Kallisto Provides Operations Update

CALGARY, Sept. 21, 2011 /CNW/ - Kallisto Energy Corp. (TSXV: KEC) ("Kallisto" or the "Company") is pleased to provide an update on its two major properties located at Pembina and Crossfield, Alberta.


Kallisto has been successful in assembling an extensive land position at Crossfield totaling approximately 125 net sections of land.

Though the focus of the Company in this area has been primarily Viking Oil, it has identified additional prospective zones, including the Mannville.  Kallisto successfully confirmed commercial productivity of the Lower Mannville (Ellerslie) formation with the test of an oil and liquids-rich gas well located at 10-34-27-1W5. Subsequent to the testing of the 10-34 well the Company acquired 3D seismic covering certain of its lands in the area and has applied for a license to drill a vertical well at 11-26-27-1W5 to further define the Lower Manville opportunity. Management is targeting to spud this well in Q4 2011. Should this well be successful, management anticipates completing an expanded 3D seismic program on its lands to identify additional Ellerslie locations and then drilling a horizontal well on Company lands.

While tests of the Viking formation in the Company's wells have been less successful than management had anticipated, they have confirmed the presence of both oil and natural gas in the formation.

The 1-29-28-1W5 well, which appears to have been damaged by the fracture stimulation, continues to produce approximately 10 bbls of oil per day (5 bbls per day net to Kallisto).

The second Viking well completed on Company lands, located at 15-7-28-1W5, was placed on production in late March 2011. During the first 60 days of production, after accounting for the recovery of load fluid, the well produced an average of approximately 310 mcf per day and 11 bbls of oil and natural gas liquids ("NGLs") for a total of approximately 52 boe per day. The wellbore was reconfigured and artificial lift installed in June 2011 and was shut in for a significant portion of June and July due to weather, equipment, and third party facility challenges. During August 2011, the well has produced an average of approximately 15 bbls of oil and NGLs per day and 248 mcf of natural gas per day for a total of 56 boe per day (36 boe per day net to Kallisto).

Subsequent to drilling these wells, Kallisto conducted a further technical review of the project, including further geological and geophysical studies, detailed reservoir engineering and the analysis and testing of Viking formation core obtained through its drilling program. As a result of that review, it is management's view that:

  • The Viking formation on the Company's lands is made up of several distinct reservoirs, some of which are primarily oil bearing and more permeable and some that are predominantly charged with natural gas and NGLs; and
  • Fracture treatments that include a binding gel damage the reservoir, severely restricting the flow of hydrocarbons into the wellbore.

Management anticipates that it will drill a well in part of the oil bearing reservoir of the Viking in Q1 2012. Should this well be successful, the Company believes that it has a number of oil locations to drill on its lands.


The Company's Pembina Cardium horizontal oil project continues to outperform independent engineering estimates.  The first three months average production for the 7 wells drilled to date is approximately 174 boe per day (52 boe per day net), 90% of which is oil, placing this project in the upper quartile for all Cardium horizontal oil wells drilled in Alberta since 2008.  These wells were drilled and completed at an average cost of approximately $2.6 million per well. Operating costs for the field are less than $6.00 per boe. For the month of August, the wells produced an average of 309 boe per day (93 net to the Company), 80% of which was oil.

There are 6 remaining locations to drill on the Company's three 30% WI sections of land at Pembina. Following discussions with our partner, Kallisto expects to participate in the drilling of 2 - 3 wells before the end of 2011.


As at the date of this Press Release, Kallisto has positive working capital, including $3.1 million in cash, and undrawn bank lines of $6.5 million. For the six months ended June 30, 2011, the Company generated cash from operations of $755,000.

Based on the independent report prepared by the Company's petroleum engineering consultants (Sproule Associates Ltd.), effective as of December 31, 2010, Kallisto's oil and gas assets were worth approximately $0.41 per share (2P NPV 10%, before income tax). This excludes any value attributed to the Company's undeveloped land holdings or any material value for its Crossfield Viking lands.

The management and directors of Kallisto are focused on increasing shareholder value and believe that value can be added through the continued development of its Crossfield properties and Pembina Cardium oil property.

Kallisto is a Calgary-based junior resource company engaged in the exploration, development and production of oil and natural gas in Alberta.

Forward Looking Information
The reader is advised that some of the information contained herein may constitute forward looking statements within the meaning assigned by National Instrument 51-102 and other relevant securities legislation. It includes, but is not limited to, statements with respect to well production and performance, expected timing of well development and operations including the anticipated dates for the drilling of wells, oil and gas reserves value, and future sources of cash to fund operations. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "scheduled", "potential", or other similar words, or statements that certain events or conditions "may", "should" or "could" occur.  Forward-looking information is based on the Company's expectations regarding its future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities.  Such forward-looking information reflects management's current beliefs and assumptions and is based on information currently available to it.  The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Company at the time of preparation, may prove to be incorrect and readers are cautioned not to place undue reliance on forward-looking information, which speaks only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to forward-looking information contained herein to reflect events or circumstances that occur after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information including risks associated with the impact of general economic conditions, industry conditions, governmental regulation, volatility of commodity prices, currency fluctuations, imprecision of reserve and resource estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and the Corporation's ability to access sufficient capital from internal and external sources. Additional risks and uncertainties are described in the Company's Short Form Prospectus dated February 7, 2011 and Annual Information Form which are filed on SEDAR at www.sedar.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Kallisto Energy Corp.

For further information:

Robyn Lore
President and Chief Executive Officer
Telephone: (403) 237-9996

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