Alberta Clipper Energy Inc. (ACN - TSX) Announces Financial, Reserve and Operating Results for the Year Ended December 31, 2006 and a Production Acquisition in its Core Area of Sylvan Lake


    CALGARY, March 22 /CNW/ - Alberta Clipper Energy Inc. ("Alberta Clipper"
or the "Company") advises today that it has filed its audited financial
statements and related management's discussion and analysis for the year ended
December 31, 2006 on and Certain
selected financial and operational information for the year ended December 31,
2006 and the period June 3, 2005 to December 31, 2005 is set out below and
should be read in conjunction with Alberta Clipper's audited financial
statements and related MD&A.
    In this report, all references to barrels of oil equivalent (Boe) are
calculated converting natural gas to oil at a ratio of six thousand cubic feet
to one barrel of oil.


                                                              Year    June 3,
                                                             ended   2005 to
                                                          December  December
                                                          31, 2006  31, 2005
    Financial ($000's, except per share amounts)
      Petroleum and natural gas sales                       24,544    11,189
      Funds generated by operations(1)                      12,525     6,752
        Per share basic                                       0.34      0.22
        Per share diluted                                     0.33      0.21
      Net earnings (loss)                                   (1,234)    1,459
        Per share basic                                      (0.03)     0.05
        Per share diluted                                    (0.03)     0.05
      Capital expenditures                                  71,517    17,950
      Net working capital surplus (deficit)                (12,954)   11,235
        Crude oil and natural gas liquids (Bbls per day)       441       328
        Natural gas (Mcf per day)                            5,554     3,580
        Barrels of oil equivalent (Boe per day, 6:1)         1,367       925
      Average realized price
        Crude oil and natural gas liquids ($ per Bbl)        67.20     70.11
        Natural gas ($ per Mcf)                               6.77     11.13
        Barrels of oil equivalent ($ per Boe, 6:1)           49.19     67.96
      Netback per Boe (6:1) ($)
        Petroleum and natural gas sales                      49.19     67.96
        Royalties                                            (9.58)   (15.95)
        Operating expenses                                   (9.69)    (7.05)
        Transportation expenses                              (0.99)    (0.70)
      Operating Netback                                      28.93     44.26
    Undeveloped land holdings (net acres)                  215,972   176,410
    Common Shares (000's)
      Shares outstanding, end of period                     40,869    34,330
      Weighted average shares, diluted                      37,545    32,201

    (1) Management uses funds generated by operations to analyze operating
        performance and leverage. Funds generated by operations as presented
        do not have any standardized meaning prescribed by Canadian GAAP and
        therefore it may not be comparable with the calculation of similar
        measures for other entities.

    In 2006, the Company's accomplishments include:
      -  Increased cash flow per share by 59%
      -  Increased production per share by 27%
      -  Added 2.8 MMboe of reserves and increased reserves per share by 44%
      -  Replaced production by 281% on a proved basis and 567% on a proved
         plus probable basis
      -  Initiated production at Trutch, B.C. by completing a new gas
         processing facility and increased reserves by 102%
      -  Discovered 4 new Leduc pools at Sylvan Lake, Alberta and increased
         reserves by 140%
      -  Initiated the construction of a new oil battery in Sylvan Lake
      -  Increased undeveloped land base by 22%.
      -  Maintained conservative balance sheet such that current debt to
         forward cash flow is less than 1.0.

    For the team at Alberta Clipper Energy, 2006 was a watershed year.
Through an aggressive drilling and infrastructure program the Company
succeeded in transforming a broad opportunity base, characterized by a large
undeveloped land position, into a significant operated reserves and production
base. Operations during the year were focused in two core areas: Trutch and
Sylvan Lake. In both of these areas extensive opportunity inventories were
built and infrastructure was put in place to facilitate growth for many years
to come. By focusing capital on these "foundation-type" assets the Company has
established dominant positions in both areas and thereby created a distinct
competitive advantage in achieving its longer term goals.
    In 2006, Alberta Clipper drilled 29 wells resulting in 4 new Leduc reef
discoveries in the Sylvan Lake Area of Western Alberta (WAB) and a substantial
expansion of the Trutch gas pool in Northeast British Columbia (NEBC). These
two properties provide a solid reserve and production foundation for the
Company and have solidified management's confidence in achieving its corporate
production target of 5,000 boe/d by the end of 2008. Positioning efforts at
Sylvan Lake and Trutch required a long-term vision for the assets that
necessitated not only significant pre-investment expenditures in land and
seismic but even larger expenditures in operated infrastructure. As a result
of this pre-investment Alberta Clipper has:

      -  Increased its ownership in production processing facilities from
         600 boe/d to 6,000 boe/d by April 2007;
      -  Increased its net undeveloped land position from 176,410 acres to
         215,972 acres; and
      -  Increased its 3D seismic database from 2568 square km to 3210
         square km.

    While the pre-investment has had a negative impact on near-term
single-year finding and development costs the move was critical in
strategically positioning the Company for longer term growth.
    In Western Alberta, Alberta Clipper's land base consists of approximately
92,958 net acres of undeveloped land. Expanding on the success experienced at
Sylvan Lake during 2006, the Company added 51,825 acres to its undeveloped
land base through freehold leasing and Crown land sales. In addition, the
Company continued to build its 3D seismic database through acquiring
113 square kilometers of 3D seismic data. At Sylvan Lake, Alberta Clipper
initiated planning and equipment procurement of a new oil battery that is
expected to be completed during the second quarter of 2007. The new facility
will resolve the capacity limitations that exist at the current battery and
allow for significant production growth in the future. Once completed,
production growth will come not only through drilling but also through
exploitation, and facilities integration. Alberta Clipper drilled 10 wells in
the Sylvan Lake area in 2006.
    In Northeast British Columbia, Alberta Clipper has a net undeveloped land
base totaling approximately 48,947 acres. In 2006 the majority of the activity
in NEBC was focused at Trutch where the Company commenced production of what
is now a significant new gas pool. As a result of a concerted effort by the
team at Alberta Clipper, the Trutch facility began delivering gas in April of
2006; 2 months ahead of schedule. By the end of 2006, the Company had brought
8 wells on production at Trutch as part of the long term plan to develop this
large gas resource. As 2006 marked the start-up of operations of the Trutch
asset, both significant capital expenditures and high initial operating costs
were incurred as a necessary "entry fee" into establishing production. Now
that the all-season road and major infrastructure investments have been made
it is expected that the Trutch netbacks will improve substantially as the
producing well count grows. Alberta Clipper drilled 5 wells in the Trutch area
during 2006.
    Alberta Clipper continued to grow its Emerging Asset inventory with the
expansion of its land base at Rycroft in Western Alberta where the Company is
pursuing a high-impact Wabamun exploration play. Additionally, at Arvilla in
Western Alberta the Company has continued to add land on its Wabamun
exploration play. Development drilling on an earlier discovery has expanded
the area of this pool. In 2006, two further successful development locations
have increased the number of wells in the pool to four with further locations
identified for 2007.
    As Alberta Clipper experiences ongoing success on its Foundation Assets,
the Company continues to consolidate in the areas where it can most
efficiently pursue its long-term exploration and development strategy. In
keeping with this strategy, the Company has divested a minor portion of its
Central Alberta assets that did not conform with the future vision for the
Company. Alberta Clipper will continue to upgrade its asset base and focus
capital and activities on both its Foundation Assets at Sylvan Lake and Trutch
and its Emerging Assets in Western Alberta and Northeast British Columbia.

    Alberta Clipper averaged 1,367 boe/d for the year ended December 31,
2006, a 48% increase over the period ended December 31, 2005 average of
925 boe/d.

    The estimated net present value (NPV) of proven plus probable reserves as
at December 31, 2006 and applying an 8% discount rate is $106.3 million on a
pre-tax basis. In addition, the Company exited 2006 with $13.0 million in
negative working capital and 215,972 net acres of undeveloped land valued at
$42.5 million. Based on these inputs the net asset value for the Company as at
December 31, 2006 is calculated to be $3.32 per basic share. The net asset
value was impacted by significant capital expenditures on central facility
infrastructure in 2006 that are not valued in the net asset value calculation
but will significantly impact the value of the Company's drilling activities
in the future.

    In accordance with National Instrument 51-101 - Standards of Disclosure
for Oil and Gas Activities (NI 51-101), GLJ Petroleum Consultants Ltd. ("GLJ")
prepared the Alberta Clipper Report. The Alberta Clipper GLJ Report evaluated,
as at December 31, 2006, 100% of Alberta Clipper's oil, natural gas liquids
and natural gas reserves. Reserves information may not add due to rounding. A
full disclosure of Alberta Clipper's reserves can be found in the Annual
Information Form on
    Based on the year-end 2006 independent reserves report, Alberta Clipper
added 1.4 million proven Boe and 2.8 million proven-plus-probable Boe via the
Company's drilling program. Reserves additions replaced production by 281% on
a proved basis and 567% on a proved-plus-probable basis in 2006.

          Summary of Total Company Interest Oil and Gas Reserves(1)
                           as at December 31, 2005
                          Forecast Prices and Costs
                                                          Natural     Total
                                     Light and   Natural    Gas        Oil
                                    Medium Oil     Gas    Liquids  Equivalent
    Reserve Category                   (Mbbl)    (MMcf)    (Mbbl)    (Mboe)
    Developed Producing                    574     8,585       217     2,222
    Developed Non-Producing                 96     2,910        40       620
    Undeveloped                            176     1,232        49       430

    Total Proved                           845    12,727       305     3,272

    Probable                               457    11,040       214     2,511

    Total Proved Plus Probable           1,302    23,767       519     5,783

           Reconciliation of Total Company Interest Reserves (1)(2)
              and Medium Oil     Natural Gas        NGLs          Total

                       Proved          Proved          Proved          Proved
                        Plus            Plus            Plus            Plus
                        Prob-           Prob-           Prob-           Prob-
               Proved   able   Proved   able   Proved   able   Proved   able
               (mbbl)  (mbbl)  (mmcf)  (mmcf)  (mbbl)  (mbbl)  (mboe)  (mboe)
     Balance     481     630  10,458  15,499     145     242   2,369   3,454
    (Dec 31,
    Discoveries  307     455   1,217   5,272      63     130     572   1,463
    Extensions   152     297   3,660   5,865      74     130     836   1,405
     recovery      -       -      97     420       9       4      25      74
    Dispositions -25     -31    -119    -147      -1      -1     -45     -56
    Revisions(3)  53      73    -559  -1,116      55      54      14     -58
    Production  -122    -122  -2,027  -2,027     -39     -39    -499    -499

    Dec. 31,
     2005        845   1,302  12,727  23,767     305     519   3,272   5,783
    (1) Based on Gross reserves meaning the total company interest (operated
        and non-operated) share before deduction of royalties payable to

    (2) As Alberta Clipper began operations on July 7, 2005, there are no
        comparable figures for the prior period. The Joint Information
        Circular and Proxy Statement of Thunder, Mustang and Forte dated
        June 6, 2005 provided a mechanical update of the NI 51-101 compliant
        reserve reports for Thunder and Mustang dated December 31, 2004, for
        those reserves associated with the Alberta Clipper assets as at
        March 31, 2005. The March 31, 2005 Reserve Report was not updated to
        reflect the reserves acquired by Alberta Clipper as at July 7, 2005.
        The December 31, 2005 Reserve Report calculates the reserves that
        were acquired by acquisition on July 7, 2005 by taking the year-end
        balance adding production and subtracting discoveries and extensions.

    (3) Total revisions incorporates production from disposed assets.

    Alberta Clipper incurred expenditures of $71.5 million dollars in 2006.
Capital associated with infrastructure expansion was $15.0 million and another
$11.4 million was spent on land and seismic activity. As a result, over 35% of
the 2006 capital program was related to pre-investment projects where reserve
value will be recognized in later periods.


    As a result of significant pre-investments in land, seismic and major
infrastructure projects, only 65% of the Company's capital program was focused
on drill-bit additions which had a negative impact on short term (1 year)
finding and development costs. The pre-investment capital has positioned the
Company with a dominant position in each of its foundation assets which should
allow for lower reserves additions costs over the longer term. NI 51-101
specifies how finding and development ("F&D") costs should be calculated if
they are reported. Essentially NI 51-101 requires that the exploration and
development costs incurred in the year along with the change in estimated
future development costs be aggregated and then divided by the applicable
reserve additions.

    2006 Capital Expenditures                               Proved  Probable
                                                                (2)       (2)
    Capital costs ($thousands)
    Exploration and development drilling and
     associated costs                                       45,035    45,035
    Land and seismic                                        11,423    11,423
    Central Facilities                                      15,000    15,000
    Change in future development costs(1)                    2,576     9,565
    Total                                                   74,034    81,023

    2006 Reserve Additions(2) (MBOE)
    Exploration and development                              1,402     2,828

    2006 Finding & Development Costs ($/BOE)
    F&D costs                                                52.80     28.66
    F&D costs, excluding future capital                      50.96     25.27

    2006 Breakdown of Finding & Development Costs
     excluding Future Development Costs ($/BOE)
    Exploration and development drilling and
     associated costs                                        32.11     15.93
    Land and seismic                                          8.15      4.04
    Central Facilities                                       10.70      5.30
    Total                                                    50.96     25.27

    (1) The aggregate of the exploration and development costs incurred in
        the most recent financial period and the change during that period in
        estimated future development costs generally will not reflect total
        finding and development costs related to reserve additions for that
    (2) Based on Gross reserves meaning the total company interest (operated
        and non-operated) share before deduction of royalties payable to

    In the 4th quarter the Company drilled 8 (4.2 net) wells, resulting in 6
(3.2 net) gas wells and 1 (0.5 net) oil well. For the year 2006 the Company
drilled 29 (15.5 net) wells resulting in 21 (12.4 net) gas wells and 7
(2.5 net) oil wells. Of the 29 wells drilled in 2006, 17 were exploratory in
nature and 12 were development.

    Cash flow from operations for the year ended December 31, 2006 was
$12.5 million ($0.34 per basic share), an 86% increase from the period ended
December 31, 2005 cash flow of $6.8 million ($0.22 per basic share).

    Alberta Clipper exited 2006 with a net debt and working capital deficit
of $13.0 million, made up of $16.2 million in negative working capital and
$3.2 million in cash.

    Alberta Clipper's undeveloped land holdings as at December 31, 2006 were
215,972 acres.

    Net Undeveloped Acreage Summary:
    Western Alberta (WAB)                                             92,958
    Central Alberta (CAB)                                             56,840
    Northeast British Columbia (NEBC)                                 48,947
    Montana                                                           17,227
    Total Net Undeveloped Acres                                      215,972

    Alberta Clipper's Annual Meeting is scheduled for 2:00 pm on Thursday,
May 10, 2007 in the Angus/Northcote Room at the Bow Valley Conference Centre,
Tower 3, 300, 205 - 5th Avenue SW, Calgary, Alberta.

    As referred to above, to view Alberta Clipper's audited financial
statements and related MD&A for the year ended December 31, 2006 and the
period June 3, 2005 to December 31, 2005 please visit our web site at or To the extent investors do not
have access to the internet, copies of the audited financials and related MD&A
can be obtained on request without charge by contacting Alberta Clipper at
(403)440-3474 or at 800, 700-2nd Street SW Calgary, Alberta, T2P 2W1.

    Alberta Clipper forecasts a $60 million capital program for 2007. As a
result of the significant pre-investment made in land, seismic, and major
infrastructure in 2006 the Company has increased the amount of capital
allocated to its drilling and associated development program from 53% of its
total capital expenditures in 2006 to 82% in 2007. The 27 well drilling
program consists of 19 wells in WAB, 6 wells in NEBC, and 2 wells in the CAB
emerging assets. The 2007 drilling inventory includes 11 exploratory wells
which expose Alberta Clipper to significant reserves and production additions
beyond those provided by the lower risk development program.
    To date in 2007, Alberta Clipper has drilled 9 wells resulting in 4 oil
wells, 3 gas wells, and 2 dry holes for a commercial success rate of 78%. In
addition, the Company has successfully re-completed 3 well bores resulting in
3 gas wells.
    Highlights of the program in WAB include a new Leduc discovery at
11-35-38-4W5 that is awaiting tie-in, 1 Leduc well currently being completed,
and 2 cased wells awaiting completion. At the Garrington 6-15-37-5W5 well,
completion operations are continuing in an attempt to enhance the productivity
of the 203 foot hydrocarbon column as indicated by independent petrophysical
analysis. The two latest Leduc discoveries bring the total number of Leduc
pools discovered by Alberta Clipper in the greater Sylvan area to 6. In
addition to the drilling activity, the Company was successful in adding 2,800
acres of net undeveloped land to the Sylvan Lake asset in the early part of
2007. The Company expects to drill a total of 18 wells in the Sylvan Lake area
in 2007.
    Alberta Clipper also advises that it has entered into an agreement to
acquire certain assets (the "Assets") in its core area of Sylvan Lake for a
total cash consideration of approximately $8.7 million, subject to certain
closing conditions. The Assets fit strategically into Alberta Clipper's Sylvan
Lake core area and consist of highly quality, high netback, oil and natural
gas. The Assets comprise approximately 500 mboe of proven plus probable
reserves based on Alberta Clipper Internal Engineering estimates, and more
than 180 boe/d of production. In addition, the Company has identified
development opportunities that have the potential to add an incremental
150 boe/d of net production on operated lands.
    In NEBC, the Trutch property continues to yield successful gas wells. To
date in 2007, the Company has completed and tested 5 well bores resulting in
5 gas wells. Of particular note, the Company has successfully tested gas from
2 new-drills and 2 re-completions on the north half of the property. The
recent activity has expanded the productive extent of the pool by more than
two times relative to where it stood at year-end 2006. No reserves have been
assigned to the newly drilled wells or associated lands in the 2006 reserves
    Alberta Clipper is nearing completion of a new pipeline under Trutch
Creek to access the incremental 400 boe/d of net gas production from the north
side of the creek. It is expected that this pipeline will begin delivering gas
from the northern portion of the pool to Company operated infrastructure early
in the second quarter. Alberta Clipper plans to drill 6 wells in the Trutch
area during 2007. Also of note, in the third quarter of 2007 the Company will
be initiating a fracture-stimulated horizontal pilot project that has the
potential to considerably increase capital efficiency with respect to reserve
and production additions. Significant improvements have been observed in
analogous tight gas reservoirs in Northeast British Columbia where the same
technology has been applied.
    The year 2007 continues to present a challenging environment for junior
oil and natural gas producers. The continued volatility in prices accompanied
by lingering high service costs is likely to create consolidation and quality
acquisition opportunities in the oil and gas sector. Alberta Clipper is well
positioned to act on these opportunities.

    Alberta Clipper Energy Inc. is a publicly traded Canadian energy company
involved in the exploration, development and production of natural gas and
crude oil in western Canada.

    This press release may contain forward-looking statements including
expectations of future production, cash flow and earnings. More particularly,
this press release contains statements concerning Alberta Clipper's future
production estimates, expansion of oil and gas property interests, exploration
and development drilling, seismic operations, regulatory applications, payout
estimates, capital expenditures, number and drilling locations to be drilled
in 2006, seismic acquisitions and facilities upgrades. These statements are
based on current expectations that involve a number of risks and
uncertainties, which could cause actual results to differ from those
anticipated. These risks include, but are not limited to: the risks associated
with the oil and gas industry (e.g., operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty
of reserve estimates; the uncertainty of estimates and projections relating to
production, costs and expenses, and health, safety and environmental risks),
commodity price, price and exchange rate fluctuation and uncertainties
resulting from potential delays or changes in plans with respect to
exploration or development projects or capital expenditures. Additional
information on these and other factors that could affect Alberta Clipper's
operations or financial results are included in Alberta Clipper Energy's
reports on file with Canadian securities regulatory authorities.
    The forward-looking statements or information contained in this news
release are made as of the date hereof and Alberta Clipper undertakes no
obligation to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws

    Oil and Gas Advisory
    This press release contains disclosure expressed as "Boe/d". All oil and
natural gas equivalency volumes have been derived using the ratio of six
thousand cubic feet of natural gas to one barrel of oil. Equivalency measures
may be misleading, particularly if used in isolation. A conversion ratio of
six thousand cubic feet of natural gas to one barrel of oil is based on an
energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the well head.

    The Toronto Stock Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release. Not for
    distribution to U.S. newswire services or for dissemination in the United
    States. Any failure to comply with this restriction may constitute a
    violation of U.S. securities law.

    %SEDAR: 00022458EE

For further information:

For further information: Kel Johnston, President & C.E.O., Alberta
Clipper Energy Inc., Telephone: (403) 440-3474, Facsimile: (403) 440-3475,

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