Bronco Energy Ltd.
TSX : BCF

Bronco Energy Ltd.

December 21, 2009 14:24 ET

Bronco Identifies Reserve Adjustment for East Wabasca Block

CALGARY, ALBERTA--(Marketwire - Dec. 21, 2009) -

THIS PRESS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH US NEWSWIRE SERVICES

Bronco Energy Ltd. ("Bronco" or the "Company") (TSX:BCF) announces that well performance and viscosity measurements indicate that some areas of the Company's East Wabasca Block ("East Block") are not suitable for secondary recovery investments.

Water and polymer floods have been used in secondary recovery programs in areas which are in close proximity to the East Block. Until now, it was believed that the fluid properties of the East Block were comparable to adjacent projects. As indicated in Bronco's third quarter 2009 press release, the Company retained a qualified consulting team to make an objective evaluation of the reservoir and development to-date. As a result, it has now been determined that the viscosity (i.e. the measure of the resistance of a fluid to flow) of oil in at least some areas is too high for water and polymer flood programs to be commercial.

The Company's December 31, 2009 reserves will reflect a negative adjustment. The extent of the adjustment cannot be determined at this time however it will impact probable and possible reserves and is expected to be significant. Although not anticipated, the worst case could eliminate all of the possible reserves and a majority of the probable reserves. Prior to completing the 2009 year end reserves evaluation, Bronco will perform extensive testing to identify where water and polymer flood programs may be effective.

The Company's proved reserves and expected 2010 cash flow will not be negatively impacted by water and polymer flood assumptions. Bronco had not made specific plans to initiate secondary recovery in the East Block as the Company believes it is premature to commit capital to water or polymer flooding until the primary recovery issues are better understood.

The evaluation of the East Block's primary recovery issues are continuing. As noted in the Company's third quarter 2009 press release, Bronco's focus for future growth is the West Wabasca Block where the drilling of up to six stratigraphic wells is under consideration. In light of this new information, the Company will evaluate its next steps prior to finalizing the West Block plans. 

This press release is not an offer to sell securities in the United States. Securities may not be offered or sold in the United States in the absence of registration or an exemption from registration.

Forward-Looking Statements

Certain statements contained in this news release concerning our well performance, productive capacity of wells, anticipated or expected production rates; the performance characteristics of our oil and natural reserves, including the prospects for application of water or polymer flood to our reserves; the timing and results of our testing for suitability of water and polymer flooding; and the extent of the adjustment to our reserves constitute forward-looking statements. Statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment that, based on certain estimates and assumptions, the resources and reserves described can be profitably produced in the future. Although we believe that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

In making the forward-looking statements, we have made assumptions regarding, among other things: the future performance of our wells; future oil and natural gas production levels from our current and new wells; our ability to maintain or increase our credit facility and our ability to obtain financing on acceptable terms as required.

Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking statements include, but are not limited to: geological, technical, drilling and processing problems and other difficulties in producing reserves; unanticipated operating events or performance; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; geological, technical, drilling, processing and transportation problems; and the other factors described in our public filings including our Annual Information Form dated March 30, 2009 and our management discussion and analysis of financial conditions for the year ended December 31, 2008, available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this document are expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking statements to conform such statement to actual results or to changes in our expectations except as otherwise required by applicable securities legislation.

Contact Information

  • Bronco Energy Ltd.
    Peter J. Pelensky
    President and CEO
    (403) 699-8383
    (403) 693-0038 (FAX)
    or
    Bronco Energy Ltd.
    Paul E. Belliveau
    VP Finance and CFO
    (403) 699-8383
    (403) 693-0038 (FAX)
    www.broncoenergy.ca