Sentry Petroleum Ltd., Denver, (Nasdaq: SPLM) has reported that Depco Rig 22 commenced drilling Talundilly-CSG1 in ATP 862, Sentry’s northern permit in Queensland, Australia at 2am Australian Eastern Time. At time of this release, a 6” steel conductor has been set at 42m and cemented. When the cement is dry the rig will air drill a 5 7/8” hole down to 180m just above the major coal zones and will be running and cementing a 4 1/2” casing. The coring will start from this depth once the cement is dry.

The Talundilly-CSG1 well is targeting the Winton coal and gas shale formation. The well will be cored from 200 to 400m and drilled down to the target depth of 550m before logging. The company anticipates 10 days to complete. Coal and shale cores will be sealed and shipped to CSG Exploration & Production Services for laboratory analysis and testing. CSG is a Queensland-based service provider specializing in the evaluation of coal seam gas (CSG) reservoirs and prospects. The firm’s primary expertise relates to gas capacity measurements through desorption, CSG prospectivity analysis, reservoir characterization, Gas In Place estimations and CSG portfolio management.

The desorption test will be continued during the following 60 days. The length of the testing process will depend on the time it takes for the total gas in the coal and shales to be desorbed. We expect testing to be completed by mid-August 2011 with results announced immediately thereafter. Isotherm analysis will also be performed during this period.

Upon completion of Talundilly-CSG1, the Rig will move to the Albilbah-CSG1 well location. The Company anticipates spudding Albilbah-CSG1 in the last week of June.

Additionally, Sentry is pleased to announce the execution of a non-binding Memorandum of Understanding (“MOU”) with Ergon Energy Queensland Pty Ltd. Ergon Energy Queensland is a wholly owned subsidiary of Ergon Energy Corp Ltd., a Queensland Government-owned major electricity distributor, retailer and generator. Ergon services over 680,000 customers across an area in excess of one million square kilometers, roughly 97% of the state of Queensland.

"The commencement of our drilling appraisal program and the execution of this MOU are important steps in our corporate development strategy," says Raj Rajeswaran, president and chief executive officer of Sentry. "The drilling appraisal program will provide us with the opportunity to confirm our technical data and potentially advance our properties towards commercialization of our prospective resource."

"The MOU, though non-binding, is an important preliminary first step in establishing a strategic relationship with one of Queensland's largest utility providers. To enter negotiations with a potential customer of the scale of Ergon Energy Queensland at this stage further strengthens our confidence in our ability to produce significant shareholder value," he adds.

Under the terms of the non-binding MOU, the companies have agreed to enter into negotiations for the purchase and sale of potential gas for use in Ergon's Barcaldine Power Generation Station immediately north of Sentry’s permits ATP 862 and ATP 864.