Bronco Energy Ltd.

Bronco Energy Ltd.

April 16, 2007 02:52 ET

Bronco Provides Operations, Reserves Update and 2007 Guidance

CALGARY, ALBERTA--(CCNMatthews - April 16, 2007) - Bronco Energy Ltd. ("Bronco" or the "Company") (TSX VENTURE:BCF) announces that it has completed its winter stratigraphic vertical test well drilling program on the Bigstone Cree Nation ("BCN") Reserve lands at Wabasca, Alberta. A total of 5 wells were drilled and cased and Bronco is delighted with the current test well results.

The first 4 wells were drilled on Bigstone Reserve 166D ("166D") and targeted the Grand Rapids formation at a depth of approximately 225 meters. Core samples have been recovered and have been delivered to Hycal Energy Research Laboratories Inc. ("Hycal") for analysis and steam testing. Hycal will prepare a report with recommendations on an oil recovery strategy. This report will then be given to independent engineers for appraisal of the Grand Rapids resource. Drill cutting samples and logs were also taken from the 4 test wells on 166D. Net oil pay encountered in 2 of the wells in the Grand Rapids exceeded 20 meters with approximately 40% porosity. The generally accepted industry standard for a thermal steam assisted gravity drainage ("SAGD") project is a minimum of 15 meters of net pay. The other 2 test wells, which were located at the edge of the Grand Rapids pool are likely too thin for SAGD, but provided an excellent opportunity to evaluate the secondary Wabiskaw zone. The Company's internal mapping of the Upper Grand Rapids is essentially unchanged. From the preliminary results of the test wells Bronco maintains the view that it's previously announced internal estimate of 556 million barrels of oil in place is conservative, and management remains optimistic about the Upper Grand Rapids potential for a significant future SAGD project. All 4 wells on 166D were drilled to the base of the Wabiskaw formation at a depth of approximately 425 meters, and all 4 wells appear to be prospective for oil and gas in the Wabiskaw zone for future development. Bronco may drill up to 5 additional test wells later this year, as surface conditions permit, 2 of which will be drilled deeper to test the Grosmont carbonates. Bronco is pleased with the results of these first 4 wells as they may allow the Company to continue with and possibly accelerate its planned activities.

To complete its stratigraphic test program, Bronco drilled a fifth vertical test well, to the east on Reserve 166. The results are encouraging, with 3 prospective zones to report. The primary target Upper Wabiskaw oil zone encountered 8 meters of net oil pay and will allow the Company to proceed with its plans to drill approximately 10 horizontal wells on this section later this year. The Middle Wabiskaw also yielded impressive log results, indicating 4 meters of high oil saturation pay. This emerging play is presently being mapped and the Company wishes to drill a test horizontal well into this prospective formation at some point in the future. The third prospective zone is Viking gas, and management hopes to complete and test this stratigraphic test well in the Viking in the near future. Bronco also was the successful bidder on approximately half a section of land adjacent to Reserve 166 at a recent land sale. This completes the spacing unit for approximately 10 potential Wabiskaw horizontal oil wells on this section.

Bronco is also pleased to report the results of its year end 2006 reserves report prepared by independent engineers Paddock Lindstrom & Associates ("PLA"). Company working interest after royalty proven, probable and possible reserves volumes of 14.5 million barrels of oil equivalent (6 Mcf:1 Bbl) have been assigned. Almost all of the Company's reserves are based on 9 sections of heavy oil for the Upper Wabiskaw formation on the BCN Reserve lands. Recoveries of 5% to 11% have initially been assigned. These recoveries have the potential to increase over time. Offset competitor Upper Wabiskaw wells, with more production history, are achieving ultimate recovery rates of approximately 18%. As previously mentioned, only 9 of the companies 28 prospective Upper Wabiskaw sections are presently assigned reserves. The remaining 19 sections of the previously announced total 563 million barrels of Upper Wabiskaw oil in place remains in the category of contingent resources, with primary recovery factors of 5% (low case), 6% (best case) and 7% (high case). Future reserves and values may be assigned to these 19 sections containing known oil quantities, should the Company deliver anticipated positive results from future drilling on these lands.

At the request of the Company, only the Upper Wabiskaw was evaluated by PLA at this time. Bronco believes there is considerable future potential in the previously announced management estimated 556 million barrels of oil from the Upper Grand Rapids zone. Bronco plans on having this zone evaluated in the middle of 2007 as a thermal SAGD project. The Middle Wabiskaw and Grosmont Carbonates also contain significant known oil pool accumulations and have not been evaluated by PLA.

Looking forward to the rest of 2007, investors should expect frequent updates during the year on the Company's execution of its Wabiskaw zone horizontal drilling program, the continuation of its drilling and evaluation of the Grand Rapids zone thermal SAGD opportunity, initial findings from Grosmont carbonates zone testing, as well as the construction of an oil processing battery in conjunction with the aforementioned activities. The Company's focus during the year will be on executing this program, and not on continuous production growth. Each horizontal well will only be production tested for up to two months, and then shut in until battery construction is completed, which is estimated to occur in the fourth quarter of 2007 or early 2008. There are several reasons for the limited short testing period. Firstly, the Alberta Energy and Utilities Board only permits the venting of small volumes of solution gas during testing. Secondly, existing well site production facilities must be removed from the surface pads to make space for drilling rigs for the drilling of additional horizontal wells. Thirdly, new wells are planned to be drilled adjacent to existing producers, and the existing producers will be formation damaged from drilling mud if the producers are not shut in at the time of drilling. And lastly, netbacks and economics are dramatically improved by producing to an oil battery, as compared to trucking, treating and water disposal to a third party. Once the oil battery is completed and fully commissioned, the Company expects to achieve strong production levels once this critical path event is completed. Actual produced oil volumes to date on existing horizontal wells do not match publicly reported Petroleum Registry oil sales volumes. There are presently large inventory oil volumes in tanks that are being used as drilling and completions fluids on new horizontal drilling locations. Inventory heavy oil volumes in tanks are typically not reported due to fluid measurement inaccuracies.

Bronco also continues to meet regularly with and assist its Peace River Arch First Nations partner in selecting its prospective Reserves lands. The exact timing for completion of the joint operating agreement of this arrangement is unknown as the Band continues to work with regulatory bodies for the issuance of its Reserves lands.

Immediately following the announcement of its year end results in the coming weeks, Bronco intends to make application to the Toronto Stock Exchange for the listing of its common shares.

Mr. Brian Alford, President and CEO, stated, "Bronco is encouraged with the recently completed stratigraphic test well program, and the positive results of the 2006 year end reserves evaluation. Bronco believes 2007 will also be an exciting year as the Company executes on its operations plans. The relationship with our joint venture partner, the Bigstone Cree Nation, also continues to be solid."

Bronco Energy Ltd. trades on the TSX Venture Exchange under the symbol "BCF".

This news release contains forward-looking statements which involve known and unknown risks, delays and uncertainties not under Bronco's control which may cause actual results, performance or achievements of Bronco to be materially different from the results, performance or expectations implied by these forward-looking statements.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement.

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

Contact Information

  • Bronco Energy Ltd.
    Brian Alford
    President and Chief Executive Officer
    (403) 699-8383
    (403) 693-0038 (FAX)
    Bronco Energy Ltd.
    David Johnson
    Chief Financial Officer
    (403) 699-8383
    (403) 693-0038 (FAX)