Sierra Vista Energy Ltd.
TSX VENTURE : SVR.A
TSX VENTURE : SVR.B

Sierra Vista Energy Ltd.

January 17, 2007 10:36 ET

Sierra Vista Achieves 2006 Exit Target and Provides Operations Update

CALGARY, ALBERTA--(CCNMatthews - Jan. 17, 2007) -

NOT FOR DISTRIBUTION IN THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Sierra Vista Energy Ltd. (TSX VENTURE:SVR.A) (TSX VENTURE:SVR.B) ("Sierra Vista" or the "Company") announces that it has met its 2006 guidance by exiting with a production rate of 505 boepd, which represents a 206% increase over the 2005 exit rate of 165 boepd. The Company has approximately 275 boepd of shut-in/behind pipe volumes. Sierra Vista has completed the 5 well, Q4 2006, winter drilling program and successfully cased all 5 wells.

With the successful completion of the Company's 2005 flow-through capital program, Sierra Vista is now able to focus on the development of its core property of Ante Creek. The 5 wells drilled and cased for the Q4 2006 program were all located in Ante Creek. In keeping with our commitment to Ante Creek, the Company directed the majority of the funds raised during our November, 2006 financing towards this property. A portion of these funds were directed to the 100% owned and operated Kaybob compression facility which is now operational.

During November, 2006 the Company successfully drilled and cased the last 2006 commitment well (100% BPO and 60% APO) on the South Ante Creek lands. This exploration well was drilled and cased to the base of the Montney formation. This well earned Sierra Vista a 60% working interest in 2 sections of land with an option to drill one more well to earn a similar interest in a 3rd section of land. This is the second successful Sierra Vista operated exploration well that the Company has drilled on the South Ante Creek lands.

The remaining 4 wells of this Q4/06 program were all part of the multi-well ARC Ante Creek farm-in program. The Company has now met its initial obligation which was to drill 3 wells by December 31, 2006. Two of these 3 wells are currently producing and were in fact on production within 35 days of spudding the wells. The production profile of these new wells is consistent with previous wells completed in the Ante Creek, Montney zone.

The third and fourth wells of this ARC program were the Company's first attempt at multi-well drilling from pads. The 1st well was drilled vertically while the second well on the pad was drilled directionally. The drill and case cost of the second pad well has come in at approximately 20% less than the first well. Both wells will be completed during the next 10 days and by sharing the equipping and tie-in costs should be on production by February 1, 2007.

With the completion of the first 4 ARC wells, the Company has now earned a 65% working interest in 3 1/4 sections of land in the heart of the North Ante Creek lands. Sierra Vista has the potential to drill up to 20 locations on 80 acre spacing and 40 wells on 40 acre spacing on these earned lands. The Company is obligated to drill one more earning well before April 30, 2007 and then an additional 4 wells by December 31, 2007. Upon completion of the 9 well earning program the Company then has the option to drill 3 additional wells to earn the balance of the 16 1/2 sections of land available under the agreement. The Company could be drilling straight up, non promoted, development wells on the earned ARC lands by the end of 2007 or earlier.

At the Company's first South Ante Creek exploration well, the current light oil producing zone will be suspended during Q1 of 2007 in order to complete and evaluate a potentially new uphole, light sweet, oil zone. With success the two zones would be commingled. This has the potential to open up a significant new light oil play uphole of the Montney zone in these southern lands.

In addition to expanding our Ante Creek land position through the ARC drilling program, Sierra Vista has acquired five sections of 100% Sierra Vista land at recent Crown land sales. The Company now has access to 18,152 net acres of undeveloped land in the Ante Creek area.

As a result of our success to date in the South Ante Creek lands, the Company has applied for and received approval to construct a new oil and gas facility to handle production volumes from these lands. Discussions with other industry operators in the area are proceeding and the Company is targeting Q4 2007 to begin construction. Both the timing and scope of this project could be altered significantly depending on the results of wells currently being drilled in the area.

At Kaybob, the Company's 100% owned and operated compression facility was started up at the end of November 2006. The Company's 75% working interest Montney well is currently producing to this facility at average rates of 1.0 mmcfd. The second Kaybob well, which is 100% Sierra Vista, will be cleaned out and placed on test towards the end of January, 2007.

The Company's shut-in Bigstone gas well is anticipated to be on production by the end of March 2007 and will add approximately 90 boepd net to Sierra Vista. Prior to January 31, 2007 the Company is committed to spud a 40% working interest BPO and 24% APO well on an adjacent section. This well will either be tied in to the currently shut-in well, or brought south to an alternate tie-in point should the Talisman Bigstone facility not start accepting third party gas as anticipated.

After its first full year of operations, including the drilling of 14 successful wells on the Ante Creek property, the Company continues to see very positive results from the Montney zone and other uphole new pool discoveries. Sierra Vista continues to show growth in its production, reserve and land base at its core property of Ante Creek. With the completion of the ARC earning program during 2007, the Company will be well positioned to begin drilling non-promoted development wells on its 18,152 acres of undeveloped land.

Sierra Vista is a junior oil and gas company engaged in the exploration for, and development and production of, crude oil and natural gas focusing in the Peace River Arch and South Central regions of Alberta. The Corporation's shares trade on the TSX Venture Exchange under the symbols "SVR.A" and "SVR.B".

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

Some of the statements contained herein including, without limitation, financial and business prospects, financial outlooks, and production forecasts may be forward-looking statements which reflect management's expectations regarding future plans and intentions, growth, results of operations, performance and business prospects and opportunities. In particular, this news release contains forward-looking statements pertaining to the quality of reserves, oil and natural gas production levels, capital expenditure programs, projections of market prices and costs, supply and demand for oil and natural gas; and expectations regarding the Company's ability to raise capital and to continually add to reserves through acquisitions and development.

In addition, this news release contains forward-looking information pertaining to the following: estimated 2006 exit rate production and production capacity, estimated production from recently tied in wells, estimated capital expenditures, timing of completions and commencement of production, number and timing of drilling of potential drilling locations and the timing of construction of facilities. There is no assurance that the Company will commence or complete the operations as set out in this release.

The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth above and elsewhere in this news release including volatility in market prices for oil and natural gas, liabilities and risks inherent in oil and natural gas operations, uncertainties associated with estimating reserves, competition for, among other things, capital, acquisitions or reserves, undeveloped lands and skilled personnel, geological, technical, drilling and processing problems.

Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", continue" and similar expressions have been used to identify these forward-looking statements. These statements reflect management's current expectations and are based on uncertainties. Although the forward-looking statements contained within this news release are based upon what management believes to be reasonable assumptions, management cannot assure that actual results will be consistent with these forward-looking statements. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no obligation to update or revise them to reflect new events or circumstances unless required under securities laws.

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

Contact Information

  • Sierra Vista Energy Ltd.
    Mr. Mark Malouin
    President & CEO
    (403) 265-9393 ext 201
    (403) 265-9224 (FAX)
    or
    Sierra Vista Energy Ltd.
    Mr. Bruce Stewart
    Chief Financial Officer
    (403) 265-9393 ext 205
    (403) 265-9224 (FAX)
    or
    Sierra Vista Energy Ltd.
    Suite 850, 101 - 6th Avenue SW
    Calgary, Alberta T2P 3P4
    Website: www.sierravista.ca