CALGARY, June 2, 2011 /CNW Telbec/ - Exall Energy Corporation ("Exall"
or the "Company") (TSX: EE) is pleased to provide an update on its
Marten Mountain operations in the wake of the fires in and around Slave
Lake Alberta. Exall's public filings can all be found at www.exall.com or www.sedar.com.
Production has been re-established to pre-fire levels of approximately
1,435 boe per day,
Summer capital program to include up to 7 gross (5.0 net) wells through
Exall debt facility has been increased to $23,000,000, effective June 1,
With the return of the residents to the town of Slave Lake, Exall's
production has returned to pre-fire levels. Exall's current average
daily production is in the order of 1,435 boe/d as outlined below:
June 02, 2011
June 02, 2011
Marten Mountain, Alberta
Bow Island, Alberta
* Productive capability assumes B trend waterflood approval at Marten
Mountain, Mitsue, Alberta.
The difference between the June 02, 2011 production rate of 1,435 boe/d
and the productive capacity of 1,900 boe/d is the result of having shut
in two wells due to the fact that they had overproduced their allowable
volumes during the New Oil Well Production Period ("NOWPP") as
prescribed by the Alberta Energy Resource Conservation Board ("ERCB").
This over production will be retired by July 1, 2011 and August 1,
2011. The two wells currently shut in and will add 200 BOEPD by August
1, 2011. Exall currently has well capacity to produce 1,900 BOEPD upon
approval of the waterflood project, which is currently in the hands of
the ERCB. The target exit rate for 2011 remains 3,000 BOEPD.
Summer Capital Program
Exall has established a camp for drilling and completion personnel in
the Marten Mountain area and has received all required approvals and
licences to recommence drilling and completion operations. Exall's
summer capital program will commence June 6th. Exall plans to drill up to 7 gross (5.3 net) wells through the end of
the third quarter, including one seismically driven location.
The successful completion of the two 3D seismic programs in the Mitsue
area with the identification of two Gilwood sand trends on the Marten
Mountain program has identified two well locations, which are
accessible through the summer. Exall is planning to spud the first of
the two wells in July to verify the seismic lead. With success the
second well will follow immediately.
Effective June 01, 2011, the Company's revolving demand credit facility
with its alternate Canadian financial institution has been increased
from $17,000,000 to $23,000,000. The facility continues to bear
interest at the lender's base prime rate plus 1.50 percent. The limit
of the credit facility is subject to adjustments from time to time to
reflect changes in the Company's asset base. There are no principal
repayments required on the loan. The facility continues to require the
Company to maintain certain financial ratios and other covenants and is
collateralized by a general security agreement providing a security
interest over all present and after acquired real and personal property
and a floating charge on all lands.
As part of its capital management program, Exall compares its net
corporate debt (the total amount of bank loan, net of working capital)
to the annual, or annualized, funds from operations before changes in
working capital. Maintaining a ratio of less than 2:1 is a Company
target. As at March 31, 2011 Exall's debt to funds from operations
ratio was 0.6:1.
Exall's production strategy is to produce all new wells at a rate
approximating their productive capacity during the New Oil Well
Production Period ("NOWPP"). This strategy, in most cases, results in
the well over producing its allowable production as prescribed by the
Alberta Energy Resources Conservation Board (the "ERCB"). As such, each
new well will see an initial period of high productivity, significantly
enhancing Exall's production, followed by a period where the well is
shut in. During the shut in time frame, Exall will, should the facts
warrant, apply for additional waterflood approvals which will require
water injection wells. Exall may convert existing producing wells into
water injection wells if the result were to be; an overall increase to,
and or a long term stabilization of production.
The rational for this strategy is that by overproducing the well in a
period where there are no penalties for over production, Exall is
capable of paying out the wells in a significantly reduced time frame.
Well payouts are shortened to months as opposed to years. The capital
recovered is then utilized for additional drilling opportunities. This
production strategy does, however, result in some unpredictability of
the corporate average daily production rates in any given timeframe.
This unpredictability will eventually be smoothed out as more
production is brought on past the NOWPP and under waterflood
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 61,808,854 common shares outstanding. The
Company's common shares are listed on the Toronto Stock Exchange under
the trading symbol EE.
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
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
| Roger N. Dueck |
President & CEO
Tel: 403-237-7820 ext. 223
| || Warren F.E. Coles |
VP - Finance & CFO
Tel: 403-237-7820 x 224
Please visit Exall Energy's website at: www.exall.com
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Maurice Dagenais: email@example.com
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Tel.: (514) 939-3989 or (416) 644-2020