Capital City Energy Group Completes Acquisition of Hotwell Services Inc.

Wednesday, Jan 07, 2009

Capital City Energy Group, Inc. or “Capital City” announced that as of December 31, 2008 it has completed the acquisition of Hotwell Services Inc., or “Hotwell” an emerging oilfield service company operating in the Appalachian Basin. Capital City purchased Hotwell for $5 million (USD), through the issuance of 2.78 million shares of restricted common stock valued at $1.80 per share. Based on current projections, Hotwell could add an additional $2,000,000 in gross revenue per month and $700,000 per month in net cash flow for 2009.

The acquisition establishes CETG as a preferred provider of horizontal logging and well completion services, the optimal method of hydrocarbon extraction for the much publicized, domestic natural gas play, the Marcellus Shale. Most importantly, the management acquired through the acquisition of Hotwell are some of the Appalachian Basin’s most talented and respected field services professionals. The strategic purchase provides the requisite infrastructure to support the Company’s aggressive growth plan in the Appalachian Basin, and specifically in the prolific Marcellus Shale formation, through its locations in Delmont, Pennsylvania and Clarksburg, West Virginia. The Company anticipates launching four additional bases of field services operations in the Basin during fiscal year 2009 to service the extensive backlog of existing clients as well as the Company’s previously announced E&P activities.

“We believe the acquisition of Hotwell Services Inc. will significantly accelerate the Company’s financial prospects and positions it as a rapidly growing provider of energy field services, specifically within the Appalachian Basin,” said Timothy Crawford, CEO of Capital City Energy Group. “In addition to expanding geographically, the transaction brings an experienced and accomplished management team led by Joseph Sites. We welcome all of the stakeholders of Hotwell to the Capital City family.