Redcliffe Exploration Inc.

Redcliffe Exploration Inc.

November 29, 2007 09:30 ET

Redcliffe Announces Third Quarter 2007 Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 29, 2007) -


Redcliffe Exploration Inc. ("Redcliffe" or the "Company") (TSX VENTURE:RXI.A)(TSX VENTURE:RXI.B) is pleased to announce its financial results as of September 30, 2007. The Company has filed its interim consolidated financial statements for the three and nine months ended September 30, 2007, and the accompanying Management's Discussion and Analysis with Canadian securities regulatory authorities. These filings are available for review at

Third Quarter 2007 Highlights:

- The Company produced an average of 451 boe/d (80% natural gas) for the three months ended September 30, 2007. At September 30, 2007, approximately 550 boe/d of behind-pipe production was awaiting tie-in from 5 wells. As a result of recent tie-in activity, Redcliffe's current production is approximately 720 boe/d, with the remaining behind-pipe production from 5 wells of approximately 250 boe/d scheduled to be brought on production over the next two months.

- The Company acquired an operated producing gas property in the Crystal area of Pembina for approximately $1.4 million. The property includes two wells (one producing approximately 275 mcf/d and one non-producing), production facilities, a sales pipeline, and 4.5 sections of 100% working interest land. The Company also drilled 2 (0.75 net) wells in the quarter, which resulted in 2 (0.75 net) gas wells. Of particular significance, the Company made a discovery on its Wapiti exploratory well (37.5% W.I.) in the Peace River Arch, which has been placed on production in early November at an initial rate of 3,000 mcf/d plus an estimated 20 bbl/mmcf of liquids from two zones. Production from this well currently remains at these levels; however, sustainability of this production rate will be established with further production data. Capital expenditures totaled approximately $5.57 million for the quarter, of which $0.25 million was spent on land, G&G and seismic, $3.73 million on drilling, completion, equipping and tie-ins, $1.39 million on the Crystal property acquisition, and $0.20 million on capitalized G&A and other.

- Subsequent to September 30, 2007, the Company signed a formal agreement to acquire Redcliffe Energy Ltd. ("REL"), a related private company, in a share exchange transaction. The acquisition is subject to a number if conditions, including shareholder approvals from each of Redcliffe and REL. The meetings of the Redcliffe and REL shareholders have been set for December 18, 2007. The acquisition is expected to add current and behind-pipe production of approximately 250-300 boe/d from REL.

- Subsequent to September 30, 2007, the Company closed on approximately $5 million in gross proceeds from its previously announced non-brokered equity financing. As a result, the Company issued a total of 11,160,932 units at $0.45 per unit, each unit consisting of one Class A share of the Company and one-half share purchase warrant. Each whole share purchase warrant entitles the holder to acquire an additional Class A share at an exercise price of $0.55 for a period of twelve months following closing.

Financial Summary:

Three months ended Nine months ended
(in dollars, except as noted) September 30, 2007 September 30, 2007

Crude oil and natural gas sales 1,507,805 4,269,678
Net earnings (loss) and other
comprehensive income (loss) (1,130,493) 197,235
Net earnings (loss) per basic and
diluted Class A share (0.03) 0.01
Net debt 6,868,097 6,868,097
Total assets 39,278,399 39,278,399
Capital expenditures 5,566,518 11,233,817
Crude oil and natural gas liquids
sales ($/bbl) 49.51 47.32
Natural gas sales ($/mcf) 5.51 6.80
Average royalty rate (%) 25.7% 26.2%
Operating expenses ($/boe) 6.83 5.01
Transportation costs ($/boe) 1.22 1.55
Operating netback ($/boe) 18.97 24.56


Redcliffe continues to focus on the growth of exploration and development prospects in the Pembina and Peace River regions of Alberta. Currently, Redcliffe has a prospect inventory of over 40 wells, many of which have significant reserve potential, particularly those surrounding the significant Gold Creek and recent Wapiti discoveries.

Redcliffe has initiated its extensive Q4 drilling program, pursuant to which the Company expects to drill a minimum of 10 and up to 12 wells in the fourth quarter. During the first quarter of 2008, an additional 1-3 wells are anticipated to be drilled in these two core areas.

At Pembina, Redcliffe will operate the drilling of 4-5 wells as the first phase in its 6 well commitment within the previously announced 67 section block farm-in, offsetting successful gas wells at Crystal and our existing Pembina acreage. These wells will target multi-zone, liquids-rich gas up to 2,100 meters in depth. In addition, Redcliffe has commenced the completion and testing of 3-4 existing wells within this farm-in project. As a result of a recently acquired operating interest in a gas processing facility in the area, successful Pembina activity is expected to translate into production increases this winter. Nearby, at Medicine River, Redcliffe expects to drill one shallow gas well before year-end, following up on its successful 2007 discovery.

In the Gold Creek/Wapiti area of the Peace River Arch, Redcliffe expects to drill 5-6 wells in the fourth quarter. These high-impact wells will target multi-zone liquids-rich gas up to 2,800 meters in depth. With success, tie-in of these wells into the newly expanded gathering and processing system is anticipated to require approximately two months following completion. The Company has been delayed a few months in commencing full rate production from its existing Gold Creek 13-25 well due to delays with upgrades to a third party compression facility. Nevertheless, the Gold Creek 13-25 well is currently producing at a restricted rate and is expected to reach full rates in January 2008. Production from new Gold Creek wells is expected to commence at approximately the same time.

As a result of the significant drilling program, the Company expects to incur sufficient capital expenditures to meet its flow-through commitments for 2007. The Company also expects to complete the previously announced acquisition of REL on or around December 18, 2007, thereby resulting in a simplified corporate structure, increased efficiencies, increased production, increased working interests in most of its properties, and the reduction of certain costs.

2008 is expected to be a challenging year for Alberta gas producers, but various market and regulatory variables have created unique opportunities in our industry. Redcliffe intends to focus its attention on projects and areas with economic fundamentals that will generate superior returns in our current economic climate. We will also explore strategic acquisitions that bring quality assets into the Company. Redcliffe is confident that with a strategically focused and disciplined approach, long-term value will be created to our shareholders.

Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

BOE 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.

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

Contact Information

  • Redcliffe Exploration Inc.
    Daryl H. Connolly
    President & CEO
    (403) 539-8440
    (403) 539-8433 (FAX)
    Redcliffe Exploration Inc.
    George Gramatke
    Vice President, Finance & CFO
    (403) 539-8442
    (403) 539-8433 (FAX)