The Buffalo Oil Corporation

The Buffalo Oil Corporation

April 10, 2006 09:00 ET

Buffalo Oil Announces Increase in Oil and Gas Reserves and Updates 2006 Forecast

CALGARY, ALBERTA--(CCNMatthews - April 10, 2006) - The Buffalo Oil Corporation ("Buffalo") (TSX VENTURE:BFO) is pleased to announce that its independent reserves engineers Paddock Lindstrom & Associates Ltd. ("Paddock") have completed their evaluation of Buffalo's oil and gas reserves as at December 31, 2005 in accordance with the standards set out in National Instrument 51-101. Summary results of this evaluation using the Paddock forecast of prices and costs as at December 31, 2005 are as follows:

- Total proved reserves of 1.42 million boe, a 266% increase over 2004.

- Proved plus probable reserves of 2.60 million boe, a 357% increase over 2004.

- Net present value of proved plus probable reserves before tax, discounted at 10%, of $31.8 million.

Detailed information on these reserves will be available on SEDAR on or before April 30, 2006 as part of the disclosures required by National Instrument 51-101 Form F1 "Statement of Reserves Data and Other Oil and Gas Information".

In 2005, oil and gas production was replaced 5.5 times on a proved basis and 10.5 times on a proved plus probable basis, calculated by adding the year over year change in reserves to the current year production and dividing this sum by the current year production.

Buffalo's 2005 net oil and gas reserves additions, including the reserves purchased in September 2005, were achieved at an average cost of $12.28 per boe on a proved basis and at $8.01 per boe on a proved plus probable basis. The cost of net reserves additions is calculated by dividing total 2005 net capital expenditures plus estimated future capital expenditures as determined by Paddock, by the sum of the year over year change in reserves plus current year production.

2006 Forecast Update

Buffalo has updated its 2006 forecast operating results to reflect currently forecast commodity prices and the expected timing of capital expenditures. Average production for 2006 remains unchanged at between 1,500 and 1,600 boe/d with a year-end exit rate between 1,800 and 2,000 boe/d. Forecast 2006 pricing is based on an average WTI crude oil price of US $63.00 per barrel and an average AECO-C spot natural gas price of Cdn $8.00 per million British thermal units. Cash flow from operations for 2006 is now forecast at approximately $8.4 million, down from the previous forecast of $10.5 million, mainly as a result of the lower natural gas commodity price forecast. Cash flow from operations per share for 2006 is now estimated at $0.48 basic and $0.42 diluted.

Buffalo is an emerging Canadian junior oil and gas company engaged in the exploration, development and production of oil and gas reserves in the provinces of Alberta and Saskatchewan.

Certain information set forth in this press release contains forward looking statements. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, reliance should not be placed on forward-looking statements. Buffalo's actual results, performance or achievements 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 Buffalo will derive therefrom. Buffalo disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent (Boe's) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf of gas : 1 Bbl of oil is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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

Contact Information

  • The Buffalo Oil Corporation
    Trevor Penford
    President and C.F.O.
    (403) 252-2462
    The Buffalo Oil Corporation
    William (Bill) Trickett
    Chairman and C.E.O.
    (403) 252-2462
    The Buffalo Oil Corporation
    Suite 180, 1209 - 59th Avenue S.E.
    Calgary, Alberta T2H 2P6
    (403) 252-2462
    (403) 252-1399 (FAX)