Exall Energy Corporation Provides Operational Update to September 29, 2011

CALGARY, Sept. 29, 2011 /CNW/ - Exall Energy Corporation ("Exall" or the "Company") (TSX: EE) is pleased to provide an operational update for the third quarter to September 29, 2011.  Exall's public filings can all be found at www.exall.com or www.sedar.com.

Highlights:

  • Drilling success continues at Marten Mountain with a new Gilwood B sand well tested flowing 350 BOEPD, awaiting pipeline tie-in

  • Acquired 153,120 gross (112,543 net) acres of undeveloped land in the Greater Mitsue area with multi-zone light oil potential for a total Greater Mitsue area undeveloped land holdings of 186,280 gross acres (135,688 net acres)

  • Participated in the drilling of 3.0 gross (2.10 net wells) during the third quarter of 2011

  • Completed the conversion of one water source well and one injector well to support Exall's second water flood scheme with water injection commencing mid-September

  • Completing the installation and tie in of a second compressor and a larger de-hydrator at its Marten Mountain battery to facilitate the handling of additional gas volumes expected, allowing Exall to produce at or near productive capability volumes

Drilling Activities

During the third quarter of 2011, Exall participated in the drilling of 3.0 gross (2.10 net wells). Due to the Slave Lake forest fires and the inclement weather encountered in the latter part of spring 2011 and the early part of the summer 2011 drilling season, the Exall drilling program is currently four to six weeks behind schedule.

Of the three wells drilled during the third quarter of 2011, one has been completed and will be tied in early in October 2011. This well was flowing 350 BOEPD (250 BOEPD net) with nil water when shut in at the termination of the 72 hour testing period allowed by the ERCB. The second well has now finished drilling and is awaiting completion and tie-in operations. The drilling operations on the third well are expected to be completed by October 3, 2011, with completion and tie-in operations to follow later in October 2011.

Land Activities

During the third quarter Exall acquired an average 73.5% working interest in 239.25 gross sections or 153,120 gross acres (175.85 net sections or 112,543 net acres) of Crown land in the Greater Mitsue area at an average cost of $20.53 per acre. It is the opinion of the Company that the land has multi-zone light oil potential and a multi-well exploration program is in the permitting stage to verify the potential. Six exploratory wells will be drilled on the acquired acreage beginning in mid-October 2011. The acquisition of these lands brings the Company's total undeveloped land holdings in the Greater Mitsue area to 289.77 gross sections or 186,280 gross acres (211.07 net sections or 135,688 net acres).

With the acquisition of the lands Exall is permitting a 224 square kilometer 3D Seismic program. Phase 1 of the 3D Seismic program is targeted for the winter of 2012 with Phase 2 to be completed in the winter of 2013.

Operational Activities

With the approval of the second waterflood scheme in July 2011, Exall converted two existing wells into one water source well and one water injection well, during August 2011, to support the waterflood scheme. Water injection commenced mid-September 2011.

In conjunction with the approval of the second waterflood scheme, Exall has installed an additional rental compressor and modified the existing de-hydrator at its battery in order to expand the fluid and gas handling capacity to accommodate increasing production rates. The retooled and upgraded facility is in the process of start up, and has seen some minor challenges which will be resolved in the next couple of weeks. Exall expects to be able to operate at full productive capacity by mid-October.

Additionally, an electric drive compressor with adequate capacity to handle future expected increases in gas deliveries will be installed at the battery in the fourth quarter, replacing one or two of the rental compressors.

About Exall

Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta, and Texas. Exall Energy is currently developing the new Mitsue area Marten Mountain discovery in north-central Alberta.

Exall Energy currently has 62,188,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE.

Reader Advisory

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

SOURCE Exall Energy Corporation

For further information:

Exall Energy Corporation

Frank S. Rebeyka
Vice Chairman
Tel: 403-815-6637
 



Roger N. Dueck
President & CEO
Tel: 403-237-7820 x 223
info@exall.com


Warren F.E. Coles
VP - Finance & CFO
Tel: 403-237-7820 x 224

Please visit Exall Energy's website at: www.exall.com

Renmark Financial Communications Inc.
Maurice Dagenais: mdagenais@renmarkfinancial.com
Florence Liberski : fliberski@renmarkfinancial.com
Tel.: (514) 939-3989 or (416) 644-2020
www.renmarkfinancial.com

 

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Exall Energy Corporation

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