Rock Energy Inc.
TSX : RE

Rock Energy Inc.

January 22, 2007 19:12 ET

Rock Energy Reports Operational Results for 2006

CALGARY, ALBERTA--(CCNMatthews - Jan. 22, 2007) - Rock Energy Inc. (TSX:RE) - During 2006 Rock participated in the drilling of 33 wells (28.2 net) with an overall success rate of 96%. During the fourth quarter of 2006 the Company produced approximately 2,000 boe per day and is currently producing in excess of 2,200 boe per day (field estimates). These production rates are in line with the company's guidance for the period, and represent 24% growth from Q3/06. Rock has an additional 300 boe per day of production in the Musreau area awaiting a gas plant expansion scheduled to be completed by the fourth quarter of 2007. The table below illustrates the specific drilling results for the year.



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1st 2nd 3rd 4th
2006 Quarter Quarter Quarter Quarter 2006
Drilling 2006 2006 2006 2006 Total
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Heavy oil wells 7 2 8 8 25
(7.0 net) (2.0 net) (8.0 net) (8.0 net) (25.0 net)
Light oil wells 2 Nil Nil Nil 2
(0.7 net) (0.7 net)
Gas wells 1 Nil 3 Nil 4
(0.1 net) (1.3 net) (1.4 net)
Dry and Nil Nil 1 1 2
abandoned wells (1.0 net) (0.1 net) (1.1 net)
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Total wells 10 2 12 9 33
(7.8 net) (2.0 net) (10.3 net) (8.1 net) (28.2 net)
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Success Rate
(net) 100% 100% 90% 99% 96%
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In addition to the drilling activities, Rock participated in 9 (6.1 net) re-completions during the year. Management estimates that total capital spending during 2006 is approximately $33 million (excluding the effect of the property sales). Fourth quarter spending amounted to $6.5 million as Rock accelerated approximately $2.0 million of 2007 capital spending into December 2006 to take advantage of operational efficiencies by drilling four additional heavy oil wells.

Rock's Board of Directors has approved an initial capital budget of $22 million for 2007 (of which $2.0 million was spent in December of 2006). During the remainder of the year the company expects to drill approximately 25 (16.5 net) wells and increase our production to exit the year at 2,600-2,800 boe per day (20-25% growth) without any contribution from our exploration projects. This capital program is expected to be funded with our cash flow and debt facility.

During the first quarter of 2007 Rock expects to participate in the drilling of 3-5 heavy oil wells in the Plains core area, 3-4 gas wells in the West Central region, and a light oil re-completion in the Medicine River area.

2006 has proved to be a very pivotal year for Rock Energy as we:

- Consolidated our asset base into two core areas and increased our working interest and operatorship;

- Strengthened our balance sheet through the sale process in July;

- Increased our production rate from 1,400 boe per day in July (post disposition) to a current rate exceeding 2,200 boe per day;

- Demonstrated the capability of our drilling program by adding over 2 million boe of proven plus probable reserves (management estimate as of Oct 1, 2006);

- Increased our net asset value per share by over 10% to $ 4.25 (management estimate at Oct 1, 2006), and;

- Built a strong inventory of drilling prospects for our future (80 drilling locations).

2007 will be a significant year for Rock as we move forward with a solid balance sheet and a foundation of production and cash flow. We have an exciting inventory of drilling opportunities including operated gas exploration prospects in the greater Kaybob area, and a high impact gas target at Kakwa that will be tested in the first quarter. The current market environment is providing some challenges and opportunities for our industry; however we believe Rock is positioned to take advantage of this situation and pursue acquisitions that will complement our operations and provide growth for our shareholders.

Advisory

This press release contains forward-looking statements that involve known and unknown risks, uncertainties, assumptions and other factors, some of which are beyond Rock's control, that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Rock believes that the expectations reflected in those forward-looking statements are reasonable at the time made but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in, or incorporated by reference into, this press release should not be unduly relied upon. These statements speak only as of the date of such information, as the case may be, and may be superseded by subsequent events. Rock does not intend, and does not assume any obligation, to update these forward-looking statements.

This press release contains references to barrels of oil equivalent (boe), boes maybe misleading, particularly if used in isolation. A boe conversion of 6 mcf to 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information

  • Rock Energy Inc.
    Allen Bey
    President & CEO
    (403) 218-4380
    or
    Rock Energy Inc.
    Peter D. Scott
    Vice President, Finance & CFO
    (403) 218-4380
    Website: www.rockenergy.ca