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AXcess News: Patch Shares Bolt on Oil Sands Drilling Progress Report.

NEW YORK -- Shares of Patch International, Inc. (OTCBB:PTCH) bolted Friday, rising nearly 20 percent after the Calgary, Alberta-based oil sands developer issued a progress report showing it was on track to complete a multi-property drilling program that would give it majority ownership in two key locations.

The news followed an announcement earlier this month by TransCanada Corp. (NYSE: TRP) that Canada's National Energy Board (NEB) has approved the transfer of a portion of TransCanada's natural gas transmission facilities to TransCanada Keystone Pipeline GP Ltd. The facilities are a key component of the Keystone Pipeline, which will transport crude oil from Alberta to refining centers in the U.S. Midwest.

The proposed Keystone Pipeline is a 2,965-kilometre (1,842-mile) pipeline with a nominal capacity to transport approximately 435,000 barrels per day of crude oil from Alberta to U.S. Midwest markets at Wood River and Patoka, Illinois.

Construction of the Keystone Pipeline is expected to begin in early 2008, with commercial operations scheduled to commence in the fourth quarter of 2009. Those development plans coincide with Patch International's plans of having a 25,000 barrel per day Steam Assisted Gravity Drainage, or SAGD, pilot plant in operation at that time.

Patch, which may be the largest junior oil sands development company in the Alberta province, said Friday it completed 11 of 16 wells on its Dover Oil Sands Project and that on the Firebag Project it was ready to commence drilling. Patch stated that as many as six drill rigs were being added to complete its combined 28 corehole program.

But in the hot oil sands arena of Alberta there's a big demand for drill rigs, though Patch may have an edge. Buried in a January 17 announcement on the second oil sands acquisition by the company was the appointment of Mark Bentsen to the board of directors. Bentsen is the founder of Cathedral Energy Services Trust (TSX: CET.UN), whose subsidiary is the largest drilling contractor in SAGD wells in Canada's oil sands arena. According to Cathedral's third-quarter results, revenues increased a record 67 percent, which Bentsen's company attributed largely to the demand for directional drilling.

Cathedral reported third quarter revenue of $38 million, compared to $22.8 million in the same period in 2005. The SAGD driller reported net income in the third quarter of 2006 of $11.3 million, or 36 cents per Trust Unit, compared to $6.1 million, or 21 cents per Trust Unit in the third quarter, 2005 - an 84 percent increase in net income.

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Publication:Business Wire
Geographic Code:1CANA
Date:Feb 26, 2007
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