Bronco Resumes Horizontal Drilling; Additional Resources Disclosure Provided
CALGARY, ALBERTA–(April 20, 2007) – Bronco Energy Ltd. (TSX VENTURE:BCF) (“Bronco”) is pleased to report that it has obtained all necessary approvals from Indian Oil and Gas Canada (“IOGC”) and Bigstone Cree Nation (“BCN”) to resume its drilling operations on the BCN lands. Bronco has commenced drilling operations on the 06-31-79-22W4 pad located on the east block of BCN Reserve 166 at Wabasca, Alberta and plans on drilling 6 horizontal production oil wells from this pad from present through spring break-up. Bronco also has IOGC and BCN approvals for the drilling of additional horizontal wells from an existing pad at 12-01-80-23W4, also located on the east block of BCN Reserve 166. Additional applications are in various stages of process. Post break-up, Bronco plans to move Bronco Drilling Services Ltd. Rig #1 to Wabiskaw to further support the drilling program. The Bronco rig is a new telescopic double drilling rig, which is presently in the final stages of construction by Extreme Energy Group in Central Alberta.
Bronco also announces that it has engaged GRB Engineering for the design and construction of its planned oil processing battery. The battery will be used for separating oil, gas and water and will include water disposal facilities. With the positive results of the new Middle Wabiskaw zone identified on recent stratigraphic well tests, Bronco has decided to increase the size of its planned battery to handle approximately 40,000 barrels of fluid per day (the original design called for 25,000 barrels of fluid per day). Request for quotations have been submitted to fabricators for major pieces of equipment and long lead items. Application for power to the new battery has also been submitted.Bronco also wishes to announce the hiring and appointment of two new senior technical managers. Mr. Daniel McKain has been appointed to the position of Drilling and Completions Manager. Mr. McKain has over 15 years of drilling and completions experience in Canada and abroad, the past four years of which he managed horizontal drilling and completion operations for a major oil and gas company in the Pelican Lake Wabiskaw field immediately offsetting the BCN lands. Mr. Stephen Terry, P.Eng. has been appointed as Bronco’s Production Engineering Manager and will be responsible for downhole optimization, facilities construction and field operations. Mr. Terry has over twenty years of industry experience in positions of increasing responsibility, the past three years of which he was responsible for production engineering, including secondary recovery, for a major oil and gas company operating in the Pelican Lake Wabiskaw field proximal to Bronco’s operations.
“The appointment of these two individuals, who have direct experience with the Pelican Lake Wabiskaw reservoir, will add significant value to the company and will allow Bronco to accelerate its aggressive exploitation plans. Their specific expertise compliments that of the current management team and we thank Mr. Terry and Mr. McKain for joining us”, said James Esposito, Executive Vice President and Chief Operating Officer of Bronco.
Bronco is pleased to provide additional detail regarding the contingent resources disclosure in Bronco’s press release of April 16, 2007. “Contingent resources” are defined as quantities of oil and gas estimated on a given date to be potentially recoverable from known accumulations. The contingent resources for the Grand Rapids are currently not economic using primary recovery methods, however Bronco is gathering technical data from recent test wells to support a Steam Assisted Gravity Drainage (“SAGD”) project. Further testing and analysis may lead to positive economics and will be calculated in the future. Bronco has viewed its core samples at Hycal Energy Research Laboratories Inc., and high oil saturations of continuous bitumen sand were evident. Bronco management reaffirms the disclosure in its press release of November 21, 2006 where it was indicated that Bronco’s estimated share of contingent resources was 45.6 mmstb low case (10% recovery), 114.0 mmstb best case (25% recovery) and 182.4 mmstb high case (40% recovery).
For the Upper Wabiskaw formation at Wabasca, Alberta, Bronco also confirms that independent engineers, Paddock Lindstrom & Associates Ltd. (“PLA”) has assigned total proved plus probable reserves of 5.9 mmboe and possible reserves of 8.6 mmboe for a total of 14.5 mmboe of reserves for Bronco’s properties. These reserves are company share and after the deduction of royalties. Additional detail on Bronco’s reserves and values will be reported in its annual National Instrument 51-101 filing in the coming weeks. PLA has assigned Bronco’s share of contingent resources of 13.9 mmstb low case (5% recovery), 16.7 mmstb best case (6% recovery) and 19.5 mmstb high case (7% recovery) to the Upper Wabiskaw for primary recovery. At this time, Bronco wishes to announce previously undisclosed estimates for the Middle Wabiskaw formation. Bronco management estimates the company’s share of contingent resources at 4.2 mmstb low case (5% recovery), 5.0 mmstb best case (6% recovery) and 5.9 mmstb high case (7% recovery) for primary recovery. With additional drilling and the implementation of a successful waterflood project, contingent resources for the Upper and Middle Wabiskaw may be reclassified as reserves and the above estimated recovery rates may be increased.
Bronco Energy Ltd. trades on the TSX Venture Exchange under the symbol “BCF”.
Petroleum and natural gas volumes are converted to a common unit of measure on a basis of six thousand cubic feet (Mcf) of gas to one barrel (Bbl) of oil. Boes may be misleading, particularly if used in isolation. The foregoing conversion 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.
This news release contains forward-looking statements. Forward-looking statements such as the estimates of resources, the references to Bronco’s exploration program and drilling program and capital expenditures relating to, and timing of, such programs are based on the opinions and estimates at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. There are uncertainties inherent in forward-looking information, including factors beyond Bronco’s control, and no assurance can be given that the programs will be completed on time, on budget or at all. In addition, there are numerous uncertainties inherent in estimating resources, including many factors beyond Bronco’s control, and no assurance can be given that the recovery thereof will be realized. The contingent resources estimate for the lands described in this news release may not reflect the same confidence level as estimates of contingent resources for all of Bronco’s lands, due to the effects of aggregation. Bronco undertakes no obligation to update forward-looking information if circumstances or management’s estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Bronco Energy Ltd.
President and Chief Executive Officer
(403) 693-0038 (FAX)
Bronco Energy Ltd.
Chief Financial Officer
(403) 693-0038 (FAX)
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