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 Q3, and

  • Exall debt facility has been increased to $23,000,000, effective June 1, 2011.

Current Production

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
Production Estimate
  June 02, 2011
Marten Mountain, Alberta 1,333   1,798
Jayar, Alberta 76   76
Overlea, Alberta 16   16
Harris Texas 9   9
Bow Island, Alberta 1   1
Corporate Total 1,435   1,900

* 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.

Debt Facilities

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.

Production Strategy

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 operations.

About Exall

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.

Reader Advisory

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 law.

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

Renmark Financial Communications Inc.
Maurice Dagenais: mdagenais@renmarkfinancial.com
Florence Liberski : fliberski@renmarkfinancial.com
Tel.: (514) 939-3989 or (416) 644-2020

Profil de l'entreprise

Exall Energy Corporation

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