nearby fields contains some of the most prolific gas reservoirs in the Sacramento Valley. They have accounted for over 400 BCF of gas production to-date. In proximity to the prospects are prolific gas fields such as Union Island (271 BCF), McMullin Ranch (63 BCF) and Vernalis (103 BCF). The project, if commercially viable would produce gas that would be purchased by PG&E Citygate that supplies gas to the Capital region of Sacramento and is used in electrical power generation in the area. PG&E Citygate prices are some of the highest in the country and prices can be found at outlets such as www.intelligencepress.com.

The planned development is subject to certain factors. Following a successful reinterpretation of newly acquired seismic, if the closure of the sands can be identified, a test well could be planned for as early as June 2011. It is anticipated that a determination as to whether the potential for a closed reservoir at depth can be made - and a well site proposed – may not be made until March 2011. Given that drilling in the low, near sea level location creates operational issues, plans for drilling would have to wait until after spring and during the dry summer months.