MEDICINE HAT, AB, Oct. 23 /CNW/ - Reece Energy Exploration Corp.
(TSX-V/RXR) ("Reece") is pleased to provide the following operations update
through the end of the third quarter of 2008.
During the quarter Reece drilled 14 (11.7 net) wells, bringing the total
number of wells drilled this year to 29 (23.7 net). All of the wells drilled
in the quarter have been cased and are either on production or in various
stages of testing or completion. Reece's average production for September,
2008 increased to 1,650 BOE/d, which equates to an increase of 740 BOE/d or
81.3% over September, 2007 and an 880 BOE/d or 114.3% increase over the
average rate for the year ended December 31, 2007. This increased production
reflects the continued success of Reece's horizontal drilling program in
During the quarter, Reece acquired additional land in its Dodsland Viking
play; completed preliminary exploration of its Bakken lands; and gained a
foothold into the Lower Shaunavon play in south western Saskatchewan. Reece
also raised $12 million through a private placement financing, had its credit
line increased to $33 million and increased its capital budget for the year to
$66 million to take further advantage of its drilling successes and
Reece's Dodsland Viking play continued to see the majority of activity
and expenditures during the quarter. An additional 10 (10 net) extended reach,
multi-stage fractured horizontal wells were drilled during the quarter, with 7
of these being tied in and on production by the end of September. These wells
have added more than 500 BOE/d of net production to Reece. An additional 760
acres of Viking mineral rights were added to the Dodsland Viking play through
an acquisition of adjacent property. Drilling in the area continues with
another 10 wells planned for the fourth quarter of 2008 and a minimum of an
additional 25 locations identified for future drilling.
The last of the three planned exploratory wells was drilled and tested.
The well encountered what appears to be a natural fracture in the formation
and does not appear to be economic for production. The first delineation well
was drilled in the Bemersyde area (near Reece's first successful Bakken
exploratory well) and initial test results are positive. A further 1,920 acres
(net 960 acres) of land was acquired in the October 6th land sale to further
enhance the Company's position at Bemersyde. Reece has a total of 7,680 acres
(net 3,840) of land in the Bemersyde play. After all testing and fracturing is
complete and production has been established for the existing wells the next
delineation wells will be drilled to establish the extent of the pool.
As previously announced, Reece entered into a joint venture with Anterra
Energy Inc. ("Anterra") to explore and develop the Lower Shaunavon formation
on 1,760 acres of Anterra land in south west Saskatchewan. Reece has completed
drilling on the first well in the area and is preparing to run the fracture
string for stimulation. At the October 6th land sale Reece was successful in
acquiring 12 sections jointly with Anterra, (50/50), and an additional 23
sections of land (100%) for a total of 22,400 (18,600 net) acres of
exploratory land in the area. Reece plans to undertake a more aggressive
program on these lands in 2009.
Two (net .66) wells were successfully drilled in the Souris Valley play
at Crystal Hill in south east Saskatchewan. One of these wells has been tied
in and is currently producing while the other is awaiting completion. Further
drilling to develop this field will be on going in conjunction with Reece's
partners in the area.
Outlook of the Company
Destruction of confidence in the United States banking sector surrounding
subprime lending has taken its toll on all of the capital markets. The
resulting pull back in share prices of the equity markets has affected most
issuers including Reece Energy.
The management of Reece can assure their shareholders that Reece is in
sound financial condition. The Company's debt is less than one times cash flow
and is held with Alberta Treasury Branch ("ATB"). ATB has been largely
unaffected by the banking mess due to its mandate to only lend to Alberta
based companies. The ATB has recently assured management that its existing
line of credit is secure. Reece is presently achieving cash flows of
$3 million per month, and will continue to drill to improve on its cash flow
Early in the year Reece established a normal course issuer bid and has
been selectively purchasing stock on a value basis and will continue to do.
Reece is a publicly held oil and gas company headquartered in Medicine
Hat, Alberta, Canada that trades on the TSX Venture Exchange under the symbol
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
BOEs derived by converting gas to oil at a ratio of six thousand cubic
feet of gas to one barrel of oil (6 Mcf: 1 bbl). BOEs may be misleading,
particularly if used in isolation. A BOE conversion ratio 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.
Certain statements in this news release including (i) statements that may
contain words such as "anticipate", "could", "expect", "seek", "may" "intend",
"will", "believe", "should", "project", "forecast", "plan" and similar
expressions, including the negatives thereof, (ii) statements that are based
on current expectations and estimates about the markets in which Reece
operates and (iii) statements of belief, intentions and expectations about
developments, results and events that will or may occur in the future,
constitute "forward-looking statements" and are based on certain assumptions
and analysis made by Reece. Forward-looking statements in this news release
include, but are not limited to, statements with respect to future capital
expenditures, including the amount, nature and timing thereof; oil and natural
gas prices and demand; other development trends within the oil and natural gas
industry; business strategy; expansion and growth of Reece's business and
operations and other such matters. Such forward-looking statements are subject
to important risks and uncertainties, which are difficult to predict and that
may affect Reece's operations, including, but are not limited to: the impact
of general economic conditions; industry conditions; government and regulatory
developments; oil and natural gas product supply and demand; competition; and
Reece's ability to attract and retain qualified personnel. Reece's actual
results, performance or achievements could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do
transpire or occur, what benefits Reece will derive therefrom. Subject to
applicable law, Reece disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
All forward-looking statements contained in this document are expressly
qualified by this cautionary statement. Further information about the factors
affecting forward-looking statements is available in Reece's current Annual
Report which has been filed with Canadian provincial securities commissions
and is available on www.sedar.com.
For further information:
For further information: Lorne Swalm, President & C.E.O., Reece Energy
Exploration Corp., Phone: (403) 526-9700, email@example.com,