The Buffalo Oil Corporation
TSX VENTURE : BFO

The Buffalo Oil Corporation

October 11, 2006 09:00 ET

Buffalo Oil Operational Update

CALGARY, ALBERTA--(CCNMatthews - Oct. 11, 2006) - The Buffalo Oil Corporation ("Buffalo") (TSX VENTURE:BFO) is pleased to update the results of its operations to the end of the third quarter 2006 and its recent acquisition of Pocaterra Energy Inc. Buffalo completed an extensive capital program during the third quarter, placing 10 (net 8.7) wells drilled in the second quarter on production and drilling an additional 8 (net 1.5) wells. In the 2006 program to date Buffalo has drilled 22 (net 12) wells at a 100% success rate.

Frog Lake, Alberta

At Frog Lake, Alberta, Buffalo has drilled a total of 19 (net 10.4) wells in 2006. In the second quarter 2006, Buffalo drilled 10 (net 8.6) wells, 9 oil wells and 1 Viking gas well. The oil wells have been completed and are currently producing at an average of 60 barrels of oil per day from the McLaren, GP and Sparky zones. The tenth well will be completed and tied in as a Viking gas well in the fourth quarter of 2006.

In the third quarter 2006, Buffalo participated in the drilling of eight (net 1.5) wells. Five of these wells were drilled for McLaren oil in the northern channel (Section 26, 27 of 57-4W4) and the remaining three wells were drilled for GP/Sparky oil. (Section 15, 28 of 56-3W4M) These wells are currently being completed and are expected to be on production by the end of October 2006.

In August a Colony gas well (net 0.5) at 2-10-057-04-W4M was recompleted and tied in to the Frog Lake gas gathering system via a new six kilometre pipeline. The well is currently producing 1.0 million cubic feet per day ("MMcfd") of sweet gas from the Colony zone.

On August 31, 2006, Buffalo's partner, Frog Lake Energy Resources Corp., exercised its option to acquire an additional 5% working interest in certain producing oil and gas assets at Frog Lake which had been acquired in September 2005. This reduced Buffalo's production by approximately 45 barrels of oil equivalent per day ("boe/d").

In the fourth quarter 2006, Buffalo plans to drill an additional six oil wells at Frog Lake.

Southeast Saskatchewan

At Heward, Buffalo drilled one horizontal well (0.52 net). With the completion of a new water disposal well and flowline installation, production from Heward is expected to be 70 bbls/d.

In Alameda, Buffalo re-entered a suspended well (net 0.5) and drilled a new horizontal leg into the Frobisher zone. The well has been on production for one month and is currently producing at rates in excess of 150 bbls/d.

Peace River Arch

Recent drilling by other operators whose properties directly offset Buffalo's five sections of land at Cecil, Alberta has been successful in discovering significant quantities of natural gas in the Wabamun zone. Buffalo is in the process of acquiring 3D seismic data over a 12 square mile area covering its five sections of land. The data will be interpreted by year end and drilling is anticipated early in 2007.

Other

In late September Buffalo participated in the drilling of a directional well (net 0.35) to 2,600 metres at Gilby, Alberta. The well has been cased and will be completed for natural gas production in the Glauconite and Ellerslie zones.

Pocaterra Energy Inc.

On October 2, 2006, Buffalo acquired approximately 85% of the common shares of Pocaterra Energy Inc. Buffalo immediately extended the deadline for Pocaterra shareholders to tender their shares to Buffalo's offer until October 17, 2006 and plans to take the necessary steps thereafter to acquire 100% of the shares.

Pocaterra is currently producing approximately 300 boe/d (50% natural gas and 50% medium gravity oil). Buffalo has initiated the tie-in of two (net 2.0) additional oil wells at Jenner, Alberta which are expected to be on production by mid October at a rate of approximately 40 bbls/d.

Outlook

With the addition of Pocaterra Energy Inc., Buffalo's current average daily production is approximately 1,850 boe/d, consisting of 59% heavy oil, 23% natural gas and 18% light oil and Ngls.

In the fourth quarter 2006, Buffalo plans to drill six (net 4.5) wells at Frog Lake and two wells (net 0.4) wells at Gilby in central Alberta and Fourth in the Peace River Arch and to tie in two oil wells at Jenner on the recently completed Pocaterra acquisition.

Buffalo now expects to exceed its previously announced exit production rate of between 1,800 and 2,000 boe/d and to exit 2006 at a production rate of between 2,000 and 2,200 boe/d.

The decline seen in natural gas prices in 2006 has been offset by the dramatic increases in Buffalo's production levels. As a result the Corporation expects to maintain its previously announced 2006 forecast cash flow from operations of $8.4 million or $0.42 per share.

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.

Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf : 1 Bbl 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
    or
    The Buffalo Oil Corporation
    William (Bill) Trickett
    Chairman and C.E.O.
    (403) 252-2462
    or
    The Buffalo Oil Corporation
    Suite 180, 1209 - 59th Avenue S.E.
    Calgary, Alberta T2H 2P6
    (403) 252-2462
    (403) 252-1399 (FAX)
    Website: www.buffalo-oil.com