Spry announces Pembina reserves and operational update

CALGARY, April 16 /CNW/ - Spry Energy Ltd. ("Spry" or the "Company") is pleased to announce an update to its Pembina, Alberta reserves effective April 1, 2010 and an operational update.

    
    PEMBINA RESERVES UPDATE
    -----------------------
    

The reserves for Spry's Pembina property were evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") with a preparation date of April 16, 2010 and an effective date of April 1, 2010 (the "GLJ Pembina Report") in accordance with National Instrument 51-101 ("NI 51-101") and the Canadian Oil and Gas Handbook as none of the reserves for our Pembina property were contained in the Company's June 30, 2009 reserve report that was prepared for our fiscal year-end. Following is selected data from the GLJ Pembina Report.

    
    Summary of Oil and Gas Reserves - Working Interest ("WI") and Net
    Based on Forecast Prices and Costs(1)
    Pembina Property, Alberta

                                            Light and
                                            Medium Oil         Natural Gas
                                            ----------         -----------
                                          WI        Net       WI        Net
                                        (Mbbls)   (Mbbls)   (Mbbls)   (Mbbls)
                                     ----------------------------------------
    Proved Producing                       558       460       388       320
    Proved Non-Producing                    80        67        56        43
    Undeveloped                          1,525     1,263     1,062       898
                                     ----------------------------------------
    Total Proved                         2,163     1,790     1,506     1,261
    Probable                             2,086     1,636     1,452     1,212
                                     ----------------------------------------
    Total Proved Plus Probable           4,250     3,426     2,958     2,473
                                     ----------------------------------------
                                     ----------------------------------------


                                           Natural Gas       Barrels of Oil
                                             Liquids          Equivalent(2)
                                             -------          -------------
                                          WI        Net       WI        Net
                                        (Mbbls)   (Mbbls)   (Mbbls)   (Mbbls)
                                     ----------------------------------------
    Proved Producing                        23        16       646       529
    Proved Non-Producing                     3         2        93        77
    Undeveloped                             64        46     1,766     1,459
                                     ----------------------------------------
    Total Proved                            91        65     2,505     2,064
    Probable                                88        62     2,416     1,900
                                     ----------------------------------------
    Total Proved Plus Probable             178       126     4,921     3,964
                                     ----------------------------------------
                                     ----------------------------------------



    Net Present Values of Future Net Revenues Before Income Taxes(3)
    Based on Forecast Prices and Costs(1)
    Pembina Property, Alberta

                               Before Income Taxes Discounted at (%/Year)
                               ------------------------------------------
                                 0         5        10        15        20
                               (M$)      (M$)      (M$)      (M$)      (M$)
                           --------------------------------------------------
    Proved Producing          37,701    29,084    24,032    20,766    18,486
    Proved Non-Producing       4,798     3,754     3,105     2,670     2,360
    Undeveloped               74,979    48,943    34,180    24,940    18,696
                           --------------------------------------------------
    Total Proved             117,478    81,781    61,317    48,376    39,542
    Probable                 127,229    73,532    50,091    37,655    30,033
                           --------------------------------------------------
    Total Proved Plus
     Probable                244,707   155,312   111,409    86,031    69,575
                           --------------------------------------------------
                           --------------------------------------------------
    Notes:
    (1) The forecast cost and price assumptions assume increases in wellhead
        selling prices and take into account inflation with respect to future
        operating and capital costs. Crude oil and natural gas benchmark
        reference pricing, inflation and exchange rates utilized by GLJ in
        the GLJ Pembina Report were GLJ's forecasts, as at April 1, 2010 as
        follows:

                                Natural
                      Oil         Gas     Natural Gas Liquids
                      ---         ---     -------------------
                        Edmonton
                          Par                           Edmonton        Exch-
                  WTI    Price        Edmonton Edmonton Pentanes Infl-  ange
                Cushing 400 API  AECO  Propane  Butane    Plus   ation  Rate
                  $US/   $Cdn/  ($Cdn/  $Cdn/   $Cdn/    $Cdn/   Rate   $US/
        Year      bbl     bbl   MMBtu    bbl     bbl      bbl   %/Year  $Cdn
               --------------------------------------------------------------
        2010
         Q2-Q4   80.00   83.26    4.30   54.12   69.11   84.93    2.0   0.95
        2011     83.00   86.42    5.26   54.45   66.54   88.15    2.0   0.95
        2012     86.00   89.58    5.95   56.43   68.98   91.37    2.0   0.95
        2013     89.00   92.74    6.42   58.42   71.41   94.59    2.0   0.95
        2014     92.00   95.90    6.79   60.42   73.84   97.82    2.0   0.95
        2015     93.84   97.84    7.05   61.64   75.33   99.79    2.0   0.95
        2016     95.72   99.81    7.40   62.88   76.85  101.81    2.0   0.95
        2017     97.64  101.83    7.72   64.15   78.41  103.86    2.0   0.95
        2018     99.59  103.88    7.89   65.45   79.99  105.96    2.0   0.95
        2019    101.58  105.98    8.06   66.77   81.60  108.10    2.0   0.95
        There-   +2.0%/  +2.0%/  +2.0%/  +2.0%/  +2.0%/  +2.0%/   2.0   0.95
         after      Yr      Yr      Yr      Yr      Yr      Yr

    (2) Natural gas is converted to barrels of oil equivalent ("boes") at a
        ratio of six thousand standard cubic feet to one barrel of oil.
        Measurements expressed in boes may be misleading, particularly if
        used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on
        an approximate energy equivalency conversion method primarily
        applicable at the burner tip and does not represent a value
        equivalency at the wellhead.

    (3) Net Present Values of Future Net Revenues After Income Taxes has not
        been prepared as the GLJ Pembina Report only includes Spry's Pembina
        property and not all properties of the Company. Income taxes are
        calculated at a corporate level and not a property level.

    (4) The GLJ Pembina Report does not include the impact of the royalty
        changes announced by the Alberta government on March 11, 2010. The
        changes will make the five percent maximum front-end royalty rate for
        the first 12 months of production or 50,000 boes, whichever comes
        first, on conventional oil and natural gas a permanent feature. The
        changes will also decrease the maximum royalty rate from 50 percent
        to 40 percent for conventional oil and from 50 percent to 36 percent
        for natural gas. Spry expects these changes to have a positive impact
        on the Net Present Values of Future Net Revenues, but we have not
        quantified that value at this time. All the royalty changes are
        effective January 1, 2011.

    (5) It should not be assumed that the present worth of estimated future
        net revenues represents the fair market value of the reserves. There
        is no assurance that the forecast price and cost assumptions
        contained in the GLJ Pembina Report will be attained and variances
        could be material. The reserve and revenue estimates set forth above
        are estimates only and the actual reserves and realized revenue may
        be greater or less than those calculated.


    PEMBINA OPERATIONAL UPDATE
    --------------------------
    

Approximately a year ago, Spry began to establish a position in the East Pembina area, and through a series of crown land sales, farm-ins and several minor undeveloped land acquisitions, the Company has obtained ownership or control in 21 (13.5 net) sections of mineral lands in the area. We commenced drilling in August 2009 and, to date, we have drilled 14 (8.8 net) successful oil wells. Spry was the operator of 13 of these wells. All wells are drilled into the Cardium formation, which is a depth of approximately 1,300 meters. The wells are then horizontally drilled between 1,200 meters and 1,400 meters and they are completed using multi-interval fracture stimulations. Eleven (5.8 net) wells are on production at a combined rate of 1,030 (615 net) boe/d. One (1.0 net) of the three remaining wells is currently recovering load oil and the other two (2.0 net) are scheduled to be completed in April and placed on-stream in May. These three wells are expected to add production at rates similar to our other wells in the Pembina area. For the balance of our fiscal year ended June 30, 2010 we plan to drill four (2.0 net) Cardium oil wells at Pembina and we have identified 12 additional Pembina wells that we plan to drill between July 2010 and December 2010. This will leave us with 52 locations on our existing Pembina lands for 2011 and beyond.

In addition to our Pembina activity, we are planning to drill four (2.8 net) wells in Saskatchewan targeting heavy oil at Northminster and light oil at Wordsworth. As a result of our recent success at Pembina, total Company production is now approximately 1,750 boes/d weighted 62 percent to oil and liquids. We continue to have approximately 145 boes/d of higher operating expense natural gas shut-in and we have recently shut-in 35 bbls/d of crude oil at Arcola, Saskatchewan due to break-up.

    
    FORWARD-LOOKING STATEMENTS
    --------------------------
    

This news release contains forward-looking statements relating to the Company, including the Company's drilling plans. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.

These forward-looking statements are based on various assumptions including expectations regarding the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; the timing, location and extent of future operations; anticipated timing and results of capital expenditures; estimates of future production; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; future exchange and interest rates; impact of increasing competition; ability to market oil and natural gas successfully and the ability of Spry to access capital. While Spry considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodity prices; currency fluctuations; imprecision of reserve estimates; environmental risks; general economic conditions in Canada, the U.S. and globally; delays resulting from or inability to satisfy various closing conditions; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Spry believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

%SEDAR: 00018775E

SOURCE SPRY ENERGY LTD.

For further information: For further information: Kenneth J. Bowie, President & CEO, (403) 984-6352

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