Upper Lake Oil and Gas Ltd. provides production guidance and announces preliminary 2008 capital budget

    CALGARY, Nov. 2 /CNW/ - Upper Lake Oil and Gas Ltd. (TSX :UP) ("Upper
Lake" or the "Company") today provided production guidance and announced that
its Board of Directors has approved a preliminary capital budget for fiscal
2008 of up to $12 million.
    Certain information included in this News Release constitutes
forward-looking information, including information concerning 2007 exit
production rate assumptions for the Company and the number of wells in which
the Company expects to participate prior to the end of 2007. Readers should
review the cautionary statement that appears at the end of this News Release.
    Prior to year end, Upper Lake expects to participate in the drilling of
four to seven wells, including a 100% working interest well in its core area
in Ferrybank, Alberta. Based on risked production adds from the wells to be
drilled, coupled with natural declines on existing production, Upper Lake
anticipates a year-end exit rate of approximately 700 to 800 barrels of oil
equivalent per day. Upper Lake is currently debt free and has a revolving
credit line of $8 million.
    The Board of Directors of Upper Lake has approved a preliminary 2008
capital program of between $9 and $12 million. The 2008 capital program
assumes the drilling of between eight (6.0 net) and 12 (9.0 net) wells and
assumes expenditures have been broken down as follows: $7.5 to $10.5 million
for drilling, completion and equipment and $1.5 million for land and seismic.
The 2008 capital budget is based on an average natural gas price of $6.50 per
gigajoule at AECO and $60 per barrel for oil and liquids. Any significant
variations from these assumed commodity prices may cause decreased or
increased activity by the Company. Although the preliminary 2008 capital
budget makes no provision for potential acquisitions, the business plan of
Upper Lake anticipates growth either through property or corporate acquisition
    Upper Lake is also pleased to announce that its board of directors has
approved the following appointments: Mr. David R. Keenan to the position of
Vice President, Engineering; Mr. David A. Cheesman to the position of Vice
President, Exploration; and Mr. Gary Taylor to the position of Controller.
Mr. Don D. Copeland, Executive Chairman, and Mr. Kelly J. Ogle, President and
CEO, welcome Messrs. Keenan, Cheesman and Taylor to the management team and
anticipate that these experienced individuals will play key roles in Upper
Lake's growth and success.
    By way of background, Upper Lake announced on October 15, 2007 that
shareholders, optionholders and warrantholders of Diamond Tree Energy Ltd.
("Diamond Tree") approved an arrangement involving Upper Lake, Diamond Tree
and Crocotta Energy Inc. ("Crocotta") at a special meeting on October 12,
2007. In connection with the arrangement, Diamond Tree shareholders received
one share of Upper Lake for each Diamond Tree share and Crocotta acquired all
of the issued and outstanding common shares of Diamond Tree in exchange for
Crocotta common shares. In connection with the arrangement, certain oil and
gas properties of Diamond Tree in central and eastern Alberta, consisting of
exploration assets, producing properties, related tangibles and undeveloped
lands, were transferred to Upper Lake. Additional information concerning the
asset transfer and the business of Upper Lake is included in the Management
Information Circular and Proxy Statement forwarded by Diamond Tree to its
securityholders in connection with the October 12, 2007 meeting of the Diamond
Tree securityholders, which has been filed under the Upper Lake profile on
SEDAR at www.sedar.com.

    Certain information set out in this News Release constitutes
forward-looking information. Forward-looking statements are often, but not
always, identified by the use of words such as "seek", "anticipate", "plan",
"continue", "estimate", "expect", "may", "will", "intend", "could", "might",
"should", "believe" and similar expressions. Forward-looking statements are
based upon the opinions and expectations of management of the Company as at
the effective date of such statements. Although the Company believes that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that those expectations will
prove to have been correct. Forward-looking statements are subject to certain
risks and uncertainties that could cause actual events or outcomes to differ
materially from those anticipated or implied by such forward-looking
statements. These factors include, but are not limited to, such things as the
volatility of prices for oil and gas and other commodities, commodity supply
and demand, fluctuations in currency and interest rates, inherent risks
associated with the exploration and development of oil and gas properties,
ultimate recoverability of reserves, timing, results and costs of exploration
and development activities, timing and costs of facilities and pipeline
construction, availability of financial resources or third-party financing,
availability of drilling and related equipment and new laws and regulations
(domestic and foreign). Accordingly, readers should not place undue reliance
upon the forward-looking statements contained in this News Release and such
forward-looking statements should not be interpreted or regarded as guarantees
of future outcomes. Forward-looking information respecting anticipated
drilling activities for the balance of 2007 is based upon the current capital
budget developed for the Company (which is subject to change), prior
exploration and development drilling activities conducted by Diamond Tree
Energy Ltd., the results of prior exploration and development drilling
activities in the Ferrybank area, the receipt of all necessary regulatory
approvals in a timely manner and industry conditions including proposed
royalty changes. Forward-looking information respecting anticipated 2007 exit
production rate assumptions is based upon current production from the
Company's oil and gas properties, anticipated exploration and development
drilling activities for the balance of 2007, historical success rates
associated with exploration and development drilling in the Ferrybank area,
management's prior experiences with the tie-in of successful wells in the
Ferrybank area, the availability of transportation and processing
infrastructure, management's evaluation of the individual wells to be drilled,
historical production rates and other data associated with prior wells drilled
in the Ferrybank area and industry conditions including proposed royalty
changes. The forward-looking statements of Upper Lake contained in this News
Release are expressly qualified, in their entirety, by this cautionary
statement. Additional information concerning the various risk factors to which
Upper Lake is exposed in the conduct of its business (and which may affect the
expectations or outcomes reflected in the forward-looking statements contained
in this News Release) are described in publicly available documents filed by
or on behalf of Upper Lake with certain securities regulatory authorities in
Canada, which are available through SEDAR at www.sedar.com, including the
September 12, 2007 Management Information Circular and Proxy Statement
prepared by Diamond Tree Energy Ltd. in connection with the special meeting of
the securityholders of Diamond Tree Energy Ltd. held on October 12, 2007.

    A barrel of oil equivalent (boe), derived by converting gas to oil in the
ratio of six thousand cubic feet of gas to one barrel of oil, may be
misleading, particularly if used in isolation. A boe conversion is based on an
energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.

For further information:

For further information: Kelly J. Ogle, President and Chief Executive
Officer, kogle@upperlake.ca; Upper Lake Oil and Gas Ltd., 1200, 111 - 5th
Avenue SW, Calgary, AB, T2P 3Y6, Phone: (403) 237-9141, Fax: (403) 237-9140,

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