Alexander Energy Ltd.

October 23, 2012 08:30 ET

Alexander Energy Ltd. Announces Bank Renewal and 2013 Guidance

CALGARY, ALBERTA--(Marketwire - Oct. 23, 2012) - Alexander Energy Ltd. (TSX VENTURE:ALX), ("Alexander" or the "Company") announces that it has received approval from its Bank for a Revolving Operating Demand loan of $12 million and a Development Demand loan of $3.5 million. Also, the Bank has approved a $1.1 million drawdown on the Development Demand loan to drill, complete, tie-in and equip the 15-12-56-27W4 well which is expected to spud before October 31, 2012.

During the coming year Alexander intends to proceed on our Organic Growth model. In this scenario the Company will finance its activities from cash flow, which is currently running in the $375,000 per month range. This model predicts 2013 exit production of over 800 BOE per day, including 650 Bbls/d of oil (up 35% over current oil production). 2013 cash flow is forecast to increase to approximately $8 million and our debt is reduced to the below $10 million. The capital budget of $6.1 million involves the drilling of several wells and allows a $2.1 million contingency for dry holes and work over expenses.

After considering all the factors the Company has decided to proceed with the following activities:

  • Work to create comfort and confidence amongst the shareholders and stakeholders by increasing communications and demonstrating the value of the Alexander property.
  • Reduce G&A expenses, operating costs, and Board and legal costs.
  • Access the Development Line and drill the 15-12 well as soon as possible.
  • Work to identify and appoint a CEO for Alexander in the near future.
  • Continue with the waterflood modeling and application to the ERCB, and work to have our allowable oil production levels continue in the 125 Bbls/d range for each well.

The Company is continually reviewing progress and opportunities and will adjust strategies and plans as conditions dictate. The Company will ensure shareholders are kept informed. A letter from the Chairman and a PowerPoint presentation outlining these activities are available on the Company's website.

Forward-Looking Statements: All statements, other than statements of historical fact, set forth in this news release, including without limitation, assumptions and statements regarding reservoirs, resources and reserves, future production rates, exploration and development results, financial results, and future plans, operations and objectives of the Corporation are forward-looking statements that involve substantial known and unknown risks and uncertainties. Some of these risks and uncertainties are beyond management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, environmental risks, industry competition, availability of qualified personnel and management, availability of materials, equipment and third party services, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Corporation at the time of preparation, may prove to be incorrect. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Reference is made to barrels of oil equivalent (BOE). Barrels of oil equivalent may be misleading, particularly if used in isolation. In accordance with National Instrument 51-101, a BOE conversion ratio for natural gas of 6 Mcf: 1 bbl has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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