Sep 6, 2007 - 09:30 ET
Pearl Announces Operations Update
CALGARY, ALBERTA--(Marketwire - Sept. 6, 2007) - Pearl Exploration and Production Ltd. ("Pearl" or the "Company") (TSX VENTURE:PXX)(FIRST NORTH:PXXS) is pleased to provide the following update on its operations activities in the third quarter of 2007.
Gross production for Pearl during the last week of August averaged approximately 10,500 barrels of oil equivalent per day ("boepd"). Production from the previous quarter ending June 30, 2007 averaged approximately 7,910 boepd.
The Company therefore continues to forecast gross production exit rates for 2007 in the range of 14,000 to 15,000 boepd.
Operationally, the Company has continued to execute a 2007 work program focused on investments in core conventional heavy oil production development projects such as Onion Lake (87.5% Working Interest) and Mooney (98.4% Working Interest) in order to both appraise and develop reserves. The expectation is that significant gains will be realized in 2007 for production, near term cash flow and net present value additions.
Keith Hill, President and CEO of Pearl, commented, "We are pleased with progress to date on our core projects. Despite a difficult operating environment thus far this year for our industry from the standpoint of weather and service costs, we are on track to meet our aggressive production and cash flow targets for year end 2007. These investments will position Pearl with a foundation that will allow us to take advantage of additional growth opportunities that we see emerging both this year and in 2008."
Operations activities in the third quarter of 2007 were focused in the following key areas.
Onion Lake Heavy Oil Project - Saskatchewan
The Company resumed its multi-well development drilling program of this heavy oil trend in July 2007 with 15 wells being drilled during the third quarter and of these, 12 have been placed on initial production. This brings the total number of wells drilled in 2007 to 40 wells, with 35 wells having been placed on production. At the end of August the Company's gross production has increased approximately 300 boepd, bringing the average production up to over 1,500 boepd. Based on the positive results and current progress of the drilling campaign thus far, the Company is expecting to drill approximately 110 wells in the 2007 subject to regulatory approvals and weather conditions. A well "down-spacing" application has now received regulatory approval and will allow a total of 85 locations to be drilled over the second half of 2007. The Company is also beginning construction of centralized facilities for sand and oil handling in September 2007 which will lead to operating cost reductions. A 3-D seismic survey will also be permitted to further evaluate the Company's southern acreage and prioritize 2007 and 2008 development drilling locations. A thermal recovery pilot involving two wells will become operational in late 2007, with the procurement and construction of pilot facilities now underway.
Mooney Heavy Oil Project - Alberta
Development drilling continued at the Mooney Bluesky "A" oil pool throughout the summer period. As of the end of September 2007, a total of 20 new horizontal oil wells will have been drilled. Eleven of these new wells are currently on production and by mid September the remaining nine horizontal wells will be brought on production. At that time there will be a total of 32 horizontal producing wells in the field. With the Company's recently announced acquisition of an additional 24% Working Interest, the Company's gross production has increased to approximately 2,300 boepd for the month of August. In September this production will increase another 900 boepd, bringing the September average production up to approximately 3,200 boepd. Development projects including water or polymer injection continue to be evaluated and advanced.
Other Canadian Properties - Alberta, Saskatchewan
Drilling and production enhancement projects continued on the Company's other heavy oil producing properties. Near term production additions will be realized from a successful summer recompletions program carried out in the Celtic area, and focused area drilling primarily in the Ear Lake / Salt Lake region. At Ear Lake, 4 development wells were drilled and completed in the third quarter. Early production testing is now underway and results suggest that a productive geological trend has been identified. An additional 6 "follow up" drilling locations are being licensed for drilling during September. At the adjacent Reward area, 2 development drilling locations have been licensed to offset a producing discovery well. In the Salt Lake area, an exploration location has been licensed for September drilling, and 3 development horizontal locations are proposed for the Lloydminster sand in the Salt Lake pool. The Company drilled an additional 5 wells in the Lloydminster area and is currently drilling a sixth well. One of these wells, drilled in the Standard Hill area, has discovered a new Waseca pool.
The Company also completed the drilling of a horizontal well in the Druid field and placed it on production in order to test the reserves potential of this field which has the potential for a water cycling project in the first half of 2008. The Company also purchased an additional 4 Sections of 100% working interest land at Druid to offset the existing land base. Two additional horizontal locations are proposed for drilling in early fall.
San Miguel Heavy Oil Project - Maverick Basin, South Texas
The Company is continuing with the San Miguel Heavy Oil Project's steam injection pilot operations to determine the technical and economic feasibility of cyclic steam injection to enhance oil recovery. Both pilot wells are presently on a third cycle of injection and production, and additional cycles will occur throughout 2007. Following discussions with our partners, a decision has been made to expand the current pilot prior to the end of 2007. Initial planning and procurement is therefore underway for the drilling of additional wells and the procurement of long-lead items for facility modifications. Discussions and planning are also underway for a second, 16 well production pilot project to the north of the existing steam injection pilot facility. The production pilot is presently projected to be operational in the second quarter of 2008.
Palo Duro Shale Gas Exploration Project - North Texas
No additional drilling was undertaken during the quarter ended June 30, 2007 on the Palo Duro Shale Gas Project. Efforts were concentrated on building the required pipeline and facilities to tie-in and test the long term performance of the two existing MacIntosh wells. The Company will continue to monitor the results of the extended production testing as well as the results of other operators in the basin in order to evaluate the long term economic viability of the Palo Duro Shale Gas Project.
Pearl also announces that it has agreed to grant an aggregate of 250,000 incentive stock options to an officer of the Company. The options are exercisable at a price of $3.75 per share over a period of 5 years and are subject to vesting provisions.
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 www.pearleandp.com.
All references in this release to boe's are based on a 6 to 1 conversion ratio. Boe's may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Pearl's Certified Advisor on First North is E. Ohman J:or Fondkommission AB.
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.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Pearl Exploration and Production Ltd.
President and Chief Executive Officer
(604) 689-4250 (FAX)
Pearl Exploration and Production Ltd.
Chief Operating Officer
(403) 261-1007 (FAX)
Pearl Exploration and Production Ltd.
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