Alberta Clipper Energy Inc. (ACN – TSX) Announces 2 Further Light Oil Discoveries and a Sevenfold Increase in the Companys Land Holdings in the Sylvan Lake Area
Alberta Clipper Energy Inc. (“Alberta Clipper” or the “Company”) advises that it has recently tested 2 new significant light oil discoveries in the Sylvan Lake area of Alberta. These latest discoveries bring the total number of new Leduc pools found by the Company this year to 4. In addition, an aggressive exploration expansion effort in the play has resulted in the Company both increasing its land holdings by 700% and adding 7 independent exploratory locations to its Leduc opportunity inventory. As a result of the land acquisition and the continued expansion of the Leduc play, the Board of Directors of the Company have approved an increase in the 2006 Capital Budget to $62 million from $46 million. In addition, the Company’s bank lines have been increased to $30 million from $22 million.
Details on the 10-14-38-4W5 discovery well (“10-14″) are as follows. The well encountered approximately 90 feet of net pay, averaging 7% porosity, from the Leduc Formation. During a 9-day testing period, the well flowed at restricted rates averaging 1,711 boe/d combined from three perforation intervals in the Leduc Formation. Alberta Clipper operates the well and holds a 35% working interest after payout (20% before payout). This new discovery sets up a minimum of 4 follow-up development locations at a 50% working interest, the first of which is currently drilling at 7-14-38-4W5 (“7-14″). The Company is currently in the process of obtaining all regulatory approvals required to tie the 10-14 well into Alberta Clipper-owned infrastructure. Tie-in is expected to be completed by the end of the month.
The 12-36-38-4W5 discovery well (“12-36″) encountered 112 feet of net oil pay in the Leduc Formation averaging 9% porosity. During a 5-day testing period, the well flowed at restricted rates averaging 1,775 boe/d combined from three perforation intervals in the Leduc Formation. Alberta Clipper operates the well and holds a 37.5% working interest. The success of this exploratory well sets up a minimum of 2 follow-up development locations at a 37.5% working interest. The Company is currently in the process of obtaining all regulatory approvals required to tie the well in to Alberta Clipper-owned infrastructure. Tie-in is expected to be completed in the fourth quarter of this year. Development drilling off the 12-36 location will commence in 2007 pending a holding application for the pool.
Both new discoveries will be subject to a Maximum Rate Limitation (“MRL”) as determined by the Alberta Energy and Utilities Board upon commencement of production. Existing Leduc pools in the immediate area are currently under Good Production Practice (“GPP”) orders that allow wells to be produced without MRL restriction. As such, Alberta Clipper will be submitting a GPP application for each of the new pools similar to that which has been submitted for the Company’s earlier discoveries. Until GPP approvals are received, production from new pool discoveries in the Sylvan Lake area will continue to be restricted relative to well capabilities. The recent successful well at 8-15-38-4W5 is currently being brought on production and is expected to produce approximately 600 boe/d (300 boe/d net) while the 9-15-38-4W5 well which was producing at 600 boe/d (120 boe/d net before payout) is currently shut-in until November 1st due to the fact that the well produced its 4 month new oil well production period (“NOWPP”) volume in 2 months.
In addition to achieving significant drilling success, the Company’s exploration efforts over the past 12 months have resulted in a material increase in the number of exploration opportunities captured within the prospective Leduc fairway. As such, Alberta Clipper has recently been successful in acquiring 49,880 net acres (78 sections) of land through both Crown land sales and Freehold leasing activities. Resulting net land holdings in the Sylvan Lake area have increased by over 700% at a cost of $4 million net to the Company. Alberta Clipper is operator of all lands and maintains interests of between 50% and 100%. The recent land acquisitions signal a major expansion in the Company’s Leduc exploration and development program.
Alberta Clipper now has an inventory of 7 independent drill-ready Leduc exploration prospects, all of which are defined on 3D seismic. The majority of these prospects have significant follow-up development drilling potential pending success on the initial tests. This year’s Leduc drilling program has yielded 6 successful wells to date for a 100% success rate. Up to 4 more Leduc wells will be drilled in 2006 at an average 42% working interest. For 2007, the Company’s total exploration and development program on the Leduc play has increased to a minimum of 12 locations at an average working interest of over 52%. Success on any of the new exploratory locations will expand this number substantially through follow-up development drilling.
Alberta Clipper Energy Inc. is a publicly traded Canadian energy company involved in the exploration, development and production of natural gas and crude oil in western Canada.
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements including expectations of future production. More particularly, this press release contains statements concerning Alberta Clipper’s future production estimates, expansion of oil and gas property and facilities interests, exploration and development drilling, regulatory applications, payout estimates, capital expenditures, and drilling locations to be drilled in 2006. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect Alberta Clipper’s operations or financial results are included in Alberta Clipper’s reports on file with Canadian securities regulatory authorities.
The forward-looking statements or information contained in this news release are made as of the date hereof and Alberta Clipper undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Oil and Gas Advisory
This press release contains disclosure expressed as “Boe/d”. All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
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violation of U.S. securities law.
For further information
Kel Johnston, President & C.E.O., Alberta Clipper Energy Inc., Telephone: (403) 440-3474, Facsimile: (403) 440-3475, Website: www.albertaclipperenergy.com
