Anderson Energy Ltd.
TSX : AXL

Anderson Energy Ltd.

January 11, 2008 09:27 ET

Anderson Energy Ltd. Announces 2008 Capital Budget and 2008 Production Guidance

CALGARY, ALBERTA--(Marketwire - Jan. 11, 2008) - Anderson Energy Ltd. ("Anderson Energy" or "the Company") (TSX:AXL) is pleased to announce its 2008 capital budget and associated production guidance.

The Board of Directors has approved a capital budget of $60 million for 2008, which is essentially a "cash flow" budget. The Company expects its capital spending in 2008 could range from $60 million to $100 million depending on commodity prices. The Board of Directors has approved a capital budget at the low end of the range given the potential for weak prices for natural gas.

The current budget assumes an average wellhead natural gas price of $6.50 per Mcf for the year. The Company plans to spend $38 million in the first quarter of the year and then reassess the budget after spring break up given the outlook for natural gas prices at that time. If prices improve, the Company could prudently spend as much as $100 million in the year by pursuing a larger drilling program in the last six months of the year. In 2008, the Company will be focusing on reducing both capital and operating costs, as well as maintaining and possibly increasing its 6 to 8 year drilling inventory.

Based on a capital budget of $60 million, average 2008 production is expected to be 8,200 to 8,600 BOED. Approximately 85% of production will be from natural gas sales, 6% from crude oil sales and 9% from NGL sales. Based on the midpoint of the 2008 guidance, the Company's average production is expected to be more than 50% higher than 2007 production estimates on a per BOE basis and more than 20% higher on a per share basis.

Anderson Energy is currently planning to drill 112 gross (72 net) wells in 2008, with the Edmonton Sands project representing 85% of the net drilling program. The Company is planning to drill more than 60 gross (45 net) Edmonton Sands wells and 7 gross (5 net) Mannville gas wells in the first quarter. The Company believes it can achieve better cost and tie-in efficiencies with a large concentrated drilling program on frozen ground conditions.

In the first quarter, the Company is also kicking off two large plant construction projects in the Sylvan Lake area at Willesden Green and Wilson Creek which will have a beneficial impact on operating expenses in the second half of the year.

With the heavy spending forecast for the first quarter, the Company has made arrangements with its lenders for an additional one year supplementary credit facility of $25 million, subject to completion of customary loan and security documentation. The Company has also entered into a short term physical fixed price natural gas contract to sell 25,000 GJs per day for the months of February and March 2008 at an average AECO price of $6.89 per GJ.

The Company remains very optimistic about the long term prospects for natural gas prices.

Operational Update:

In the fourth quarter of 2007, Anderson Energy drilled 39 gross (31.7 net) wells at a success rate greater than 90%. The Company drilled 33 gross (30 net) Edmonton Sands wells in the fourth quarter. The Company utilized three drilling rigs and seven pipeline crews in the fourth quarter and tied in over 35 wells in the last six weeks of the year. The Company was successful in meeting its exit production targets.

On November 14, 2007, the Company indicated that it was planning to sell certain Eastern Alberta oil assets. The sales process did not result in a bid that met the Company's threshold value for these assets and the Company has elected to retain the assets.

We encourage anyone interested in further details on our Company to visit our website at www.andersonenergy.ca.

Advisory

Certain information regarding Anderson Energy Ltd. in this news release including management's assessment of future plans and operations, number of locations in drilling inventory and wells to be drilled, timing of drilling and tie-in of wells, productive capacity of the wells, timing of construction of facilities, expected production rates, dates of commencement of production, capital expenditures and timing thereof and extent of reserve additions, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completion and facilities costs, unexpected decline rates in wells, wells not performing as expected, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect Anderson Energy's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), at Anderson Energy's website (www.andersonenergy.ca). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Anderson Energy does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Disclosure provided herein in respect of barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 thousand cubic feet: 1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information

  • Anderson Energy Ltd.
    Brian H. Dau
    President and Chief Executive Officer
    (403) 262-6307
    (403) 261-2792 (FAX)
    Website: www.andersonenergy.ca