Buffalo Resources Corp.

Buffalo Resources Corp.

September 19, 2007 09:00 ET

Buffalo Resources Provides Operations Update and 2007 Capital Guidance Following Amalgamation with Choice

CALGARY, ALBERTA--(Marketwire - Sept. 19, 2007) -


Buffalo Resources Corp. ("Buffalo" or the "Company") (TSX VENTURE:BFR) is pleased to provide an operational update and guidance for the remainder of 2007.

On August 3, 2007, following shareholder approval, The Buffalo Oil Corporation ("Old Buffalo") and Choice Resources Corp. ("Choice") amalgamated. The new company, Buffalo Resources Corp., trades on the TSX Venture exchange under the symbol BFR. Senior management consists of Bill Trickett as President and Chief Executive Officer, Gord Harris as Chief Operating Officer and Trevor Penford as Chief Financial Officer.

The initial production base of the Company is 3,900 boe/d split equally between gas and oil with approximately another 100 boe/d behind pipe pending completion of the Killam battery in late September 2007. Buffalo is well positioned and will continue to generate solid growth through its low risk development at Frog Lake and Viking/Killam, while developing its high impact Pincher Creek and Peace River Arch natural gas prospects. The Company has 130,000 net acres of undeveloped land and an inventory of 200 drilling locations.

Buffalo has developed a $12 million capital program for the remainder of 2007 which includes drilling 22 (13.5 net) wells, to be financed using a combination of cash flow from operations and the proceeds of certain non core asset sales, to be allocated as follows:

Pincher Creek

A horizontal well 13-28-4-29W4M, targeting natural gas in the Mississippian formation, has been licensed and is expected to spud in December. The well will be drilled to a vertical depth of 3,800 meters with a 1,000 meter horizontal leg designed to intersect reservoir fractures at the toe of the Mississippian roll-over. It is expected that the well will take approximately 90 days to drill.

Buffalo is currently establishing a $25 million drilling fund to finance 75% of Phase 1 of its Pincher Creek drilling program which will include drilling the above well and following up in 2008 with a second Mississippian horizontal well and the re-entry and re-completion in the Cretaceous zone of two existing wellbores for light oil. It is anticipated that Buffalo will participate directly for the remaining 25% WI in the program.

Frog Lake

Buffalo plans to drill 14 (8 net) McLaren/GP/Sparky oil wells by year-end, bringing the 2007 total to 28 (14 net) wells drilled on Frog Lake properties. Three wells have been licensed and will be drilled by the end of September and drilling is expected to commence in November on the remaining 11 wells.

A preliminary feasibility study is currently underway to assess the potential for the application of various thermal techniques to improve recoveries from the Frog Lake conventional heavy oil pools.


The new central oil battery at Killam will have the capacity to process 1,000 barrels per day of fluid production. The new facility will allow for the immediate tie-in of two currently completed but shut-in wells, expected to deliver an additional 100 boe/d of production and will provide processing capacity for future development of the property through horizontal drilling. In the third quarter Buffalo will be drilling a Mannville well (0.5 net) targeting oil and gas. Offsetting wells currently produce oil at rates of 125 bbl/d and gas at 800mcf/d.

Central Alberta

An exploratory well (0.6 net) at Malmo, 7-8-44-22W4M, is currently being drilled to the Leduc/Nisku zone. At Wetaskiwin, Buffalo has commitments to drill two (0.5 net) wells by year-end.

Peace River Arch

In 2006, Old Buffalo completed a 12 square mile 3D seismic program over its Cecil lands. Interpretation and evaluation of this data has resulted in 10 potential drilling locations. Commencing in October the first two (2.0 net) wells will be drilled for stacked oil and gas targets ranging from the Kiskatinaw down to the Wabamun and Granite Wash zones. Prior to year-end, Buffalo will participate in a 2,300 meter well (0.1 net) targeting Triassic gas in the Valhalla area as a result of a farm-in on Buffalo acreage by another operator. An exploratory well (1.0 net) targeting Bluesky gas will spud in September at Expanse.

Buffalo is planning to shoot a major 3D seismic program over its acreage at Clayhurst before year-end to establish another Peace River Arch exploration area for 2008.

2007 Outlook

Buffalo anticipates exiting 2007 at a production rate of between 4,500 and 4,800 boe/d.

A number of properties have been identified as non core to Buffalo's future growth including all the operations at Heward and Alameda in southeast Saskatchewan, and at Wetaskiwin, Simonette and Newton in Alberta. The process to dispose of these assets has been initiated and should be complete by year-end. It is anticipated that the disposition of these properties will result in the loss of between 150-250 boe/d. The proceeds will be used to support the capital program and to pay down debt.

For financial accounting and reporting purposes, the Buffalo/Choice amalgamation is considered a reverse takeover of Choice and all financial statements for 2007 will represent Choice's results for the period March 1 to August 3, 2007 and the results of the combined enterprise from that date forward. In addition, Buffalo management has decided to move the Company as quickly as possible from Choice's year-end of February 28 to a calendar year-end for financial reporting purposes. This change may cause some confusion for readers of Buffalo's financial statements for the remainder of 2007. The next interim financial report will be for the three months ended August 31 and the final interim financial report for 2007 will be for the four months ended December 31.

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

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) and barrels of oil equivalent per day (Boepd) 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.

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