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Pearl Announces Financial Results for Period Ended December 31, 2007
FEB 28, 2008 – 21:09 ET
CALGARY, ALBERTA–(Feb. 28, 2008) – Pearl Exploration and Production Ltd. (“Pearl” or the “Company”) (TSX VENTURE:PXX)(FIRST NORTH:PXXS) is pleased to announce the results of the fifteen months ended December 31, 2007 and twelve months ended September 30, 2006. An updated investors’ presentation is available on Pearl’s website at www.pearleandp.com.
Quarterly Results (Amounts in Canadian Dollars unless otherwise indicated)
The effective date of this report is February 27, 2008. Additional information relating to the Company is available on SEDAR at www.sedar.com and on the Company’s web-site.Message from the President
To our shareholders,
Unlocking the value of heavy oil is what Pearl is all about – since the day of inception. Heavy oil will be playing an ever increasing role in world oil consumption as new sources of light crude become more and more elusive. Global energy demand will persistently push the limits of available supply. Diminishing availability of conventional oil and high prices will drive improved technology, refining capacity and infrastructure to recover and process heavy oil.
Recognizing this as a largely overlooked opportunity, Pearl has been on a mission to accumulate heavy oil assets and has built a portfolio of quality projects. The emphasis is on large resource upside potential while achieving a balance of low-risk development. The focus is in North America where much of the world’s quality heavy oil resources lay and offer the most value due to proximity to markets. The untapped potential in North America is huge and Pearl is positioning itself to take full advantage.
Over the course of 2007, Pearl added substantially to its production and resource/reserve base through six corporate and land acquisitions and a major development drilling program – accomplishments we are very proud of.
Much of the operations were focused on development drilling to raise production levels to the 2007 guidance range of 12,000 to 14,000 Boepd. Our year end exit rate came in at the low end of the range at 12,100 boepd yet represents a 55% increase over year end 2006 exit rate. In total the Company drilled 170 wells in 2007 throughout its properties utilizing as many as 5 rigs at a time.
As a result of these efforts, our Proved Reserves increased by 90%, our Probable Reserves by 89% and our Possible Reserves by over 500%. The quadrupling of our combined total Proved plus Probable plus Possible Reserves from 50.7 to 194.9 MMboe illustrates the value and quality of the assets acquired and developed during the year.
Other activities during the year focused on converting our large-scale resources into reserves through steam and other enhanced oil recovery techniques and this work will continue with much greater emphasis in 2008. Contingent resources today stand at over 326 MMboe with oil in place numbers internally estimated at 5 – 8 billion barrels.
The Company has set a capital budget of $61 million for 2008 with the majority of it allocated to resource conversion programs, including continued work on steam pilots at the San Miguel project in Texas, the Onion Lake project in Saskatchewan and the Blackrod project in the Athabasca region of northern Alberta, all of which offer great upside potential.
Pearl will also be initiating studies to examine options for upgrading and/or refining technologies on its core properties to increase per barrel netback economics. In addition, in order to dedicate more capital and intellectual resources to core properties, the Company will investigate the rationalization of certain non-core assets located in Saskatchewan and Southern Alberta.
As a predominately heavy oil producer, the Company’s realized oil price is exposed to significant fluctuations resulting from the market volatility of the light-to-heavy price differential. Although, West Texas Intermediate pricing is at historic highs, the light-to-heavy differential varies widely from month to month and can result in significant revenue swings. During the fourth quarter of 2007, the Company’s realized well head pricing ranged from the low $50/bbl range in November to the low $30/bbl range in December. This negatively impacted revenue in the fourth quarter. For the first quarter of 2008, the light-to-heavy differential has narrowed considerably and the Company is expecting to realize well head pricing for the quarter to average in the low to mid $50/bbl range.
The year 2007 was a busy, productive year for the Company. The management team was greatly strengthened by the appointment of Randy Neely as CFO and Dean Tucker as VP Canadian Business Unit as well as the addition of several other key members of the team. As well, our shareholder base was broadened through the listing of its shares on the First North Exchange in Stockholm.
In the months to come, the Company will continue to strengthen and focus on adding value. Pearl has recognized the enormous potential in heavy oil and will continue to aggressively grow and upgrade its heavy oil resources creating a unique, innovative and highly attractive niche for itself in the oil and gas sector. Investment in heavy oil stands to reap extraordinary rewards and the Company intends to be front and center.
I would like to very much thank our shareholders for their continued support through the market turbulence of 2007 and look forward to a successful 2008 and beyond as we follow our mission of unlocking the value of heavy oil.
On Behalf of the Board
Keith Hill, President and CEO
>>VISIT HERE to view full press release.
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