PEARL CLOSES ACQUISITION OF
HEAVY OIL RESOURCES
FROM PETROHUNTER ENERGY
CALGARY, ALBERTA - Pearl
Exploration and Production Ltd. ("Pearl" or the "Company")
(TSX Venture: PXX and First North: PXXS) is pleased to report that it has
closed the previously announced (October 1, 2007) acquisition of PetroHunter Energy Corporation’s heavy oil assets
located in Montana and Utah. The assets acquired include a 100% working
interest in several large resource heavy oil development projects referred to
as Fiddler Creek, Promised Land, West Rozel
and Gunnison Wedge. Closing on a total of an additional approximately
4,836 net acres (“Additional Acres”, representing approximately 22%
of the net acres comprising the Fiddler Creek properties) has been deferred
until certain third party owners have agreed to terms acceptable to Pearl for the acquisition
of leases covering such portion of the Fiddler Creek properties.
The assets were acquired for a
purchase price of a maximum of US $30 million, payable as follows: (a) US $7.5
million in cash at closing; (b) an aggregate of up to 2,500,000 common shares
of Pearl (with a deemed value for purposes of this transaction of US$4 per
share), of which 592,822 shares are being held in escrow pending further
post-closing title due diligence and of which 960,025 will be issued if and
when the follow-on closing is held on the Additional Acres, and (c) US $12.5
million (reduced to US$9,757,070.91 until the follow-on closing has occurred on
the Additional Acres) in cash at such time as either: (i) production from the assets reaches 5,000 bopd; or (ii) proven reserves from the assets is greater
than 50 million barrels of oil as certified by a third party reserve auditor
acceptable to Pearl. In addition, Pearl
reimbursed PetroHunter at closing for a total of
approximately US$458,000 in expenses incurred on the properties since October
1, 2007.
Pearl is also pleased to
announce that drilling has commenced on the Fiddler Creek Project. The Beartooth Federal 43-33 well, was spud on October 27, 2007
at the Fiddler Creek Field in Stillwater
County, Montana and
will be drilled to a total depth of approximately 2,830 feet. The main purpose
of this well is to test the southwestern portion of the field to validate
reservoir continuity and for potential reserve addition. Additional
drilling is planned in 2008 to not only delineate the structure but also to
commence commercial production.
Pearl President and CEO Keith Hill commented “We are very pleased to
have closed this transaction which will add another focus area for us in terms
of resources, reserves and production. The well currently drilling will
be the first step to realizing the value of this large scale heavy oil
project. Additional evaluation projects for the Promised Land prospect are
in Montana and the West Rozel
Field in Utah
are currently under study.”
Reserves have been prepared by
DeGolyer and MacNaughton
Canada Limited ("D&M") in a reserves report for the period ended September
30, 2007 in accordance with National Instrument 51-101 Standards of Disclosure
for Oil and Gas Activities, and are summarized as follows.
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September 30, 2006
(MMbo)
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Net Present Value @ 10%
(M$)
|
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Proved
|
1.8
|
5,727
|
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Probable
|
6.7
|
40,726
|
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Total Proved
and Probable
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8.5
|
46,453
|
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Possible
|
12.6
|
94,370
|
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Total Proved, Provable and Possible
|
21.1
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140,823
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Proved Reserves are those reserves that can be estimated with a high
degree of certainty to be recoverable. It is likely that the actual remaining
quantities recovered will exceed the estimated proved reserves.
Probable reserves are those additional reserves that are less certain to
be recovered than proven reserves. It is equally likely that the actual
remaining quantities recovered will be greater or less than the sum of the
proven plus probable reserves.
Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves. There is only a 10-per-cent probability
that the quantities actually recovered will equal or exceed the sum of the
proven plus probable plus possible reserves.
Pearl Exploration and
Production Ltd. is a public company focused on delivering disciplined growth by
establishing a North American portfolio of heavy oil projects with an emphasis
on large resource opportunities. Additional information on Pearl is available on the
Company’s website at www.pearleandp.com.
For further
information, please contact:
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Keith Hill - President and
Chief Executive Officer
Tel.:
(604) 689-7842
E-mail:
khill@namdo.com
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Randy Neely – Chief
Financial Officer
Tel: (403) 716-4054
E-mail: randy.neely@pxx.ca
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Sophia Shane – Corporate
Development
Tel:
(604) 806-3575
E-mail:
sophias@namdo.com
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All references in this release
to boe's are based on a 6 to 1 conversion ratio. Boe's may be misleading, particularly if used in isolation.
A boe conversion of 6 Mcf:1 bbl is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.
Pearl’s Certified
Advisor on First North is E.
�hman J:or Fondkommission AB.
Forward-looking statements: This
document contains statements about expected or anticipated future events and
financial results that are forward-looking in nature and as a result, are
subject to certain risks and uncertainties, such as general economic, market
and business conditions, the regulatory process and actions, technical issues,
new legislation, competitive and general economic factors and conditions, the
uncertainties resulting from potential delays or changes in plans, the occurrence
of unexpected events, and the Company’s capability to execute and
implement its future plans. Actual results may differ materially from
those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning
of the Private Securities Legislation Reform Act of 1995.
The TSX Venture Exchange has
not reviewed and does not accept responsibility for the adequacy or accuracy of
this release.
