Polaris Geothermal Signs Well Drilling Contracts

Polaris Geothermal Signs Well Drilling Contracts

Polaris Geothermal Inc., a renewable energy geothermal power producer, is pleased to announce that its subsidiary, Polaris Energy Nicaragua (“PENSA”), has entered into well drilling contracts for the drilling of production and re-injection wells to triple its generation capacity at the San Jacinto geothermal field in Nicaragua.

The first of the contracts was entered into with the drilling company Perforadora Santa Barbara, a subsidiary of LaGeo of El Salvador. The contract is for the drilling of 4 new wells over a period of 8 months. Another 8 wells will be drilled in a subsequent phase.

The drilling of these 12 wells is forecast for completion in 22 months, with commencement of the first well immediately and it will be initiated following completion of negotiations with the Banco Centroamericano de Integracion Economica (BCIE), expected in Q1 of 2007.

PENSA has also signed a contract with Baker Hughes International of the United States to obtain drilling support services, such as bit supply, directional drilling, wire line services and supply of drilling fluids, among others.

In addition, the services of BJ Services of El Salvador will be contracted to provide specialist cementing services for the new wells.

The total investment in the drilling programme for both phases will be approximately US$30 million.

Construction of the steamfield and plant installations to triple the current production to 31.4 MW will require a work force of about 700 people.

Own geo-scientific unit to be created

Tom Ogryzlo, CEO and President of Polaris Geothermal, said “The Company has always had a policy of technology exchange from their project management team and contractors to the local work force. This drilling program will be carried out under the supervision of Sinclair Knight Merz of New Zealand. To this end we will put together a team of international and local experts that will be part of our permanent new geo-scientific department within PENSA”.

About LaGeo

LaGeo of El Salvador is a partially government-owned corporation engaged in generating electrical power based on geothermal resources. PENSA worked with LaGeo during its first production phase consisting of the installation of two 5-megawatt turbines.

PENSA’s Drilling Program:

Phase 1:

– 2 new production wells: 900 to 1800 m. deep in current production areas; with wider than standard diameters (9-5/8″instead of 7″) to maximize performance.

– 2 new re-injection wells: approximately 1000 m. deep in the outer perimeter of the reservoir area.

Phase II:

– 4 new production wells: 2000 m. deep outside current production areas, to increase the production capacity of the reservoir.

– 4 new re-injection wells: nearly 1000 m. deep in the outer perimeter of the reservoir area.

About Baker Hughes

Baker Hughes provides drilling products and services worldwide to oil and natural gas companies, as well as formation, assessment, follow-up and production. It operates in over 90 countries around the world. Baker Hughes is the combination of many innovative companies that have developed and introduced technology to serve the petroleum service industry. Their combined history dates back to the early 1900s. During its history, Baker Hughes has acquired and assimilated numerous oilfield pioneers including: Brown Oil Tools, CTC, EDECO, and Elder Oil Tools (completions); Milchem and Newpark (drilling fluids); EXLOG (mud logging); Eastman Christensen and Drilex (directional drilling and diamond drill bits); Teleco (measurement while drilling); Tri-State and Wilson (fishing tools and services); Aquaness, Chemlink and Petrolite (specialty chemicals), Western Atlas (seismic exploration, well logging). For more information log on http://www.bakerhughes.com.

About Sinclair Knight Merz (SKM)

SKM is recognised as a world leader in engineering and scientific consulting to the geothermal industry. SKM’s range of technical and management skills enable them to take a geothermal development from initial exploration through to project development and long-term management. As a fully integrated multi-discipline consultancy, they are the only company able to provide a ‘total package’ of services. For more information log on http://www.skmconsulting.com.

About Polaris Geothermal Inc.

The Company is producing geothermal power from a 10 MW plant installed on its San Jacinto concession in Nicaragua. The concession has the potential to produce up to 200MW of power and the company is starting an expansion to about 30MW which is scheduled for completion in about 18 months. This expansion will be paralleled with a further expansion to 66MW to be completed about 30 months from the present time. The Company already has a Power Purchase Agreement to sell up to 66 MW to a major Spanish utility for a 20 year period starting from March 2006. Any power produced above the 66 MW can be sold significantly higher tariff.

In addition to the San Jacinto concession in Nicaragua, the company has plans to drill it’s second concession, Casita, which had 90% probability to produce 137 MW. As well, the Company is examining potential geothermal business opportunities in other countries.


This press release includes certain “forward-looking statements”. All statements regarding the ability of the Company to successfully complete the Offering and the loan with Quest are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. All statements that are not historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance, are “forward-looking statements”. We caution you that such “forward looking statements” involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Such risks and uncertainties include unpredictable results of exploration activities, uncertainties inherent in the estimation of geothermal resources, fluctuations in the costs of goods and services, problems associated with production operations, changes in legal, social or political conditions in the jurisdictions where the Company operates, lack of appropriate funding and other risk factors, as discussed in the Company’s filings with Canadian securities regulatory agencies. The Company expressly disclaims any obligation to update any forward-looking statements.

Contacts: Polaris Geothermal Inc. John Clark Director and CFO (416) 367-0150 x 22

Email: john@itmcorp.ca

Polaris Geothermal Inc. Thomas Vukovich Director (416) 367-0150 x 21 Email: vukitm@itmcorp.ca

Website: www.polarisgeothermal.com

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