Pilot Energy Ltd.

Pilot Energy Ltd.

January 05, 2005 16:25 ET

Pilot Energy Ltd. Announces Property Acquisition and Closing of Flow-Through Issue and Subordinated Debenture


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: PILOT ENERGY LTD.

TSX VENTURE SYMBOL: PGY

JANUARY 5, 2005 - 16:25 ET

Pilot Energy Ltd. Announces Property Acquisition and
Closing of Flow-Through Issue and Subordinated
Debenture

CALGARY, ALBERTA--(CCNMatthews - Jan. 5, 2005) - Pilot Energy Ltd. (TSX
VENTURE:PGY) ("Pilot") is pleased to announce that it has completed the
acquisition of approximately 190 barrels per day of oil production in
the Chauvin area of Alberta for cash consideration of $4.5 million. The
effective date of the transaction is January 1, 2005 and closing took
place on January 5, 2005.

The acquisition is characterized by the following attributes:

- operated (100 percent) working interest property;

- current production of 190 barrels of oil per day of medium gravity oil
with opportunities to complete uphole gas zones in existing wellbores
for additional production;

- reserves of 350,000 barrels of oil equivalent ("boe") proven and
530,000 boe proven plus probable (prepared by management), not including
uphole gas;

- reserve life index of 7.6 years, proven plus probable;

- reserve cost of $8.51 per barrel, proven plus probable;

- production acquisition cost of $23,700 per barrel (based on 190 boe
per day).

The acquisition will be accretive to Pilot on a reserve, production and
cash flow per share basis and help to provide a stable platform of
longer life assets which will further grow the Company. Pilot will file
a business acquisition report in respect to the Chauvin area acquisition
on SEDAR within 75 days in accordance to applicable securities
regulation. Current production in Pilot, including this acquisition, is
approximately 550 boe per day.

Pilot also announces that it has closed the recently announced private
placement of 625,000 flow-through common shares issued at $0.90 per
share for gross proceeds of $562,500. The shares are subject to a hold
period and may not be traded until May 1, 2005, except as permitted by
applicable securities legislation and the rules of the TSX Venture
Exchange. Insiders of Pilot subscribed for less than 10 percent of the
flow-through private placement. After the closing of this issue Pilot
has 15,472,546 common shares issued and outstanding.

In addition, Pilot has closed the previously announced $1,000,000 eleven
percent subordinated debenture. Insiders or parties related to insiders
of Pilot subscribed for $750,000 of the debenture.

Pilot is a Canadian junior energy company engaged in the exploration and
development of oil and natural gas in Alberta and Saskatchewan.

Issued and Outstanding Common Shares: 15,472,546

This news release may contain forward-looking information. Actual future
results may differ materially from those contemplated.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Pilot Energy Ltd.
    Todd Lemieux
    President
    (403) 514-8115 ext. 226
    or
    Pilot Energy Ltd.
    Scott Ratushny
    Director
    (403) 514-8115 ext. 223
    or
    Pilot Energy Ltd.
    Ken Frankiw
    Director
    (403) 514-8115 ext. 224
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.