Doral Energy Corp.
OTC Bulletin Board : DRLY

Doral Energy Corp.

September 28, 2009 15:38 ET

Doral Energy Announces Permian Basin Operational Update

MIDLAND, TEXAS--(Marketwire - Sept. 28, 2009) - Doral Energy Corp. (OTCBB:DRLY) today announced updates on the Company's recent operations on two projects currently underway on its oil and gas properties in Eddy County, New Mexico: recompletion of Doral's Federal S No. 7 well as a Grayburg/San Andres completion; and improvement of waterflood operations in the West Artesia Grayburg Unit.

Recompletion of the Federal S No. 7 Well

Doral Energy has undertaken operations on its Federal S No. 7 well (formerly known as the Mustang 28 Federal No. 1 drilled by Anadarko Petroleum in 2001) to recomplete it as a Grayburg/San Andres oil producer. Doral Energy has lease rights to a depth of 4,000' on the 240-acre Federal S Lease located approximately 0.5 mile south of Loco Hills, NM. An offset well on the lease, the Federal S No. 6, (located 2,800' south of the Federal S No. 7) has produced over 143 MBO (thousand barrels of oil) from the Grayburg Formation. If successful, Doral Energy expects the Federal S No. 7 well to produce in the range of 35-50 BOPD (barrels oil per day) and 25-35 MCFD (thousand cubic feet of gas per day), increasing Doral Energy's total daily oil production from its Hanson Energy properties by approximately 30%.

To date, the Company has successfully re-entered the well and set two (2) cast iron bridge plugs to abandon the Paddock completion tested by the previous operator. Doral has also run casing inspection and cement bond logs to confirm the operational integrity of the wellbore for recompletion and production. A set of modern cased-hole logs has also been run over the interval from 1,500'-4,000', and the Company's engineers and geologists are evaluating these logs to select perforation intervals for testing and completion in the Grayburg/San Andres formations. Doral plans to perforate and test the well next week, properly stimulate the well as required, and begin production.

When asked to comment on the work to-date, Patrick Seale, Doral Energy's President and Chief Operating Officer, stated, "We have been very encouraged by what we have seen so far in these recompletion operations. We have experienced some delays due to scheduling and bringing in equipment, but we have taken the steps necessary to properly evaluate the well and ensure that the formation intervals selected will be the best for optimizing oil and gas production rates from the Grayburg/San Andres formations. We will keep our shareholders informed when more information is available."

West Artesia Grayburg Unit

The West Artesia Grayburg Unit ("WAGU") is a 640-acre waterflood unit in Eddy County, NM, owned and operated by Doral Energy, which currently has 16 producing wells and 7 water injection wells. The WAGU is surrounded by 5 adjacent Doral Energy leases containing 240 acres and 9 producing wells, bringing the WAGU area totals to 880 acres containing 25 producing wells and 7 water injection wells. The performance of waterflood and production operations on the WAGU have been below optimum for the last several years, primarily due to the lack of water injection volumes and downhole pump performance. Doral is currently working to improve and expand WAGU waterflood operations initially focusing on improving conformance of existing injectors and producers. Doral Energy has recently completed a preliminary report from a continuing geological study of the WAGU area being conducted by the Company's geologists and engineers.

Based on the study results to-date, Doral Energy recently added 130' of perforations (260 shots) over the unitized Grayburg interval in the WAGU #4 WIW, a water injection well in the WAGU. Prior to this operation, a water injectivity test on the WAGU #4 failed to inject any water into the Grayburg formation at 600 psig surface injection pressure. After perforating, the well was acidized with 2,000 gallons of 20% HCl acid, using 2,000 pounds of rock salt during the acid job for diversion. After the acid job, a water injectivity test on the WAGU #4 WIW resulted in a water injection rate of 6 BPM (barrels per minute) at 2,000 psig surface injection pressure, or an equivalent daily water injection rate of 8,640 barrels of water per day.

Doral Energy has also entered into a contract with an offset operator to supply produced water to Doral for injection into the WAGU waterflood, with a contract fee per barrel payable to Doral. The offset operator is currently delivering 400 barrels of water per day to the WAGU, expandable to Doral's ability to handle injection into the WAGU injection wells. Doral plans to continue working on the WAGU injection wells to increase water injection capabilities while optimizing producing wells in order to increase WAGU oil production and ultimate recovery.

Commenting on the results of the WAGU #4 work, Marty Bloodworth, Doral Energy's Vice President of Operations stated, "We were very pleased with the increased water injectivity of the WAGU #4 after adding the additional perforations over the Grayburg formation. This confirmed our belief that the Grayburg sands were capable of taking significantly higher water injection volumes than the injection wells were demonstrating. These higher injection volumes in conjunction with the larger water volumes now available to us under our new contract should allow Doral to improve the conformance of the WAGU waterflood and increase oil production."

About Doral Energy Corp.

Doral Energy Corp. (OTCBB:DRLY) is an oil and gas exploitation and production company headquartered in Midland, Texas. Doral Energy Corp.'s strategy is to grow a portfolio of under-developed production and exploitation assets with the potential for generating near-term increases in existing production through operational improvements, and longer-term development of proved undeveloped reserves by infill drilling. Doral focuses on identifying acquisitions that generate immediate cash flow from production, but which also have strong proved developed non-producing and proved undeveloped reserves that can be tapped for significant growth. The prolific Permian Basin of Texas and New Mexico is a geographic region of particular interest for the Company's future acquisition activity. Doral's first producing assets, the Hanson Properties in Eddy County, New Mexico, located in the northwestern Permian Basin of New Mexico, are currently producing 155 BOEPD and have an estimated 4.48 million BOE of total proved reserves based on 3rd party engineering evaluations.

Shareholders and investors are encouraged to visit Doral Energy's website at www.DoralEnergy.com for more information.

Forward Looking Statements

This news release contains forward-looking statements that are not historical facts and are subject to risks and uncertainties. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined, and assumptions of management. Forward looking statements are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "aims", "potential", "goal", "objective", "prospective", and similar expressions or that events or conditions "will", "would", "may", "can", "could" or "should" occur. Information concerning oil or natural gas reserve estimates may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. In particular, there is no assurance that Doral will be able to re-finance its current credit facility or acquire any future properties.

Actual results may differ materially from those currently anticipated due to a number of factors beyond the reasonable control of the Company. It is important to note that actual outcomes and the Company's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include misinterpretation of data, inaccurate estimates of oil and natural gas reserves, the uncertainty of the requirements demanded by environmental agencies, the Company's ability to raise financing for operations, breach by parties with whom the Company has contracted, inability to maintain qualified employees or consultants because of compensation or other issues, competition for equipment, inability to obtain drilling permits, potential delays or obstacles in drilling operations and interpreting data, the likelihood that no commercial quantities of oil or gas are found or recoverable, and our ability to participate in the exploration of, and successful completion of development programs on all aforementioned prospects and leases. In addition, although the scheduled effective date of the stock split is September 14, 2009, the Board of Directors reserves the right to delay the effective date or terminate the stock split at its descretion. Additional information on risks for the Company can be found in the Company's filings with the US Securities and Exchange Commission.

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