Petro-Reef Resources Ltd.
TSX-V: PER
May 27, 2008
Record
Revenue, Cash Flow and Production for Petro-Reef Resources Ltd.
�
CALGARY,
ALEBRTA -- Petro-Reef Resources Ltd. ("Petro-Reef") is pleased to
announce record financial and operating results for the three month period
ended March 31, 2008.
Three months Ended March
31������������������ 2008������� 2007����
% Change
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Gross Revenue������������������������� $ 5,580,839� $2,542,748������� 119.5%
Cash Flow From
Operations������������� $ 3,169,617� $1,567,436������� 102.2%
CFPS ($ / Share)���������������������� $����� 0.09�
$���� 0.05�������� 80.0%
Net Income���������������������������� $�� 652,575�
$� 444,680�������� 46.8%
Capital Expenditures������������������ $13,618,242� $2,427,755������� 460.9%
�
�
Production����������������������������������� 2008������� 2007����
% Change
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Crude oil and NGL (bbls/d)�������������������� 117��������� 25������� 369.2%
Natural Gas (Mcf/d)������������������������� 6,430������ 3,415�������� 88.3%
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Total Production
(boe/d)�������������������� 1,189�������� 594������� 100.1%
Petro-Reef's gross revenue increased 119.5% to
$5,580,839 as a result of higher production volumes. Cash flow from operations
was up 102.2% to $3,169,617 generating a cash flow per share of $0.09, 80.0%
higher than the previous year. Earnings increased by 46.8% to $652,575.
Petro-Reef's capital expenditures were 460.9% higher as a result of the
approximately $10,400,000 acquisition of a working interest partner which
closed during the quarter.
Production increased 100.1% to 1,189 boe/d with crude
oil and NGL production increasing 369.2% to 117 bbls/d. A combination of
drilling activity and the acquisition of a working interest partner in
Petro-Reef's core area of Alexander resulted in the record quarterly
production. During the quarter, Petro-Reef tied-in a new oil well located at
7-1. The well tested at over 700 bbls/d of crude oil and will initially be
produced at approximately 150 boe/d upon the installation of a pump.
During the quarter, Petro-Reef announced the acquisition
of a working interest partner in Alexander for approximately $10,400,000 with
an effective date of January 1, 2008. The acquisition included approximately
400 boe/d of production, a 10% working interest in the Petro-Reef operated
Alexander gas plant, a 50% working interest in the Alexander oil battery and
interests in several key sections of undeveloped land in Alexander.
Operations
Update
Petro-Reef has an active capital program scheduled for
the next several months combining low risk development drilling / work-overs
with high impact exploration drilling. Petro-Reef is currently completing a six
well work-over / recompletion program, focusing on optimization from wells
requiring a small capital investment to commence production. Petro-Reef is
currently completing a work-over on its 13-06 well as work was required to
stabilize production and eliminate lower zone water production. The work-over
was successful and production has stabilized, with pressures increasing and
water volumes continuing to fall. As a result of lower production from the
13-06 well, current production is estimated at 1,200 - 1,250 boe/d. Production
is expected to increase to 1,350 - 1,400 boe/d upon the completion of the
installation of a pump at the 7-1 oil well which is expected to occur by the
end of the month.
Petro-Reef has made considerable progress with respect
to obtaining regulatory approvals on key wells and development programs. Petro-Reef
has received regulatory approval for the drilling of up to 8 wells on
Petro-Reef's key development oil section after a six month application process.
As a result of the approval, Petro-Reef intends to drill up to four wells
targeting oil in addition to the four oil wells currently drilled in the area
in the coming months.
Petro-Reef had identified two high impact natural gas
drilling opportunities in Alexander and is proceeding to obtain regulatory
approvals. Approvals
were delayed as a result of land owner concerns, which required Petro-Reef to
attend arbitration hearings to assist in the resolution of outstanding issues.
Petro-Reef completed the arbitration hearings and has reached a resolution with
concerned land owners. With a resolution now achieved, Petro-Reef intends to
apply for drilling licenses for both wells. Petro-Reef expects to receive
regulatory approvals for and commence drilling of the two natural gas locations
in July.
Petro-Reef
announces that the Board of Directors granted stock options to an officer of
the Corporation to purchase up to 150,000 common shares under its Incentive
Stock Option Plan. The exercise price is $1.45, which was the closing price of
Petro-Reef's shares on May 26, 2008. The stock options will vest over one year
and expire five years from the date of grant.
Forward-Looking
Statements: All statements, other than
statements of historical fact, set forth in this news release, including
without limitation, assumptions and statements regarding reservoirs, resources
and reserves, future production rates, exploration and development results,
financial results, and future plans, operations and objectives of the
Corporation are forward-looking statements that involve substantial known and
unknown risks and uncertainties. Some of these risks and uncertainties are
beyond management's control, including but not limited to, the impact of
general economic conditions, industry conditions, fluctuation of commodity
prices, fluctuation of foreign exchange rates, environmental risks, industry
competition, availability of qualified personnel and management, availability of
materials, equipment and third party services, stock market volatility, timely
and cost effective access to sufficient capital from internal and external
sources. The reader is cautioned that assumptions used in the preparation of
such information, although considered reasonable by the Corporation at the time
of preparation, may prove to be incorrect. There can be no assurance that such
statements will prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements.
Reference is made to barrels of oil
equivalent (boe). Barrels of oil equivalent may be misleading, particularly if
used in isolation. In accordance with National Instrument 51-101, a boe
conversion ratio for natural gas of 6 Mcf: 1 bbl has been used, which is based
on an energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
The TSX Venture Exchange has not
reviewed and does not accept responsibility for the adequacy or accuracy of
this release.
CONTACT INFORMATION:
Petro-Reef
Resources Ltd.
Joseph
Werner
President
and CEO
(403)
265-6444
Fax: (403)
264-1348
or
Petro-Reef
Resources Ltd.
John
Pantazopoulos
Vice-President
Finance and CFO
(403)
265-6444
Fax: (403)
264-1348
or
Petro-Reef Resources Ltd.
970, 10655
Southport Road S.W.
Calgary,
Alberta T2W 4Y1
Email: info@petro-reef.ca
Website: www.petro-reef.ca
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