Cobalt Energy Ltd.

Cobalt Energy Ltd.

November 22, 2007 17:21 ET

Cobalt to Acquire Assets and Updates Drilling Plans

CALGARY, ALBERTA--(Marketwire - Nov. 22, 2007) -


Cobalt Energy Ltd. ("Cobalt" or the "Company") (TSX VENTURE:CB.A) (TSX VENTURE:CB.B) announces today that it has entered into an agreement to purchase lands and producing assets from an energy trust. Pursuant to the agreement Cobalt has agreed to pay $375,000 in cash, subject to certain financial adjustments and right of first refusal provisions. The acquisition will establish Cobalt's initial production consisting of light crude oil at Woking Alberta, located within the Company's primary core area of the Peace River Arch. Cobalt has identified a number of well re-completion opportunities and possible drilling opportunities which are anticipated to increase the current production. In addition, the property holds potential for a waterflood project which may contribute to additional oil production in the future.

Details of the acquisition are as follows:

- Current production of approximately 20 boe/d (70% light crude oil) from six wells, 70% operated;

- Reserves as evaluated by GLJ Petroleum Consultants effective September 1, 2007 assigned Proven Reserves of 4,300 boe, and Proven plus Probable reserves of 4,300 boe to the existing wells at September 1, 2007. Additional reserves associated with one well which commenced production after September 1, 2007 are internally estimated by Cobalt to increase the total Proven reserves to approximately 16,000 boe, and Proven plus Probable reserves to 18,000 boe;

- Total land holdings comprised of 8,480 gross acres (3,600 net acres) with approximately 1,200 undeveloped net acres;

- Acquisition Metrics, prior to certain adjustments, are approximately $18,750 per flowing boe, $23.40 per Proven boe, $20.80 per Proven plus Probable boe.

Drilling Update

Cobalt plans a moderate Q4 2007 drilling program expecting to operate the drilling of 2 (1.5 net) wells prior to year end. The drilling will be focused at the Boundary Lake prospect in the Peace River Arch targeting liquids rich natural gas reserves. At Boundary Lake, Cobalt has assembled 5,760 acres (nine sections) of undeveloped multi-zone lands. In September, the Company increased its working interest across these lands to 100% and expects to move forward with its drilling program with a partner, retaining an 80% production interest to Cobalt. To date, the Company has evaluated approximately 80 km of trade and proprietary 2D seismic over its lands to support the initial well locations.

The East Central Alberta exploration region is expected to see a lower activity level than the Peace River Arch region. Currently, Cobalt holds 2,560 acres (four sections) of undeveloped land at 100% working interest. To date the Company has evaluated approximately 35 km of trade seismic and subsequently has shot approximately 15 km of proprietary 2D seismic over its lands. Interpretation of the proprietary seismic is underway and drilling plans will be determined after the seismic evaluation is completed.


The Company's activity for the remainder of 2007 and into early 2008 will focus on fulfilling its flow-through obligation of $5.3 million by drilling a portion of our current exploration inventory and by conducting seismic programs in our core areas. The majority of capital expenditures will be directed towards the Peace River Arch with drilling at Boundary Lake and several well recompletions at Woking, pending the closing of the acquisition. Concurrently, we anticipate adding to our current undeveloped land position in multi-zone regions of Alberta, and building our production base. Further acquisitions remain a part of Cobalt's growth strategy and the Company is continually evaluating property or corporate acquisition opportunities which are well-suited to its business plan.

Reader Advisory - This news release contains certain forward-looking statements, which include assumptions with respect to completion of an acquisition, increase to production and reserves and use of capital. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, tax treatment (including royalties), inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances 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, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. BOE or boe/d may be misleading particularly if used in isolation. A BOE conversion of 6mcf:1bbl is based as an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the well head.

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

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