Pearl Exploration and Production Ltd.
TSX VENTURE : PXX

Pearl Exploration and Production Ltd.

October 19, 2007 12:21 ET

Pearl Closes Acquisition of Watch Resources

CALGARY, ALBERTA--(Marketwire - Oct. 19, 2007) - Pearl Exploration and Production Ltd. ("Pearl") (TSX VENTURE:PXX)(FIRST NORTH:PXXS) is pleased to report that it has completed the previously announced (August 2, 2007) acquisition of all of the issued and outstanding shares of Watch Resources Ltd. ("Watch") pursuant to a court approved plan of arrangement involving Pearl, Watch and the shareholders of Watch (the "Arrangement").

Pursuant to the terms of the Arrangement, Watch shareholders received 0.23 of a common share of Pearl for each common share of Watch held. In connection with the Arrangement, 10,542,927 common shares of Pearl have been issued to former Watch shareholders. The Arrangement was approved by Watch shareholders by a vote of 19,030,262 shares, representing 97.3% of the votes cast, at a special meeting of the Watch shareholder held on October 18, 2007. In addition, the Arrangement has received court approval and all requisite regulatory and other approvals. Following the completion of the Arrangement, Pearl has 187,407,624 shares outstanding, of which former Watch shareholders hold 5.62%.

The key producing asset acquired through the transaction is the Fishing Lake conventional heavy oil field in north-central Alberta. This field is located near Pearl's Onion Lake field and the acquisition of this field is anticipated to provide synergies with Pearl's Onion Lake operations while contributing to Pearl's goal of building a solid base of recoverable resources to provide low risk production and cash flow.

The Fishing Lake property represents a significant heavy oil resource for Pearl and offers additional potential with the use of enhanced oil recovery techniques. The field comprises compact geology with stacked reservoir sands over a contiguous 7 1/2 section land base.

The Fishing Lake field is early in its development with current net production of approximately 400 boepd, and Watch had internally estimated a 2007 exit rate for the field of 700 to 750 boepd with the continuation of an ongoing capital program. Further development drilling in 2008 and beyond provides the potential for significant production upside.

Pearl is a public company focused on delivering disciplined growth by establishing a North American portfolio of oil and gas projects with an emphasis on large resource opportunities. Additional information on Pearl is available on its website at www.pearleandp.com.

Pearl's Certified Advisor on First North is E. Ohman J:or Fondkommission AB.

All references in this release to boe's are based on a 6 to 1 conversion ratio. Boe's may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company's capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

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

Contact Information

  • Pearl Exploration and Production Ltd.
    Keith Hill
    President and Chief Executive Officer
    (604) 689-7842
    Email: khill@namdo.com
    or
    Pearl Exploration and Production Ltd.
    Randy Neely
    Chief Financial Officer
    (403) 716-4054
    Email: randy.neely@pxx.ca
    or
    Pearl Exploration and Production Ltd.
    Sophia Shane
    Corporate Development
    (604) 806-3575
    Email: sophias@namdo.com
    Website: www.pearleandp.com