MONTREAL, March 28 /CNW Telbec/ - Rolland Energy Inc. (TSX-V: ROE, the
"Corporation") is pleased to release a second update to shareholders from the
Corporation's President and Chief Executive Officer Michael McLellan, B. Comm,
Some six months have passed since your Board of Directors adopted a
Restructuring Plan to prevent insolvency. At that time, the Corporation was
facing very serious financial difficulties and could not meet its short-term
financial obligations. The financial situation remains difficult, but has
improved dramatically as a result of various successes we have had in
executing the Restructuring Plan. The Corporation today is on more solid
financial footing than it has been for several years. For the first time in
several years, the Corporation has sufficient revenue-generating assets that
will make the Corporation cash-flow positive from operations. In addition, we
have attracted many new opportunities, some of which should provide the
Corporation with excellent future growth prospects.
The three key objectives of the Restructuring to be met so that the
Corporation becomes cash-flow positive and profitable have not changed. They
2. Maximize net cash generated from existing assets, and;
3. Increase the size and quality of the Corporation's asset base via
exploration, development and acquisitions.
We have made significant progress towards meeting these objectives. New
capital has been raised, with which we have improved production from our
Manitoba oil properties and participated in the drilling of gas wells in
Alberta. However, at both our Manitoban and Albertan properties we are three
months behind schedule in bringing greater revenues online. With respect to
our Manitoba properties, the General Manager was replaced with a more
experienced operator early in January 2008. Production levels have now
increased substantially and continue to increase (see Manitoba Light Crude
Properties below). Regarding our Alberta properties, the drilling and
completion of the wells were delayed for various operational reasons. The
drilling phase is now completed, and the results have so far exceeded our
expectations (a full update on results is provided below). One well will be
brought on production prior to seasonal road bans, which normally occur
throughout the months of April and May. This is because is because field
access is required to lay gathering lines. The remaining wells are therefore
expected to be on production in July 2008.
In the months of October and December 2007, the Corporation raised a total
of $2.4 million. These funds were raised under very difficult conditions, but
represent the majority of the first phase of our recapitalization. The
Corporation will make efforts to raise additional funds from equity investors
to fund further exploration, development, acquisitions and to pay down debt to
continue the clean-up of the Corporation's balance sheet (some of this
development is discussed below).
Alberta Gas Well Results
As previously announced, the Corporation farmed-in for a 20% interest of a
well at Abee, and for a 25% interest in wells located at Bolloque, French and
two wells at Thorhild. All wells are located in the Radway area, approximately
The well at French was not deemed to have sufficient gas to be completed. The
results of the remaining four wells have, on average, exceeded our
Abee: The well was completed in the McMurray and the Glauconite zones. The
tie-in for the well is now complete and the well will go on production March
28, 2008. The expected comingled production from this well, based on
flow-testing, is approximately 600 mcf per day initial gross production.
Bolloque: The well was perforated in the Wabumum zone. The tested flow
rate from the Wabumum was 120 mcf per day. The partners are evaluating tie-in
costs to attempt to obtain economic production.
Thorhild 1: This well was perforated in the Lower McMurray, and had an
encouraging show of gas. The partners are planning to stimulate the formation.
The Second White Specs also shows good potential, and the partners may
perforate and stimulate this formation too. Comingled production from both
zones is expected to be economic.
Thorhild 2: The well was perforated and completed in the Wabumum zones.
Based on flow-testing, the expected initial gross production from the Wabumum
is 700 mcf per day. The Glauconite zone also has very good potential, but will
not be completed until such time as production from the Wababum has been
Gross cumulative initial production from 2 of the 4 wells is therefore
expected to be 1,300 mcf per day. The Corporation therefore estimates that its
share of the gross revenues from these wells will be at minimum $75,000 per
month, using a constant gas price of $8.00 per mcf. With only these two wells
on production the Corporation's share of net revenues will be approximately
$27,000 per month.
The Corporation will provide an update regarding the other two wells as
more information becomes available.
With these new revenues coming online, in combination with the
Corporation's properties in Manitoba, the Corporation will be cash-flow
positive from its total operations, excluding any debt repayments.
Manitoba Light Crude Oil Properties
Production has now begun to increase substantially. The Corporation has
re-invested in its properties to increase production and made the necessary
management changes, and revenues from the Manitoba properties have increased
as a result.
As previously disclosed, production reached a historical low for the
months of October through December, averaging 21 barrels per day for the
quarter, due to both a lack of re-investment and the management practices of
previous management. Delays in improving production since the adoption of the
Restructuring Plan can be attributed mainly to personnel problems, which have
now been resolved. The following table shows the actual and forecast
improvement in production at our Manitoba Properties:
Month Total Production Bbls per Revenues
November 2007 575 19 $48,038
December 2007 572 18 $50,781
January 2008 1190 38 $106,376
February 2008 1260 43 $111,221
March 2008 (projected) 1540 50 $149,380
April 2008 (projected) 1700 57 $164,900
Revenues are projected for March and April using a constant $97.00 per
barrel. The production obtained in April is expected to stay constant until
July 2008, because the Corporation's two wells at Maples have been shut down
until the Maples battery is upgraded, which is planned for June 2008. Once the
Maples wells are brought online again, production is expected to increase
further. One well reactivation and two well workovers are also planned, which
should increase production further yet.
The Corporation has made important progress towards the establishment its
international division, with the goal to trade in large quantities of
petroleum products. If the Corporation succeeds in closing a single
transaction would have an extensive and favourable material effect on the
business of the Corporation. The Corporation is bidding on products and
engaged in negotiations for numerous allocations of petroleum products in
various countries, from various companies.
It has been a difficult yet exciting six months, and we are now half way
towards meeting the objectives of our Restructuring Plan.
Internationally, we continue to aggressively pursue our first transaction.
In Canada and the USA, we are currently evaluating or negotiating for
several different development opportunities and acquisitions. To pay for new
opportunities we plan to raise new funds, as required. As I have said before,
we are operating under the belief that new investors will invest in the
Corporation to fund these opportunities because of both the value that will be
created by the opportunities themselves, and because of the effects of
leverage when adding new cash-generating assets to a cash-flow positive
Now that we have improved the Corporation's financial position, and
improved the size and quality of its asset base, we are well positioned for
the growth we aspire to.
I trust that your patience will be rewarded.
Michael McLellan, B. Comm, CFA
President and Chief Executive Officer
Rolland Energy Inc.
ABOUT ROLLAND ENERGY INC. - www.rollandenergy.com
Rolland Energy is a public energy company focused on developing oil and
gas properties in Western Canada, building shareholder value through growth
from low-risk drilling and strategic acquisitions.
Forward looking statements:
Statements included herein, including those that express management's
expectations or estimates of our future performance, constitute
"forward-looking statements" within the meaning of applicable securities laws.
Forward-looking statements are based on assumptions and estimates that are
subject to various risks and uncertainties including but not limited to the
risks disclosed under the heading "Business Risks" in the Corporation's
periodic filings with Canadian securities regulators, including most recently
in its Management Discussion and Analysis for the period ended June 30, 2007.
Such information contained herein represents management's best judgment as of
the date hereof based on information currently available. The Company does not
assume the obligation to update any forward-looking statements.
"The TSX Venture Exchange has not reviewed this release and therefore
does not accept responsibility for its adequacy or accuracy."
For further information:
For further information: Michael McLellan, (514) 333-9292