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Foundation Coal Holdings Inc

Thursday, February 14th, 2008

Foundation Coal Holdings, Inc. announce that an affiliate has acquired a 49 percent interest in Target Drilling, Inc., a privately-held contract drilling company headquartered in Jefferson Hills, Pa. Target Drilling employs approximately 60 people and has specific expertise in both in-mine horizontal drilling and surface directional drilling to capture coal seam methane gas.
Greg Walker, Foundation Coal’s Senior Vice President and head of the company’s land and gas assets, said, “As part of our future growth, we are focusing on the development of our valuable gas resource. Our affiliates hold more than 150,000 acres of coalbed methane lands in Northern Appalachia.”
Working with a third party consulting firm, Foundation Coal recently completed a study of the methane contained in controlled acreage in Northern Appalachia. The reservoir engineering study, coupled with current gas production activity, indicates recoverable gas exceeding 300 billion cubic feet (300 million MCF).
Walker added, “The surface directional test wells we have drilled with Target Drilling have exceeded our expectations for gas production and gas quality. Degassing the coal in advance of mining lowers mining costs, increases mining efficiency and reduces the emission of a greenhouse gas that would otherwise be vented into the atmosphere. We feel it is advantageous to have a strategic relationship with a premier driller in a region where gas drilling and production continue to expand rapidly.”
Stephen Kravits, founder and President of Target Drilling noted, “We are very excited about this investment by Foundation Coal, one of the leading coal producers in the country. We have had tremendous success in extracting coalbed methane for Foundation in the past, and we look forward to a long and productive relationship with Foundation and our many clients for whom we are providing drilling services. This transaction enhances Target’s ability to grow and allows Target to better serve the needs of its customers in a region of the country experiencing strong demand in gas development due to vast reserves and good market access.”

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