CALGARY, Alberta and DENVER, Jan. 26 /PRNewswire-FirstCall/ -- Storm Cat Energy Corp. (Amex: SCU; TSX.V: SME) today provided an update on the Company's U.S. and Canadian operations. The highlights of the Company's operations are: * Storm Cat's Board of Directors has approved an initial CAPEX budget of approximately US$32 million for drilling, leasehold and geologic work in 2006. In 2005, the Company spent approximately US$20 million. * The Company is producing 4.0 million cubic feet per day (MMcfd) from 138 wells on its Powder River Basin properties. * Storm Cat entered into a letter of intent to purchase approximately 3,550 net acres in the Powder River and 4,308 net acres in Alberta. Both areas are prospective for coalbed methane (CBM) drilling and production. * In British Columbia, the Company is rapidly moving forward with drilling to determine commerciality on the Elk Valley farm-in. Storm Cat has re-activated three wells, drilled two wells on the northern portion of the pilot and permitted to drill six wells for the next phase of development. * In Alaska, a rig is secured with drilling to commence in February 2006. Storm Cat will drill the Northern Dancer #1, its first onshore Cook Inlet Basin well. * Permits have been submitted to drill three wells on Storm Cat's Moose Mountain acreage in Saskatchewan. Although a drilling rig has not yet been secured, the Company is confident it will secure a rig in the near future. * On January 25, 2006, the SEC declared effective the Company's registration statement filed on Form F-3 pursuant to the registration rights agreement dated October 20, 2005. The Company's operational update: Powder River Basin - Wyoming Storm Cat Energy is developing coalbed natural gas on over 7,800 gross acres in the Jamison/North Twenty Mile and Northeast Spotted Horse areas, located in Campbell County, Wyoming, USA. Geologically, these fields are located on the northeastern flank of the Powder River Basin coalbed natural gas region. Originally placed in production in early 2002 and acquired by Storm Cat in 2004, the Jamison/North Twenty Mile properties are currently producing at a rate of approximately 750 thousand cubic feet per day (Mcfd) of natural gas from 28 producing wells (26 operated). Current production derives from the Anderson and Canyon coal seams. Storm Cat has 100% working interest (81.5% net), in 1,481 acres at Jamison/North Twenty Mile. A total of six coal seams exist in the Jamison/North Twenty Mile area, including the Anderson and Canyon. The Company believes two of the lower coal seams, the Cook and the Wall, provide sufficient thickness to warrant testing and development through the drilling of new wells. Storm Cat is currently preparing a Plan of Development for submission to the BLM with the intent to begin drilling up to 20 multi-seam Cook/Wall wells in 2006. In addition, the Company feels the shallow Smith coal seam is a good candidate for re-completion of certain existing wells. The Company acquired the Northeast Spotted Horse properties in 2005. The field is located approximately 35 miles northwest of Gillette, Wyoming. Storm Cat owns 6,320 gross contiguous acres. Originally placed on production in 2001, it presently consists of 110 producing wells (108 operated). Production is climbing and is currently over 3.25 MMcfd from various Fort Union coal seams. As of January 2006, Storm Cat drilled 43 new wells at Northeast Spotted Horse, including 29 multi-seam completion wells in a combination of the Cook, Wall and Pawnee coal seams. Multi-seam completion techniques help economically capture incremental reserves in a single wellbore, significantly reducing finding and development (F&D) costs. The remaining 14 wells are completed in only the shallower Canyon coal seam on an experimental 160-acre pattern. Well analysis on the 160-acre pattern is showing improved economics by capturing reserves with fewer wells than the normally accepted 80-acre pattern. The Company is actively continuing its drilling and development activity and is on track to complete its 120-well drilling program by early second quarter 2006. Powder River Basin Transactions Storm Cat Energy entered into an agreement to acquire a 90% working interest in approximately 3,550 net acres in the Powder River Basin, Campbell County, Wyoming. Pending due diligence review, the transaction is set to close by the end of the first quarter 2006. Storm Cat Energy plans an aggressive drilling program, subject to regulatory requirements, after closing. Transaction terms were not disclosed. Storm Cat Energy and PRB Gas Transportation, Inc. (PRB) have closed on an asset sale in which PRB has purchased, from a wholly-owned subsidiary of Storm Cat Energy Corporation, certain gathering assets in Northeast Spotted Horse for an undisclosed amount. PRB will provide natural gas gathering and compression services for Storm Cat's Recluse-area development properties including Northeast Spotted Horse. This transaction will allow Storm Cat Energy to focus its capital and operations on drilling and production activities. Elk Valley - British Columbia In June 2005, Storm Cat entered into a Farm-in and Joint Venture agreement on 77,775 gross acres in the Elk Valley area of southeastern British Columbia. Prior to Storm Cat's involvement, 17 stratigraphic and exploratory wells were drilled in two pilot areas. Targeting coals in the Mist Mountain formation, the wells encountered over 300 feet of coal in 14 seams. Production testing from 2001 to 2004 resulted in over 300 Mcfd from the best well. Storm Cat re-activated three wells in the Elk Valley western pilot, adding a new coal interval to the completion in two of three wells. Currently, the three wells are producing approximately 180 Mcfd into the project's production facilities. Two new wells north of the pilot project were drilled in nine and seven days, respectively. Focusing on the shallower part of the Mist Mountain section, the wells encountered between 175 feet and 207 feet of coal between 600 feet and 2,400 feet deep. Both wells are in the process of being completed and prepared for tie-in to the pilot facilities. These newly drilled wells are expected to be placed on production test in February 2006. Six additional well locations are being surveyed and permitted for the next phase of exploration. Cook Inlet Basin - Alaska Storm Cat Energy acquired extensive Petroleum and Natural Gas leases in the Cook Inlet region of Alaska. Over 7.0 Tcf of natural gas have been produced from this prolific basin since hydrocarbons were discovered in the 1950s. The Company now owns 100% interest in more than 35,000 acres of onshore lands leased from the State of Alaska and the Alaska Mental Health Trust approximately 30 miles north of Anchorage and on-trend with recent gas discoveries in the region. Storm Cat's first Alaska well, Northern Dancer No. 1, will be drilled on Alaska Mental Health Trust lands to a depth of approximately 7,500 feet to test the natural gas potential of the Tyonek formation. This initial exploratory well is expected to spud in February, 2006. Alberta Plains - Canada Storm Cat acquired two separate prospects in South Central Alberta. The first is located in the Cessford area of Alberta. Storm Cat secured access to 3,200 gross acres (2,240 net acres) through a drill-to-earn agreement. The lands are prospective for gas from the Belly River and Upper Mannville Coals, as well as gas from tight Mannville sands. The first well on this prospect will be drilled prior to March 31, 2006, pending rig availability and suitable weather. The second prospect is located in the general Red Deer area of Central Alberta, within the rapidly emerging Mannville Coal fairway currently being developed between Calgary and Edmonton. Storm Cat acquired a 100% working interest in 2,067.8 acres of land in the December 14, 2005 Alberta Crown Land sale. The lands have a lease-term of five years and are prospective for gas from the Upper Mannville Coal formations, as well as gas from tight Upper and Lower Manville sands. Storm Cat is currently planning to drill a horizontal Mannville CBM well in the fourth quarter of 2006. Moose Mountain - Saskatchewan Storm Cat completed its geological review of the Moose Mountain project in east/central Saskatchewan where the data suggests analogy to widespread producing areas in western Saskatchewan. Storm Cat has submitted licenses to drill three wells to evaluate the potential of the Second White Specs formation and is currently awaiting the availability of a drilling rig to begin drilling. About Storm Cat Energy Storm Cat Energy is an independent oil and gas company focused on the pursuit, exploration and development of large unconventional gas reserves from fractured shales, coal beds and tight sand formations. The Company has producing properties in Wyoming's Powder River Basin, exploration and development acreage in Canada and Alaska, and high-risk, high-reward exploration acreage in Mongolia. The Company's shares trade on the American Stock Exchange under the symbol "SCU" and in Canada on the TSX Venture Exchange under the symbol "SME." By Order of the Board of Directors Storm Cat Energy Corporation J. Scott Zimmerman President and Chief Executive Officer /s/ J. Scott Zimmerman Forward-looking Statements CAUTIONARY STATEMENT: This publication contains certain "forward looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995 relating to matters such as the Company's drilling and other exploration plans and projected well economics. Forward looking statements are statements that are not historical facts; they are generally, but not always, identified by the words "expects," "plans," "anticipates,\" "believes," "intends," "estimates," "projects," "aims," "potential," "goal," "objective," "prospective," and similar expressions, or that events or conditions "will," "would," "may," "can," "could" or "should" occur. Forward-looking statements are based on the beliefs, estimates and opinions of Storm Cat's management on the date the statements are made; they involve a number of risks and uncertainties. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Storm Cat undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include, but are not limited to the volatility of natural gas prices, the possibility that exploration efforts will not yield economically recoverable quantities of gas, accidents and other risks associated with gas exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company's need for and availability of additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company's exploration and development plans, and the other risk factors discussed in greater detail in the Company's various filings on SEDAR (http://www.sedar.com/) with Canadian securities regulators and its filings with the US Securities and Exchange Commission, including the Company's Form 20-F dated July 1, 2005. THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. DATASOURCE: Storm Cat Energy Corp. CONTACT: Scott Zimmerman, President and Chief Executive Officer, or Paul Wiesner, Chief Financial Officer, both of Storm Cat Energy Corp., +1-87-STORMCAT Web site: http://www.stormcatenergy.com/

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