Bear Ridge Resources Ltd.
TSX : BER

Bear Ridge Resources Ltd.

March 01, 2007 07:00 ET

Bear Ridge Resources Ltd. Provides 2006 Year End Reserves Summary, Tupper Operational Update, Announces $14.4 Million Private Placement Financing and Process to Explore Strategic Alternatives

CALGARY, ALBERTA--(CCNMatthews - March 1, 2007) - Bear Ridge Resources Ltd. (TSX:BER) ("Bear Ridge" or "the Company") is pleased to provide our 2006 year end reserves summary, an operational update on the Tupper gas project and announce both a $14.4 million private placement financing and a broader process to explore strategic alternatives.

2006 Year End Reserves Summary

Bear Ridge is pleased to provide a summary of its reserves evaluation as of the year ended December 31, 2006 as prepared by GLJ Petroleum Consultants ("GLJ"), the Company's independent reserves evaluator. The Company's annual audit of its financial statements is not yet complete and accordingly all financial amounts referred to in this press release are management's best estimates. Bear Ridge expects to issue its audited financial statements for 2006 in the second half of March.

In this press release "Company Interest before Royalty" is the working interest reserves plus royalty interest reserves before royalty burdens payable are deducted. Bear Ridge's reserves have been prepared in accordance with National Instrument 51-101 Standards of disclosure for Oil and Gas activities ("NI- 51-101") in Canada.

Highlights of the Reserve Report include:

- Bear Ridge added 6.9 million barrels of oil equivalent ("boe") on a proved plus probable basis and 3.6 million boe on a proved basis. After netting out production of 1.2 million boe's the Company's reserves total 10.1 million boe of proved plus probable reserves and 5.8 million boe proved reserves at year end 2006.

- Reserve assignments in the Company's Tupper gas project accounted for 4.0 million boe of total company proved plus probable reserves and 1.4 million boe of total company proved reserves.

- Proved plus probable reserves increased by 215 percent (68 percent per share) and proved reserves increased by 167 percent (43 percent per share).

- Generated a reserve replacement ratio of 4.0 times on a proven basis and 6.7 times on a proved plus probable basis.

- Finding, development and acquisition costs for 2006 on a proved plus probable basis were $23.90 per boe excluding future development costs and $28.51 per boe including future development costs.

- Finding and development costs in the Company's Tupper gas project on a proved plus probable basis were $5.62 per boe excluding future development costs and $13.62 including future development costs. Excluding 2006 land costs of $8.7 million, Tupper finding and development costs were $3.45 per boe excluding future development costs and $11.45 per boe including future development costs.

Summary of Oil and Natural Gas Reserves Company Interest before Royalty

The Company increased proved plus probable reserves by 215 percent to 10.1 million boe and proven reserves by 167 percent to 5.8 million boe. Given the need for infrastructure in the Tupper area and the number of development locations included in the 2006 year end reserve report, the report includes a significant portion of non-producing reserves. The vast majority of future drilling locations included in the report are located in the Tupper area.

The Tupper gas project accounts for 4.0 million boe of the total company proved plus probable reserves. Proved plus probable reserves were assigned at Tupper to three vertical wells drilled in 2006, eight future vertical wells and one future horizontal well. Reserves were assigned on a quarter section basis per well using recovery factors of 12 to 21 percent for vertical wells and 44 to 70 percent for the one horizontal well. Reserves have only been assigned to three of the Company's 30 net units at Tupper.

The following table summarizes year end proved and probable reserves for the Company interest using forecast prices.



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Reserves Summary December 31
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2006 2005
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Reserve Category Gas Oil Liquids Total Total
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(mmcf) (mstb) (mstb) (mboe) (mboe)
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Proved producing 14,652 411 124 2,977 1,347
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Proved developed non-producing 9,601 6 107 1,713 797
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Proved undeveloped 5,985 50 51 1,099 19
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Total proved 30,237 467 282 5,789 2,162
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Total probable 23,406 193 208 4,302 1,039
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Total proved plus probable 53,643 660 491 10,091 3,201
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(numbers may not add due to rounding)
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Reserves Reconciliation

The following table shows the working interest reserves reconciliation based on future prices and costs for Bear Ridge.



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Proved Proved plus
Probable
(mboe) (mboe)
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December 31, 2005 2,162 3,201
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Drilling 1,642 4,423
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Acquisition/ Divestitures 2,822 3,435
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Revisions 337 206
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Production (1,174) (1,174)
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December 31, 2006 5,789 10,091
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Net Present Value of Reserves

Below is a table showing the Company's net present value of reserves using forecast prices and costs. The prices used were GLJ Petroleum Consulting "GLJ" Forecast Prices as at December 31, 2006. The estimated future net revenues are presented before deducting future estimated site restoration costs, and are reduced for estimated future abandonment costs and future capital costs associated with non-producing, undeveloped and probable additional reserves.

Summary of Future Net Revenue Before Income Taxes



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$(000's) December 31, 2006 December 31, 2005
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Discounted at 0% 5% 10% 0% 5% 10%
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Total proved 126,531 96,350 78,446 72,301 62,747 56,157
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Total probable 102,271 56,806 36,702 26,718 19,387 15,122
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Total proved plus probable 228,802 153,336 115,147 98,749 82,134 71,279
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The Company's Net Asset Value ("NAV") reflects the future net revenue before income taxes adjusted for estimated land values and debt. The value of undeveloped land is determined internally at the estimated current market value. This NAV currently recognizes reserve value on only three of Bear Ridge's 30 net units at Tupper and does not include any potential value associated with a successful, large scale Tupper development or other potential going concern value. The Company's proved plus probable reserve values are impacted significantly at the 5 and 10 per cent discount rate due to the large volume of non producing reserves at Tupper that are forecast for initial production in the fourth quarter of 2007 and beyond. Additional development drilling operations in excess of the future locations recognized in the current reserve report, if successful, could have a material impact on reserves and net asset value.

Using Reserves Value at December 31, 2006 - Forecast Pricing and Costs:



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($MM except share amounts) 5% 8 % 10%
Before Before Before
Tax tax tax
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Proved plus probable reserve value $153,336 $127,918 $115,147
(includes future capital)
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Undeveloped land (1) 41,588 41,588 41,588
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Seismic (2) 4,400 4,400 4,400
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Estimated net debt (75,900) (75,900) (75,900)
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Total net assets (basic) $123,424 $98,006 $85,235
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Basic shares outstanding (000's) 55,130 55,130 55,130
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Estimated net asset value per share $2.24 $1.78 $1.55
(basic)
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In the money Option & warrant proceeds (3) $6,219 $6,219 $6,219
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Diluted shares outstanding 58,955 58,955 58,955
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Estimated net asset value per share $2.20 $1.77 $1.55
(diluted)
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1. internal estimate based on $1,000/acre for the Company's 23,257 net
undeveloped acres at Tupper and $175/acre for the remaining
104,749 net undeveloped acres
2. Internal estimate
3. based on year end share value of $3.70 per share
4. The Company has an estimated $181 million in tax pools to
apply against future taxable income.


Bear Ridge Finding, Development and Acquisition Costs (unaudited)

While overall finding and development ("F&D") costs were higher than Company expectations, the Company is very encouraged by first year F&D costs for its Tupper project. Tupper F&D costs amounted to $11.45 including future development costs ("FDC") excluding land costs and $13.62 including FDC and land costs. Bear Ridge's 2007 capital program is focused primarily on further development of the Company's Montney gas pool at Tupper.



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Capital Costs
($000's) $/boe
Proved plus Proved plus
Tupper Stand Alone Probable probable
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(unaudited)
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Exploration & Development 13,900 3.45
including capitalized G&A, without
land, without FDC
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Exploration & Development 22,627 5.62
including capitalized G&A, with land,
without FDC
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Exploration and Development 46,113 11.45
including capitalized G&A, without
land, with FDC
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Exploration & Development 54,840 13.62
including capitalized G&A, with land,
with FDC
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Total Company
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Exploration & Development 131,592 25.61
including capitalized G&A, without FDC
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Exploration & Development 168,811 33.65
including capitalized G&A, with FDC
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Total Expenditures, without FDC 192,693 23.90
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Total Expenditures, with FDC 229,912 28.51
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Tupper Operational Update

As previously announced, Bear Ridge has assembled a contiguous land block of 32 (30.1 net) units and 225 square kilometers of 3D seismic in the Tupper area of northeast British Columbia. The Company's Tupper project is situated directly offsetting the rapidly developing Swan Montney gas pool. Production in the Swan gas pool has grown from approximately 10 mmcf per day in December 2005 to in excess of 40 mmcf per day in December 2006 primarily based on production increases from the initial 10 horizontal gas wells that were drilled and brought on stream in 2006. The operator of the Swan pool has an additional 20 horizontal wells that have either been drilled or licensed to be drilled in the Swan pool and is currently constructing additional facilities and infrastructure to service the area.

Bear Ridge drilled and cased three (3.0 net) vertical Montney delineation wells at Tupper in 2006 and just cased its fourth 100 percent working interest vertical delineation well in mid February, 2007. All four wells have in excess of 30 meters of Montney gas pay and all results to date have tied directly to our 3D seismic interpretation of the Upper and Basal Montney zones.

Our initial three wells at Tupper have all been successfully completed with test rates ranging from 1.2 mmcf per day to 3.4 mmcf per day. Completion operations on the fourth well will get underway in early March 2007. Further completion operations on one of the initial three Tupper wells are planned for the summer of 2007 to coincide with the school break. Bear Ridge plans to commence drilling its fifth vertical delineation well the Tupper pool in March 2007.

Bear Ridge continues to proceed in accordance with our initial schedules for all surface acquisition and regulatory applications for the sales pipeline and production facility necessary to bring the Tupper project to commercial production. Regulatory approvals for the sales pipeline and facility are expected in the second quarter of 2006 however construction will not commence until we have an opportunity to review strategic alternatives.

First year finding and development costs for the Tupper project have been very encouraging to date at $11.45 per boe including future development costs and $13.62 per boe including initial land acquisition costs and future development costs. Our independent reserve evaluators assigned 4.0 million boe of proved and probable reserves based on successful Montney results in our initial three Tupper wells. Reserves were booked by our independent reserve evaluators based on recoveries of 12 to 21 percent on vertical wells and 44 to 70 percent based on one future horizontal well. At year end 2006, reserves have only been assigned to the Montney zone in three of the Company's 30 net units at Tupper (based on the existing three vertical wells, eight future vertical and one future horizontal well within the three units). In addition to the Montney, all four Tupper wells have encountered prospective up hole zones, however, these zones have not been tested to date and no reserves have been assigned.

Should upcoming completion operations provide results consistent with those experienced to date, the Company expects to significantly expand its existing reserve base. In addition positive results will continue to validate our 3D seismic interpretation of the Upper and Basal Montney zones and our ability to further delineate the pool with our upcoming fifth well. Given the significant drilling success directly offsetting our Tupper block at Swan, the early success of Bear Ridge's vertical delineation drilling program and the validation of our 3D seismic interpretation over the Swan and Tupper pools, Bear Ridge sees significant reserve booking and production potential from a large scale horizontal development drilling program on its Tupper block.

Strategic Alternatives

As part of Bear Ridge's ongoing effort to improve shareholder value, the management and Board of Directors of Bear Ridge have elected to explore strategic alternatives. Alternatives may include the sale, merger or takeover of the Company, or the reorganization, restructuring or sale of some or all of the Corporations properties or any alternative deemed to be in the best interest of Bear Ridge shareholders. Tristone Capital Inc. has been engaged by the Board of Directors as its independent financial advisor to advise and assist in this process.

Private Placement Financing

In its effort to provide the Company additional financial flexibility, the Company has entered into a private placement equity financing which will net the Company $14.4 million. This financing is expected to close on or about March 14, 2007. The terms of the financing are as follows:

- Seven million CDE flow through shares at $1.80 per share plus 8.4 million CDE flow through warrants exercisable at $2.00 with a two year term

- One million CDE warrants originally issued with the December 15(th) financing will be exercised in conjunction with the closing of this new financing at a reduced exercise price of $1.80 per share

The financing has been entered into with the same group of investors who provided $24 million of equity financing on December 15, 2006. Included in the terms of this follow on financing is an agreement to amend the terms of the warrants subscribed to in the December 15(th) financing as follows. The two million CEE warrants originally priced at $5.50 and the remaining two million of CDE warrants originally priced at $4.50 will all be converted to CDE warrants, with a reduced exercise price of $2.00. Bear Ridge believes this additional financing provides important financial support and the conversion of all CEE warrants to CDE increases future flexibility as it explores all of its strategic alternatives for the benefit of its shareholders.

Additional information regarding Bear Ridge and its business and operations is available on Bear Ridge's website www.bearridge.ca 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
    (403) 537-8450 (FAX)
    or
    Bear Ridge Resources Ltd.
    R. Alan Steele
    Vice President Finance, Chief Financial Officer
    (403) 537-8915
    (403) 537-8450 (FAX)
    Website: www.bearridge.ca