Kereco Energy Ltd. - Corporate Update

    (TSX: KCO)

    CALGARY, Sept. 4 /CNW/ - Kereco Energy Ltd. ("Kereco") is pleased to
announce the results of a recent review of its reserves.
    Concurrent with our previous announcement on July 18, 2007 with respect
to the repositioning process we have embarked upon, Kereco engaged GLJ
Petroleum Consultants Ltd. ("GLJ") to perform a review of our current reserves
effective August 1, 2007. We are pleased to report that the review resulted in
Kereco more than replacing it's production since December 31, 2006. Total
proved reserves increased to 24.4 mmboe from 23.1 mmboe and total proved plus
probable reserves increased to 35.2 mmobe from 32.5 mmboe.


    The following tables outline the Company's reserves as at August 1, 2007
as independently evaluated by GLJ in accordance with National Instrument
51-101 Standards of Disclosure of Oil and Gas Activities ("NI 51-101").

    Summary of Oil and Gas Reserves (Company Interest - Forecast Price Case)

                                                                    August 1,
                                 Natural       Crude                     Boe
                                     Gas         Oil        NGLs  equivalent
                                   (mmcf)     (mbbls)     (mbbls)      (mboe)
    Proved producing              42,569       8,220       1,579      16,894
    Proved non-producing           8,188         913         187       2,465
    Total proved developed        50,757       9,133       1,766      19,359
    Proved undeveloped            12,692       2,499         477       5,092
    Total proved                  63,449      11,632       2,243      24,450
    Probable additional           29,548       4,848         991      10,763
    Total proved plus probable    92,998      16,480       3,234      35,213

    Net Present Value of Reserves

                                          Discounted  Discounted  Discounted
    ($000s)                 Undiscounted       At 8%      at 10%      at 12%
    Total Proved                 659,239     442,588     410,948     383,920
    Probable                     302,698     143,764     125,169     110,198
    Total Proved Plus Probable   961,936     586,353     536,117     494,118

    Net Asset Value

    Utilizing the reserves as evaluated at August 1, 2007, the net asset
value of Kereco is estimated to be $7.28 per basic share using a net present
value at 8%, before tax, analysis. Kereco began operations in January of 2005
with a net asset value per basic share of $2.60.

    Operations Update

    The Company has had a relatively active quarter of drilling wherein we
have drilled 14 wells, of which 13 were successful (8 oil, 5 gas). The
drilling in the quarter has added approximately 1,000 to 1,200 boe/day of
behind pipe volumes to bring our total current behind pipe volumes to 1,500 to
2,000 boe/day.

    Corporate Strategic Plan Update

    We are proceeding with our plans to reposition Kereco for the future.
With the finalization of our reserves update, we have now commenced the first
phase of our plan which is the disposal of assets that we have identified to
be non-strategic. These assets currently produce approximately 1,650 boe/day.
As we move forward with the remainder of our repositioning process we will
continue to inform you of our progress.


    Certain information set forth in this press release, including
managements' assessment of the future plans and operations of Kereco, contains
forward looking statements. By their nature, forward-looking statements are
subject to numerous risks and uncertainties, some of which are beyond our
control, including the impact of general economic conditions, industry
conditions, changes in laws and regulations including the adoption of new
environmental laws and regulations and changes in how they are interpreted and
enforced, volatility of commodity prices, currency fluctuations, interest rate
volatility, imprecision of reserve estimates, environmental risks, competition
from other industry participants, the lack of availability of qualified
personnel or management, stock market volatility and ability to access
sufficient capital from internal and external sources, market valuations with
respect to announced transactions and the final valuations thereof and
obtaining required approvals of regulatory authorities. Readers are cautioned
that the assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be imprecise
and, as such, undue reliance should not be placed on forward looking
statements. The actual results, performance or achievement of Kereco could
differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be given that
any of the events anticipated by the forward looking statements will transpire
or occur, or if any of them do so, what benefits that Kereco will derive
therefrom. Except as required by law, Kereco disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
    In conformity with Canadian Securities Administrators National Instrument
51-101, natural gas volumes have been converted to equivalent barrels of oil
("boe") using a conversion ratio of six thousand cubic feet ("mcf") to one
boe. This ratio is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead. Readers are cautioned that boes may be misleading, particularly if
used in isolation.

    %SEDAR: 00021661E

For further information:

For further information: Kereco Energy Ltd., Grant B. Fagerheim,
President and Chief Executive Officer, Phone (403) 290-3401

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