Pearl Exploration and Production Ltd.

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  Sep 18, 2006 - 09:00 ET
Pearl Spuds First Well at Palo Duro Gas Project in Texas

  CALGARY, ALBERTA--(CCNMatthews - Sept. 18, 2006) - Pearl Exploration and Production Ltd. ("Pearl" or the "Company") (TSX VENTURE:PXX) is pleased to announce the spudding of the first well of a four well exploration program at the Palo Duro gas project in northern Texas. Prognosed depth for the McIntosh #1-77 well is 10,500 feet and is expected to take approximately 20 to 25 days to drill. Pearl has a 30% net working interest in the Palo Duro project with Petroglobe Energy USA Ltd. as operator.

The primary target of the project is an emerging Lower Pennsylvania natural gas resource play in the Palo Duro basin. The project comprises gross 100,000 acres under lease and is within the heart of the play area currently being explored by Vintage Petroleum, Bankers Petroleum and Tyner Resources (please see attached map). The most significant aspect of this well is that it will be the first well drilled underbalanced and thus will be able to minimize formation damage which is often critical to the economic success in shale gas type plays. Recently disclosed natural gas test rates by other operators in the basin have been encouraging and suggest significant benefits from properly drilled and stimulated wells.

The Palo Duro Shale play is an unconventional natural gas play targeting organically rich, fractured Lower Pennsylvanian shales that exist at depths between 8,000 and 10,000 feet. The Lower Pennsylvanian Shale of the Palo Duro Basin is similar in many of its geochemical characteristics to the prolific Barnett Shale of the Fort Worth Basin. Both are organically rich, thick fractured shales. Because the shale is over 300 feet thick in the Barnett Shale Group, publicly disclosed estimates suggest approximately 150-180 BCF of gas in place per section (640 acres per section). The publicly estimated recovery with current completion technology is approximately 24 BCF of gas per section (16 wells at 1.5 BCF per well). The original gas in place numbers could be somewhat higher for the Lower Pennsylvanian Shale because of the greater thickness (400 - 1000 feet) as compared to the Barnett Shale. The Lower Pennsylvanian Shale could have a higher recovery factor than the Barnett Shale because of the greater deliverability of the Lower Pennsylvanian Shale.

In addition to testing for economic natural gas production rates in the Lower Pennsylvania shale, the potential of several secondary conventional oil objectives are expected to be tested within the four planned wells. These targets are highly productive in the neighboring Permian Basins of West Texas and several operators in the area have had shows and tests of oil in the basin.

Pearl President, Gary Guidry, commented, "We are very pleased to be embarking on a multi-well program that will help define the prospectivity of our Palo Duro Basin project. We believe that under-balanced drilling may be the key to successfully unlocking the full potential of the Penn shales. The similarities to the nearby Barnett Shale play indicate this basin could have the potential to become a major new source of gas for the United States."

Pearl is a public company focused on delivering disciplined growth by establishing a North American portfolio of oil and gas projects with an emphasis on large resource opportunities. Additional information on Pearl is available on our website at

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company's capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

To view the attached map, please click on the following link:

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.


Pearl Exploration and Production Ltd.
Gary Guidry
President and CEO
(403) 716-4051
(403) 261-1007 (FAX)


Pearl Exploration and Production Ltd.
Gary Hyde
Chief Operating Officer
(403) 716-4063
(403) 261-1007 (FAX)


Pearl Exploration and Production Ltd.
Sophia Shane
Investor Relations
(604) 689-7842
(604) 689-4250 (FAX)


Pearl Exploration and Production Ltd.
Arlene Weatherdon
Chief Financial Officer
(403) 716-4054
(403) 261-1007 (FAX)

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