Great Plains' Quarter-Ended March 31 2009 Reflects Commodity Price Softening and Increases in Behind Pipe Production



    
    /NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/
    

    CALGARY, May 14 /CNW/ - Great Plains Exploration Inc. (TSX - GPX) (Great
Plains) is pleased to announce its financial and operational results for the
three months ended March 31, 2009. In spite of a prudently reduced winter
capital program, positive progress was made in the development of the
Company's core operating areas with exploratory success at Crossfire and in
Northeast British Columbia (NEBC). Our primary focus for the balance of 2009
will be the tie-in of light oil discoveries at Pembina and Crossfire.

    
    The operational reserves and financial highlights for the year-to-date are
as follows:

    Operations
    ----------

    -   Produced an average of 1,491 BOE/d for the first quarter, which
        reflected cold-related weather downtime in January as well as the
        temporary shut-in of the 9-1 well at Crossfire and the A-17-G well in
        Klua. These two wells accounted for approximately 500 boe/d of the
        1,975 BOE/d average production in the fourth quarter of 2008. The A-
        17-G is back on production and the 9-1 well awaits regulatory
        approval to recommence operation. Current production is approximately
        1,620 BOE/d.

    -   Discovered two light oil pools at Pembina/Crossfire and one gas pool
        in NEBC. These discoveries in aggregate, along with previous
        discoveries represent approximately 1,200 to 1,500 BOE/d (74% oil) of
        additional productive capacity, the majority of which Great Plains
        management expects to bring on-stream in 2009.

    -   Invested a total of $3.0 million (excluding capitalized G&A) on the
        Company's capital projects, of which $2.4 million was spent on
        drilling and completion. The balance of expenditures was for
        equipment and facilities costs.

    -   Net asset value (NAV) of $1.03 per share based on P+P, year-end PV10
        independent reserve report, with land independently valued at
        $23.7 million, including quarter-end net debt of $25.8 million and
        excluding Q1 discoveries at Pembina/Crossfire and NEBC as well as
        seismic.

    -   Subsequent to quarter-end, disposed of non-core assets comprising
        approximately 30 BOE/d of production and 230,000 BOE of reserves for
        total proceeds of $4.1 million, which will be applied to reduce net
        debt.

    Financial
    ---------

    -   Cash flow per BOE decreased to $7.18 from $17.21 in the fourth
        quarter of 2008 as a result of the continued reduction in commodity
        prices and increased operating costs. This operating cost increase
        reflects maintenance programs in winter access areas as well as fixed
        operating costs being spread over lower production numbers at Klua
        and the temporary shut-in of the Crossfire 9-1 well.

    -   Cash flow of $966,000 ($0.01 per share) for the quarter, down from
        $3.1 million ($0.04 per share) for the fourth quarter of 2008.

    -   First quarter 2009 hedge positions covered 50% of gas production at
        an average floor price of $7.34 CDN/GJ and 65% of oil production at
        an average of $76.02 CDN/bbl. Hedge positions for the balance of 2009
        include 43% of current gas volumes at an average price of $7.02
        CDN/GJ and 60% of current oil volumes at an average floor of $67.22
        CDN/bbl.

    -   Bank credit facility was renewed at $27 million of available line
        which reflects lower commodity prices and the non-core asset
        disposition.

    -   Quarter-end tax pools position of $95 million.


    President's Message
    -------------------

    First Quarter In Review
    -----------------------
    
    Great Plains continued to take a cautious approach to capital spending
and focused on a limited number of projects which match the Company's
long-term objectives while managing the realities of the current environment.
Generally speaking, we met our exploration objectives for the winter and the
Company is now in a position where it has a number of solid operating
footholds with good follow-up potential. We participated in three wells in the
quarter, all successful, resulting in two oil wells (net 0.58) in
Pembina/Crossfire and one gas well (net 0.5) in Helmet, NEBC.
    The oil discovery at Pembina/Crossfire 14-33-50-5 W5 (40% WI) encountered
11.5 metre of Nisku oil pay analogous to several discoveries in the vicinity
which have tested in excess of 1,000 BOE/d. Although the well has not yet been
completed, a preliminary 227,000 net BOE Probable reserves have been assigned
by the Company's reserves evaluators and valued at approximately $6.0 million
using a 10% discount rate. This well is expected to be tested and tied-in by
year-end. The oil discovery at Pembina/Crossfire 3-1-50-6 W5 (18% WI)
encountered approximately 3.0 metre of Nisku oil pay which production tested
at 75 BOE/d. Plans for the potential tie-in of this well are being evaluated
in the context of the re-commencement of production at 9-1.
    The discovery at Helmet (50% WI) encountered gas from the Bluesky
formation. The well which tested at 1 MMcf/d (gross) was tied-in subsequent to
the quarter-end and is currently producing 215 Mcf/d net to Great Plains. A
preliminary 0.458 bcf of Proved and Probable reserves have been assigned to
the Company's interest by our reserves evaluators. Two firm and five
additional locations have been identified for follow-up drilling at Helmet.
Given the close proximity of production infrastructure, a $3.00 to $3.50 per
Mcf gas will generate sufficient revenue.
    At Gunnel, a previously announced Debolt gas discovery (100% WI) was
re-stimulated with test flow rates improving to 1.8 MMcf/d. New pipeline and
processing construction in this area may now allow this well to be tied-in
prior to year-end 2009. Great Plains has one firm summer access location and
two additional locations in inventory for winter drilling.
    Based on drilling success at Gunnel and Helmet, as well as in-depth
geological and geophysical work on other exploration leads, the Great Plains
team has identified a total of 10 firm locations with 18 other targets
currently being defined in NEBC. Our primary technical focus in this area
continues to be the Debolt and Bluesky formations which we evaluate using an
extensive inventory of 2D and 3D seismic data. Depending upon the proximity to
infrastructure and the individual risk profile of each prospect, we generally
require a gas price of $2.50 per Mcf to achieve a positive net present value
on these projects and $3.50 per Mcf to generate an acceptable rate of return.
    In the Klua area, the significant fixed costs associated with operating
our plant and facilities has a material impact on the economics of the
currently producing wells. With only 2 MMcf/d flowing through the plant, which
has a capacity for 10 MMcf/d, we continue to evaluate opportunities for new
drilling, recompletion and future shale gas development. The Great Plains
technical team believes that there is potential to find conventional
exploration prospects from 3 to 20 bcf in size and is currently evaluating the
Keg River well, that was drilled this past winter, for a side-track drilling
operation in the summer or fall of 2009.
    Additionally, we have now embarked on a preliminary evaluation of the
unconventional shale gas potential of this area which is a southern extension
of the Horn River Basin. Given our current land position, well control and
existing infrastructure, we believe that we may have a significant economic
advantage in pursuing this potential resource-type opportunity.
Notwithstanding these efforts, in the current price environment, the
Corporation is evaluating the option of temporarily shutting-in production
from this area for the upcoming summer should gas prices remain below $5.00 
per Mcf.

    
    Outlook
    -------
    
    In management's view, little has changed since our year-end release of
March 27th. While recent commodity prices and economic indicators may provide
some encouragement for investors, Great Plains management will continue to
take a very cautious approach to capital spending. At Pembina/Crossfire, our
basic plan remains unchanged with one completion at Crossfire (14-33) and
three new drills scheduled for drilling in 2009. These wells not only bring
their individual target prospect of 1,000 BOE/d per well but also enhance the
overall economics of current behind pipe volumes. While we now have the option
of conducting some summer activity at Klua and Gunnel, we believe that our
best economic returns in the current environment will be found in light-oil
projects in the Pembina area.
    During the current low commodity price environment, the Corporation is
making efforts to reduce its overall general and administrative costs. All
staff members have voluntarily agreed to reduce their compensation through
unpaid leaves and the temporary suspension of the Company's stock savings
program. Senior staff have taken an effective 15% reduction in compensation
and we expect to see the benefits of these reductions as well as other cost
saving measures to be reflected in subsequent quarters. We will continue to
review our capital and operating activity in the context of new price
scenarios, our hedging program and our $27 million credit facility and budget
accordingly. Furthermore, operating costs per boe in the coming quarters are
expected to decrease from the first quarter as production levels increase to
absorb fixed costs and we will not be subject to the repairs and maintenance
activity that was incurred in our winter access only properties.
    Subsequent to quarter-end, Great Plains closed the sale of its interest
in a minor Cardium property for $4.1 million. The sale will reduce daily
production by approximately 30 BOE/d, so any impact on operating cashflow will
be minimal. The proceeds of the sale will reduce the credit facility drawn
amount leaving over $4 million of available line for working capital. With
this credit availability, minimal capital commitments for the balance of the
year, continued positive cashflow being generated (augmented by the expected
return to production of the 9-1 well in the summer) and the strength of our
hedge positions, Great Plains will have sufficient sources of funds available
to meet all its operating and capital requirements for the coming year.

    
    On behalf of the Board of Directors,

    (Signed)"Stephen P. Gibson"

    Stephen P. Gibson
    President and CEO
    May 14, 2009



    FINANCIAL & OPERATIONAL HIGHLIGHTS

    -------------------------------------------------------------------------
    ($000s except per unit amounts)      Three     Three               Three
                                        Months    Months              Months
                                         Ended     Ended               Ended
                                        Mar 31    Mar 31         %    Dec 31
                                          2009      2008    Change      2008
    -------------------------------------------------------------------------
    Oil and gas sales                    5,823     7,201       (19)    9,608
    Cash flow                              966     3,599       (73)    3,128
      Per share (basic)                   0.01      0.07       (86)     0.04
    Net loss                            (2,579)   (1,078)     (139)   (2,490)
      Per share (basic and diluted)      (0.03)    (0.02)      (50)    (0.03)
    Capital expenditures, net of
     dispositions                        3,322     5,501       (40)    7,246
    Bank debt and working capital
     deficit                            25,831    19,624        32    23,474
    Common shares outstand. (000s)
     basic                              91,504    50,554        81    91,504
    -------------------------------------------------------------------------
    Production
      Crude oil (bbls/d)                   465       625       (26)      747
      NGLs (bbls/d)                         35        31        13        23
      Natural gas (Mcf/d)                5,946     2,478       140     7,226
    -------------------------------------------------------------------------
      Total (BOE/d)                      1,491     1,069        39     1,975

    Realizations
      Crude oil ($/bbl)                  63.41     89.55       (29)    70.53
      NGLs ($/bbl)                       38.38     70.31       (45)    50.75
      Natural gas ($/mcf)                 5.70      8.47       (33)     6.99
    -------------------------------------------------------------------------
      Average ($/BOE)                    43.40     74.03       (41)    52.87

    Netbacks ($/BOE)
      Oil and gas sales                  43.40     74.03       (41)    52.87
      Royalties, net of ARTC             (6.42)   (12.89)      (50)   (11.92)
      Operating and processing costs    (19.14)   (15.00)      (28)   (14.89)
      Transportation                     (4.20)    (1.30)     (223)    (3.34)
      Asset retirement expenditures      (0.25)    (0.09)     (178)     0.11
    -------------------------------------------------------------------------
      Operating Netback                  13.39     44.75       (70)    22.83
      Processing and other income         1.75      2.86       (39)     0.71
      General and administrative         (6.68)    (6.51)       (3)    (5.23)
      Interest                           (1.28)    (4.03)      (68)    (1.10)
      Current taxes recover (expense)        -     (0.07)      n/a         -
    -------------------------------------------------------------------------
      Cash flow Netback                   7.18     37.00       (81)    17.21
    -------------------------------------------------------------------------
    

    The complete quarterly financial statements and corresponding MD&A
documents are available on SEDAR at www.sedar.com and on the Great Plains
website at www.greatplainsexp.com.

    Investors should note that BOEs may be misleading, particularly if used
in isolation. A BOE conversion rate of 6 Mcf: 1bbl is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.

    Advisory Regarding Forward Looking Statements

    This press release contains forward-looking statements which include, but
are not limited to: operations plans and outlook, expectations, opinions,
forecasts, projections, guidance or other statements that are not statements
of fact. Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it cannot give any assurance that
such expectations will prove to be correct. Results of the Company may be
affected by a variety of variables and risks associated with oil and gas
exploration, production and transportation, such as loss of market, volatility
of oil and gas prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other producers, ability to
access sufficient debt and equity capital from internal and external sources,
ability to replace and expand oil and gas reserves, ability to generate
sufficient cash flow from operations to meet its current and future
obligations, and risks associated with existing and potential future lawsuits
and regulatory actions made against the Company; as a consequence, actual
results could differ materially from those anticipated or implied in the
forward-looking statements.
    The Company's forward-looking statements are expressly qualified in their
entirety by this cautionary statement and are made as of the date of this news
release. Unless otherwise required by applicable securities laws, the Company
does not intend nor does it undertake any obligation to update or review any
forward-looking statements to reflect subsequent information, event, results
or circumstances or otherwise.

    %SEDAR: 00020740E




For further information:

For further information: Great Plains Exploration Inc., Stephen P.
Gibson, President & CEO, Sean Bovingdon, Vice-President Finance & CFO, Tel:
(403) 262-9620, Fax: (403) 262-9622, Website: www.greatplainsexp.com, Email:
info@gpexploration.ca

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GREAT PLAINS EXPLORATION INC.

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