Nexstar Energy Ltd.
TSX VENTURE : NXE.A
TSX VENTURE : NXE.B

Nexstar Energy Ltd.

January 15, 2007 09:00 ET

Nexstar Energy Establishes Initial Production, Provides Operational Update and Announces $9.5 Million Capital Budget

CALGARY, ALBERTA--(CCNMatthews - Jan. 15, 2007) - Nexstar Energy Ltd. (TSX VENTURE:NXE.A) (TSX VENTURE:NXE.B) ("Nexstar Energy" or the "Company") is pleased to announce the preliminary results of its recently commenced exploration program. Since the Company's Class A and Class B shares started trading on the TSX Venture Exchange on August 23, 2006, the Company has re-worked a 100% working interest natural gas well in Pembina, Alberta, resulting in the Company's first production, and drilled and cased two (0.92 net) wells in Bigoray, Alberta.

PEMBINA AREA, ALBERTA

Initial Production Established

In November 2006, Nexstar Energy reworked a suspended well at 4-19 and placed the well on production. Since November 25, 2006, this natural gas and condensate well has produced at an average rate of approximately 100 barrels of oil equivalent per day ("BOEPD"). The Company had previously acquired a 100% working interest in the 4-19 well, associated pipeline and lands for identified natural gas potential in the currently producing deeper zone and a shallower untested zone.

3-D Seismic Completed - Drilling Locations Selected

Also in November 2006, Nexstar Energy and its joint venture partner completed the field data acquisition of a nine square mile 3-D seismic program over Company-owned lands and third party lands held under a recently negotiated seismic option. This 3-D seismic program was primarily undertaken to explore for the untested shallow zone potential indicated in the 4-19 well. Interpretation of this new seismic data has identified several drilling locations on Company and option lands. Nexstar Energy has surveyed the first location and expects to begin drilling operations on the first well in February, 2007. This drilling location is in close proximity to an underutilized pipeline. The Company expects to participate in the well for at least a 60% working interest.

BIGORAY AREA, ALBERTA

Two Exploration Wells Cased - Completions Underway

In November and December 2006, the Company drilled and cased wells for natural gas potential at 3-22 (41% working interest) and 6-25 (51% working interest). Completion operations are underway on both wells with test results anticipated later in January. Both wells were drilled as farm-in commitments, resulting in the Company earning an interest in four sections of farm-in lands per well, subject to the payment of a non-convertible gross-overriding royalty to the farmor.

Undeveloped Lands Acquired

Nexstar Energy was successful at the December 13, 2006 and January 10, 2007 Alberta Crown land sales, resulting in the acquisition of 1,440 gross acres (928 net acres) of prospective lands at Bigoray. In addition, at a recent public asset auction the Company acquired a 35% working interest in two sections (1,280 gross acres, 269 net acres), including a suspended natural gas well with re-completion potential. The Company's undeveloped land position now includes 8,800 gross acres (4,233 net acres).

SWAN HILLS AREA, ALBERTA

During 2006, the Company and its joint venture partner, a senior producer, committed to an airborne survey over the Swan Hills area of north central Alberta. This region includes some of the largest oil fields in Alberta where production from deeper Devonian formations is well established. This high-impact prospecting program has now been completed and numerous anomalies have been identified. The Company and its joint venture partner are reviewing the data resulting from the airborne survey and expect to evaluate some of these anomalies and potential prospects with conventional seismic surveys and drilling later this year.

CAPITAL EXPENDITURE PLANS

Nexstar Energy's Board of Directors has approved capital expenditures of up to $9.5 million for currently identified projects. Approximately $6.9 million of this capital is allocated to drilling, completion and equipping, with a further $2.5 million for land, seismic and airborne surveys. In addition to the two (0.92 net) exploratory Bigoray wells recently drilled, Nexstar Energy plans to drill up to five gross wells prior to the 2007 spring break up. With a strong balance sheet and no debt, Nexstar Energy expects to fund these capital expenditures internally.

In the current industry environment, the Company continues to review new drilling and acquisition opportunities that either add to its existing core areas or create a new core area.

ABOUT NEXSTAR ENERGY

Nexstar Energy is an emerging junior oil and gas company focused on drilling multi-zone crude oil and natural gas prospects in west central Alberta, complemented by strategic acquisitions.

ADVISORY: Certain information regarding the Company including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environment risks, competition from other producers and ability to assess sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. The reader is cautioned that the use of the terms BOE ("barrel of oil equivalent") and BOEPD ("barrel of oil equivalent per day") may be misleading particularly when used in isolation. A BOE conversion of 6 mcf to 1 BOE may not represent a value equivalency at the wellhead.

9,200,000 Class A Shares

1,080,000 Class B Shares




The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Nexstar Energy Ltd.
    Peter A. Carwardine
    President and CEO
    (403) 263-6133 Ext: 201
    (403) 263-3629 (FAX)
    or
    Nexstar Energy Ltd.
    Brian J. Spilchen
    VP Finance and CFO
    (403) 263-6133 Ext: 202
    (403) 263-3629 (FAX)
    or
    Nexstar Energy Ltd.
    603 - 7 Avenue SW, Suite 525
    Calgary, Alberta T2P 2T5
    (403) 263-6133
    (403) 263-3629 (FAX)
    Email: info@nexstar-energy.com
    Website: www.nexstar-energy.com