Pearl Exploration and Production Ltd.



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  Jan 12, 2007 - 09:00 ET
Pearl Announces Operations Update

  CALGARY, ALBERTA--(CCNMatthews - Jan. 12, 2007) - Pearl Exploration and Production Ltd. ("Pearl" or the "Company") (TSX VENTURE:PXX) is pleased to provide the following update on its operations activities.

Gross production in January is currently averaging approximately 8,100 barrels of oil equivalent per day ("boepd"). Drilling activities are presently underway at the Company's Onion Lake and Mooney properties. Preparations are also underway for additional first quarter 2007 drilling programs for the Company's southern Alberta, Thunderchild, Ear Lake, Salt Lake, and Celtic property areas.

At Onion Lake, the Company began drilling today on the first well of a multi-well development drilling program. Drilling locations have been pre-built for eight of 35 drilling locations which are now in various stages of regulatory approval. An initial 35 wells of a budgeted 90 well program are expected to be completed over the current winter drilling season. Contingent funds have also been budgeted to expand the drilling program in the second half of the year, depending on the impact of weather conditions and the timing of regulatory approvals. Onion Lake is a large heavy oil development project within a heavy oil trend located in northern Saskatchewan/Alberta. The Company holds an 87.5% working interest and is the operator.

At Mooney, the first well of a four well appraisal program has been drilled, and a second well is underway on the west side of the field to confirm aspects of the field's areal extent and structure (e.g. reservoir thickness and "oil/water contact"). Once completed, the results of the four well program will be used to guide further appraisal and development drilling. On the east side of the field, an initial waterflood response is being seen in the pilot project area and development drilling activities continue with one Bluesky "A" pool well having been drilled and a second well already underway. There are plans to drill an additional six to eight wells during first quarter 2007 depending on weather related location access. The Mooney field is a producing asset located in north-central Alberta. The Company holds a 74.1% working interest and is the operator.

The final well of a four well shale gas exploration program targeting the Lower Pennsylvania Shale in the Palo Duro basin of northern Texas is now underway. The Ramsower #1-113 well is currently drilling at a depth of approximately 5,000 feet towards a projected target depth of 9,800 feet. Results of the first three wells are still being evaluated. Flow test results for the first well in the program, McIntosh #1-77, have now been submitted to the Texas Railroad Commission. The absolute open flow rate of the well measured 3,316 thousand cubic feet per day and approximately 150 barrels of condensate per million cubic feet of gas, suggesting that a significant economic risk factor for the basin remains the expected ultimate recovery volume per well rather than initial well productivity. Pipeline easements are being procured and arrangements made for construction of a four mile pipeline to transport the gas. Having access to a gas sales pipeline will allow long-term testing of well performance (and recovery) for this condensate rich gas, tight gas reservoir.

In the second well of the program, Young #1-32, several shallow prospective secondary oil zones were identified. Testing of the deepest of these oil zones reached during drilling is now complete with the zone determined to be non-commercial. Further testing of the remaining "uphole" oil zones is expected to resume once necessary equipment becomes available. The third well in the program, Cox #1-13, will be evaluated for stimulation in the shale section once an evaluation of the geologic data has been completed. The results for the well are indeterminate at this time. Planning is underway for an extension of the current drilling program with the additional of wells to further test the economic viability of the play. The Company holds a non-operated 30% working interest in the project.

Injection operations continue at the Company's San Miguel heavy oil project pilot facility to determine the technical and economic feasibility of cyclic steam injection to enhance oil recovery. To date over 50,000 barrels of steam (on a cold water equivalent basis) have been injected into the formation at rates of between 700 and 1,100 barrels per day with wellhead temperatures ranging from 550 to 650 degrees Fahrenheit. Preparations are now underway to attempt initial production from the first of two pilot wells following initial steam injection and a "soak" period that ends this week. The second pilot well remains on initial steam injection. The San Miguel project is a large heavy oil deposit in the Maverick Basin in southern Texas. Pearl is the operator and has a 75% working interest in the pilot project. This reduces to 50% after payout.

Pearl President Gary Guidry stated, "The Company is continuing its efforts to add production volumes and advance several large exploration and development programs. We are pleased with our progress on each of our core projects and are positioned to meet the production and cash flow targets outlined in our previously announced 2007 Capital Budget Program. Additionally, the Company continues to evaluate the possible acquisition of a number of additional heavy oil opportunities in Canada and the United States, consistent with its growth strategy."

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.

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.
Gary Guidry
President and Chief Executive Officer
(403) 716-4051
(403) 261-1007 (FAX)
Email: gary.guidry@pxx.ca

or

Pearl Exploration and Production Ltd.
Gary Hyde
Chief Operating Officer
(403) 716-4063
(403) 261-1007 (FAX)
Email: gary.hyde@pxx.ca

or

Pearl Exploration and Production Ltd.
Arlene Weatherdon
Chief Financial Officer
(403) 716-4051
(403) 261-1007 (FAX)
Email: arlene.weatherdon@pxx.ca

or

Pearl Exploration and Production Ltd.
Sophia Shane
Corporate Development
(604) 806-3575
Email: sophias@namdo.com
Website: www.pearleandp.com
 
 

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