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TSX-V Symbol "AEC"
CALGARY, June 26 /CNW/ - Action Energy Inc. ("Action" or the "Company")
announces that it has entered into two separate farmout agreements on its high
impact Bakken exploration prospects in southeast Saskatchewan and a single
farmout agreement on its high impact natural gas exploration prospect at West
Calais in the Peace River Arch area of Alberta. These farmout agreements will
provide the Company with cash to execute its exploration programs and will
initiate operational activities in the Company's major prospect growth areas
while diversifying the exploration risk associated with these prospects.
In southeast Saskatchewan, Action has entered into two farmout and joint
venture agreements which combined will generate prospect fees in the amount of
$4.15 million to Action and will result in the drilling of 2 Bakken
exploration wells evaluating the Company's 24 gross sections. Action will
retain a 50% working interest in the 24 sections of exploratory lands in the
At West Calais, in the Peace River Arch area of Alberta, the Company has
farmed out its 50% working interest in exchange for a prospect fee in the
amount of $1.0 million. Action will pay for 50% of the AFE cost of drilling
the exploratory test well into the Granite Wash formation and will retain a
20% working interest. The West Calais prospect is adjacent to the Puskwa
Beaverhill Lake and Granite Wash producing property and is just southeast of
Action's Teepee Creek Doig producing property. The prospect has multi-zone
potential ranging from Cretaceous and Montney gas targets to Beaverhill Lake
and Granite Wash gas and light oil targets.
Action is currently near the end of a very busy drilling month in the
Company's history. After a long, wet spring break-up, the Company has
geared-up its operations and the following is a status update for the
In June, Action finished drilling 3 Sparky zone heavy oil wells at
Lloydminster. Completion, equipping and tie-in operations are underway at the
date of this press release. Well logs for each of the wells have met Company
expectations and production operations will commence early in Q3-2008.
Additional infill drilling will be evaluated once the new wells have been
production tested. Action has numerous infill, step-out and exploration well
opportunities to follow up the drilling done so far in 2008 on this property.
Action has a 100% working interest in 5 sections and a 5% working interest in
1 section of land in the Lloydminster/Lindberg area. 3-D seismic has been shot
over 5 of the 100% sections in the area.
On June 17, 2008 Action spudded a vertical well to test for natural gas
in Gething formation. The well reached total depth and has been logged and
cased and is being equipped for production. The well has not yet been
production tested; however, well logs were as expected. Action has an operated
50% working interest in 6 sections of land in the area. Initial production
rates for other successful Gething wells in the McLeod area have had rates
ranging from 2.0 to 3.5 mmcf/d. Follow-up drilling will be evaluated once the
well has been production tested.
West Calais, Alberta
On June 23, 2008, the Company and its partners spudded a 3-D seismic
defined exploration test targeting the Granite Wash formation. The well is
currently drilling and expected to reach total depth in early July 2008. The
seismic anomaly being tested is analogous to a well drilled immediately
adjacent to the Company's lands in 1985 by an industry major. The well tested
at 7.6 mmcf/d with 40 Bbls per million of natural gas liquids. The well was
never brought on stream due to the then lack of production infrastructure in
the area and because of very low natural gas prices in 1985. There is
currently sufficient infrastructure in the area to tie in a successful well.
On June 18, 2008, Action spudded a horizontal step-out well targeting the
Midale formation on its 100% working interest property. The horizontal well is
a follow-up to the vertical Midale exploration discovery announced in February
2008. The well is expected to reach total depth in early July 2008.
Two exploratory wells targeting the Bakken formation are expected to be
finished drilling in early Q3-2008.
Action's production for the 5 months ended May 30, 2008 has averaged
between 1,500 and 1,600 boed (45% natural gas). The Company's average
production rate is very closely tracking the internal production forecast for
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements including
expectations of future production, cash flow and earnings. 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 Action's operations
or financial results are included in Action's reports on file with Canadian
securities regulatory authorities.
Production information is commonly reported in units of barrels of oil
equivalent or boe. A boe conversion ratio of six thousand cubic feet per
barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based upon
an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency for the individual products at the
wellhead. Such disclosure of boe's may be misleading, particularly if used in
For further information, the full 2007 Audited Financial Statements,
Management Discussion and Analysis and the Annual Information Form have been
posted on the Company's website: www.action-energy.com or, alternatively, can
be viewed at www.sedar.com.
As at May 31, 2008, the Company had 57,256,792 common shares outstanding
and 4,708,507 options outstanding at an average exercise price of $3.27.
Action Energy Inc. is a publicly traded Calgary, Alberta based junior oil
and natural gas exploration and production company with operations
concentrated in core areas in southern Saskatchewan and central and southern
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information:
For further information: Kelly D. Kerr, Vice-President, Finance and
Chief Financial Officer, Action Energy Inc.; ACTION ENERGY INC., Suite 800,
350 - 7th Avenue S.W., Calgary, Alberta, T2P 3N9, Phone: (403) 264-1112, Fax:
(403) 264-1116, E-mail: firstname.lastname@example.org, Website: