Bear Ridge Resources Ltd.
TSX : BER

Bear Ridge Resources Ltd.

November 06, 2006 09:30 ET

Bear Ridge Announces Significant New Pool Gas Discovery at Tupper BC

CALGARY, ALBERTA--(CCNMatthews - Nov. 6, 2006) - Bear Ridge Resources Ltd. (TSX:BER) is pleased to announce a significant new pool gas discovery at Tupper in Northeast BC. In addition, the Company provides market guidance and reports preliminary highlights of third quarter financial and operating results.

Tupper BC New Pool Gas Discovery

Bear Ridge is pleased to report successful drilling results on its high impact, 3D-driven Tupper natural gas project. Initial drilling and 3D seismic results indicate a Montney gas pool with a potential 800 bcf of Original Gas In Place on Bear Ridge's land block.

Bear Ridge's Tupper property is located 20 kilometers south of the town of Dawson and in close proximity to significant Montney gas pools at Dawson and Swan in Northeast BC. Over the past year Bear Ridge shot a 120 square kilometer 3D seismic program to evaluate a large track of open crown lands and purchased an additional 20 square kilometers of 3D seismic to template the offsetting Swan Montney gas pool.

The Company has assembled a large contiguous land block at Tupper covering approximately 80 square kilometers. Bear Ridge posted and purchased a 100 percent interest in 28 sections (17,920 net acres) of new Crown leases in Q1 2006 and earned a 55 percent interest in 3 sections (1,096 net acres) in Q3 2006.

Bear Ridge's 3D seismic interpretation indicates an expansive Montney accumulation covering approximately 50 square kilometers within the Company's Tupper land block. Bear Ridge has drilled two successful 2,800 meter Montney test wells to date at locations of c-56-A and c-86-A and is currently drilling its third Montney test at a-51-B. Initial drilling results are consistent with our 3D seismic interpretation of the Montney pool.

The c-56-A well reached total depth in mid August, 2006. Bear Ridge earned a 55 percent interest in the c-56-A well and three contiguous sections of land by drilling this well. The well encountered over 40 meters of Montney gas pay, based on log analysis, with porosity ranging from 5 to 10 percent. Due to the wells' proximity to a nearby school, completion operations were restricted to a single frac and a limited duration test period. A 100 ton poly CO2 frac was successfully placed in the Lower Montney and the well flowed up casing at restricted rates of 1 to 2 mmcf/d during a partial cleanup period of approximately 18 hours. Operations were suspended prior to full recovery of frac fluids and solids and prior to reaching a stabilized gas rate. Additional evaluation of the Lower Montney and fracture stimulation of the Upper Montney in c-56-A is planned for the summer of 2007.

The Company's second Tupper well, c-86-A, reached total depth in mid-October. Bear Ridge owns a 100 percent interest in this well. The c-86-A well encountered over 40 meters of Montney gas pay, based on log analysis, with porosity ranging from 5 to 10 percent. Two poly CO2 fracs totaling 150 tons were placed in the separate Lower Montney intervals. The well flow tested at rates exceeding 3mmcf/d from the lower Montney. An 80 ton poly CO2 frac is planned for mid November, 2006 to stimulate the Upper Montney in the c-86-A well. Following completion of the Upper Montney a commingled flow test of the Lower and Upper Montney zones will be conducted.

Bear Ridge is currently drilling its third Montney delineation well at a location of a-51-B. The Company owns 100 percent interest in this well, which is expected to reach total depth in mid November, 2006.

The Montney gas reservoir in the Tupper, Swan and Dawson pools is a sandy siltstone encased within a large shale package. All three Montney pools are over pressured and there is no indication of water in any of the three pools. Our initial two wells in the Tupper pool, c-56-A and c-86-A, are both over pressured at approximately 13 kpa per meter which will contribute to higher Original Gas In Place and ultimate recoveries.

The Company estimates Original Gas In Place ("OGIP") of approximately 10 bcf per quarter section (40 bcf per section) in each of the c-56-A and c-86-A wells. Based on 3D seismic over the Tupper and Swan pools and results from our initial 2 delineation wells, the Montney appears to extend over a 50 square kilometer area covering over 20 sections of Bear Ridge's 31 section land block. The Company estimates OGIP of 800 bcf on Bear Ridge lands. Further delineation of the pool will allow the Company to provide an estimate of potential recoverable reserves.

Bear Ridge plans to drill 6-8 vertical delineation wells and 2-4 horizontal development wells at Tupper in 2007. The Company's 2007 capital program at Tupper could range between $30 and $50 million. Full development of the Montney Tupper pool as currently mapped will likely require 2-3 years of continuous drilling.

In addition to significant Montney gas potential, the Tupper property also holds considerable multi-zone potential. The Halfway, Paddy and Dunvegan are all productive offsetting our Tupper block. Numerous Halfway, Paddy and Dunvegan prospects have been identified on 3D seismic and all three zones have already been encountered in our c-56-A and c-86-A wells. Our planned Montney delineation program will help evaluate the aerial extent of a number of these shallower zones and Bear Ridge is planning a second phase of drilling to capture this multi-zone uphole potential.

Pipeline routing and production facility alternatives are currently being assessed and initial Tupper production is forecast for October, 2007. The Tupper area is mixed agricultural and forested land and is accessible on a year-round basis. Bear Ridge held its second open house with area residents in late October, 2007 to discuss our upcoming drilling and pipeline operations with community residents. The Company is currently in the process of securing surface access for its 2007 Tupper drilling program and pipeline right of ways to egress the Tupper area.

Bear Ridge has identified the significant value and future upside potential of the Tupper project and has made the strategic decision to maintain a 100 percent interest in the project. Total seismic and land costs at Tupper are approximately $14 million to date. By year end 2006 Bear Ridge will have drilled and completed 3 Montney delineation wells at Tupper at an estimated cost of approximately $11 million, bringing the Company's total Tupper investment to approximately $25 million.

As a result of maintaining the significant upside of this investment for shareholders at a 100% working interest, Bear Ridge has carried a higher than budgeted level of debt to finance the project. As at September 30, 2006 Bear Ridge had drawn $83 million on its credit facilities and had a working capital deficiency of approximately $20 million.

Bear Ridge has moved forward with a number of initiatives to initially finance the expanded Tupper capital program and current debt levels, including:

- A new $30 million non - revolving loan facility was put in place in September, 2006 to help fund the initial Tupper development phase. Coupled with the Company's existing $80 million credit facility, Bear Ridge has increased available lines to $110 million.

- The Company is currently reviewing property disposition alternatives and has identified certain non-strategic properties that it may monetize.

- The Company reduced its 2006 drilling program from 78 (46 net) wells to 74 (40 net) wells.

- Bear Ridge has employed an active hedging program and currently has 10,000 GJ per day hedged for the November-March winter period and 9,000 GJ per day hedged for the April-October summer period.

Revised Guidance

Third quarter production averaged approximately 3,300 boe per day. During August the Company was unable to rectify a mechanical failure that occurred early in July at the 15-6 Mica well. This event prevented the Company from restoring 500 boe per day from this well to reach expected production rates in late August of 4,500 boe per day. The 15-6 well was re-drilled in the quarter and returned to production at a rate of 500 boe per day in early October, leaving the Company without production from this well for the entire third quarter. Several other factors impacted the Company's production during the quarter, the most significant of which were TCPL pipeline shut downs and unplanned third party plant outages during September which reduced production by over 1,000 boe per day for a portion of the month and MRL restrictions placed on production in the Cecil area which reduced production by an additional 500 boe per day.

Production for the week ended November 3, 2006 averaged approximately 4,100 boe per day with an additional 900 boe per day behind pipe and 500 boe per day shut in due to MRL restrictions at Cecil. Of the 900 boe per day of behind pipe volumes, 550 is expected to be on production prior to year end with the remainder coming on at various times during 2007. MRL restricted production of 500 boe per day at Cecil is not expected to be back on production until the second quarter of 2007.

Bear Ridge is now expecting to exit 2006 at a production rate of 4,500 boe per day. The exit target has been reduced from previous guidance due to the 500 boe per day MRL restriction at Cecil, delays in bringing on approximately 300 boe per day of behind pipe volumes, capital being redirected to the Company's drilling program at Tupper and inflationary pressures on capital costs increasing overall capital expenditures compared to budget.

Total net capital expenditures for 2006 are expected to reach $97 million as the result of $18 million in expenditures at Tupper above budgeted amounts and additional expenditures due to inflationary pressures on other drilling projects. As a result of the incremental costs Bear Ridge is reducing the number of net wells in its 2006 drilling program from 46 to 40 wells. The effect of drilling 6 fewer net wells impacts exit guidance by approximately 600 boe per day. Performance of certain wells drilled in 2006 accounts for an additional reduction of 400 boe per day from budgeted rates.

Preliminary Q3 2006 Financial and Operating Results

- Bear Ridge drilled 15(9.0 net) wells with a 78 percent success rate.

-- At Eaglesham in the Peace River Arch, the Company drilled 4 (0.96 net) successful oil and gas wells all targeting high impact Wabamun features defined by 3D seismic.

-- Other Peace River Arch drilling activity amounted to 5 (3.75 net) wells resulting in 1 oil well, 2 gas wells and 2 unsuccessful wells

-- In NEBC Bear Ridge drilled 3 (2.18 net) gas wells with a 100 percent success rate.

-- In West Central Alberta 3 (2.13 net) gas wells were drilled with a 100 percent success rate.

- The Company purchased 3,385 net acres of undeveloped land during the quarter, increasing total undeveloped lands to 129,445 net acres. Land costs during the quarter amounted to $1.2 million. Subsequent to the quarter Bear Ridge purchased 6,733 net undeveloped acres in one of its key 3D driven exploration projects at a cost of approximately $500,000, increasing the Company's undeveloped land holdings to 136,178 net acres.

- Production for the third quarter averaged approximately 3,300 boe/d, up 9 percent from the prior quarter and 300 percent from Q3 2005.

- Current production is approximately 4,100 boe/d with an additional 900 boe/d of behind pipe volumes and 500 boe/d of shut in volumes at Cecil due to MRL restrictions.

- Revenue for the quarter is approximately $14 million, which is relatively flat compared to the prior quarter as increased volumes were offset by lower commodity prices.

- Cash flow for the quarter is approximately $5.0 million or $0.10 per share.

- Operating costs increased to approximately $12.50 per boe due to short term water handling costs, a number of one-time repair and maintenance costs and higher gas processing charges.

- Capital expended during the quarter was approximately $29 million. This was approximately $7 million above budgeted amounts due to higher working interest participation at Tupper, unexpected third party supplemental costs, higher drilling and completion expenditures and increased facility and infrastructure construction costs.

- Credit facilities were increased to $110 million with the addition of a new $30 million non-revolving loan facility.

- At September 30, the Company had drawn $83 million its credit facilities and had a working capital deficiency of approximately $20 million.

Summary

Bear Ridge executes a drillbit growth strategy focused on large scale 3D seismic projects in the Peace River Arch and Northeast BC. The Company has assembled over 1,300 square kilometers of 3D seismic in these regions and has built solid core operating positions with considerable drilling upside at Earring, Josephine, Eaglesham and Clear Hills in the Peace River Arch region. The Tupper project in Northeast BC is the Company's largest 3D-driven exploration project to date and has the potential to significantly transform Bear Ridge's production and reserve base.

A new presentation on the Tupper natural gas project is available on the Company's website at www.bearridgeresources.com.

ADDITIONAL INFORMATION

Additional information regarding Bear Ridge and its business and operations, including the annual information form for Bear Ridge Resources Ltd. for the period ended December 31, 2005, is available on Bear Ridge's website www.bearridgeresources.com and Bear Ridge's SEDAR profile at www.sedar.com

Forward Looking Statements - Certain information regarding Bear Ridge Resources Ltd. set forth in this document, including management's assessment of Bear Ridge Resources Ltd.'s future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Bear Ridge Resources Ltd.'s control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, current fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Bear Ridge Resources Ltd.'s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance 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 that Bear Ridge Resources Ltd. will derive there from.

Contact Information

  • Bear Ridge Resources Ltd.
    Russell J. Tripp
    Chief Executive Officer
    (403) 537-8440
    or
    Bear Ridge Resources Ltd.
    Douglas C. Hibbs
    President
    (403) 537-8440
    or
    Bear Ridge Resources Ltd.
    Brian A. Baker
    Chief Financial Officer
    (403) 537-8440
    (403) 537-8450 (FAX)
    or
    Bear Ridge Resources Ltd.
    2200, 330 - 5 Avenue SW,
    Calgary, Alberta, T2P 0L4