Defiant Resources Corporation

Defiant Resources Corporation

April 23, 2007 09:00 ET

Defiant Resources Corporation Provides Operational Update: Successful First Quarter Drilling Program Leads to Significant Reserve Additions

CALGARY, ALBERTA--(CCNMatthews - April 23, 2007) - Defiant Resources Corporation ("Defiant" or the "Company") (TSX:DFR) is pleased to announce that its successful first quarter drilling program in the Grande Prairie area has increased the Company's reserves, production and net asset value.

Highlights of our activities during the first quarter of 2007:

- Our drilling success rate was 100%, with four (3.1 net) wells drilled and cased in our Grande Prairie core area.

- Two (2.0 net) were successful gas wells, which have resulted in several new pool discoveries; two (1.1 net) were successful developmental oil wells following up on the 2006 Dunvegan oil discovery.

- Three of the new wells were producing at a combined net rate of 250 boe per day as of April 1, 2007, raising our corporate production as of that date to over 1,400 boe per day.

- The fourth well tested gas from two zones. The first zone tested at 250 mcf per day and we expect to more than double the rate when it is stimulated after spring break up. The second zone tested at 1,000 mcf per day and 100 bbls of water per day. We expect to have the first zone on production in June.

- The AEUB granted approval for Good Production Practice at our Grande Prairie East Halfway oil pool on March 9, 2007.

- Our first quarter production averaged 1,085 boe per day, consistent with our guidance of 1,100 boe per day.

These discoveries have generated several follow-up drilling opportunities for our company, and we determined that they were material enough to warrant an interim update to our reserves evaluation by our independent engineers, Sproule Associates Limited ("Sproule"). Accordingly, Sproule prepared an update of the Company's P&NG reserves to March 31, 2007, which consisted of:

- an updated evaluation of our Dunvegan oil pool and our lower Dunvegan gas pool at Grande Prairie East and our new gas discoveries at Gold Creek; and

- a computer recalculation of all other areas to a March 31, 2007 effective date.

Sproule utilized their March 2007 price forecast, which, compared to December 2006, incorporated slightly lower oil and gas prices for the first two years and substantially similar prices thereafter.

A comparison of our March 31, 2007 and December 31, 2006 reserves, as evaluated by Sproule Associates Limited, is summarized below:

Mar 31/07 Dec 31/06 Change %
Net Present Values Before Taxes
5% $ 82,175 $ 69,316 $ 12,859 19%
10% $ 67,441 $ 56,259 $ 11,182 20%
15% $ 57,831 $ 47,865 $ 9,966 21%

Proved Developed Producing 1,605 1,408 197 14%
Proved Developed Non-Producing 126 33 93 281%
Proved Undeveloped 103 40 63 158%
Total Proved 1,834 1,481 353 24%
Probable 1,805 1,690 115 7%
Total Reserves 3,639 3,170 468 15%
First Quarter Production 97
Total Reserve additions 565

Reserves additions of 565 mboe represent an 18% increase in total proved plus probable reserves. Defiant added 450 mboe of proven reserves, an increase of 30%. The reserves additions are attributable to the development drilling which significantly extended the Dunvegan oil pool discovered in 2006 and exploration successes at Gold Creek and Grande Prairie East.

Finding and development costs including changes in future capital were $17.45 per boe proved and $13.24 per boe proved plus probable based on capital expenditures estimated at $6.1 million for the quarter. For comparative figures, the Company's Annual Information Form filed on on March 29, 2007 summarizes finding and development costs for the three most recent financial years.

At March 31, 2007, our diluted per share net asset value is calculated to be $2.75 discounted at 10 percent, and $3.37 discounted at 5 percent. These calculations assume a working capital deficiency, including bank debt, of $17.0 million and a value for undeveloped land and seismic of $12.8 million.

The Company's plans for the second quarter include:

- Drilling gas wells at Karr and Dimsdale, and another development Dunvegan oil well at Grande Prairie East.

- Commencing the installation of water handling and compression facilities at Grande Prairie East to reduce operating costs.

- Stimulating and tying in the Gold Creek gas well.

We estimate that our second quarter production will average 1,300 to 1,350 boe per day, allowing for natural declines and production disruptions during spring break-up. Our activities this spring will also include a series of investor presentations, including participation at the COPIC conference in Toronto on Wednesday May 2, the SEPAC Investment Symposium in Calgary on Wednesday May 30 and at the CAPP Investment Symposium in Calgary on Tuesday June 19. We will post our latest investor presentation on our web site on Wednesday April 25, 2007.

Forward Looking Statements - Certain information regarding Defiant Resources Corporation set forth in this document, including management's assessment of Defiant Resources Corporation's future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties including resolution of various land owner issues These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Defiant Resources Corporation's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Defiant Resources Corporation's actual results, performance or achievement 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 that Defiant Resources Corporation will derive therefrom. In addition, the term boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf = 1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information

  • Defiant Resources Corporation
    Rick J. Ironside
    President & C.E.O.
    (403) 218-4104
    (403) 266-5506 (FAX)
    Defiant Resources Corporation
    Rob H. Solinger
    V.P., Finance & C.F.O.
    (403) 218-4106
    (403) 266-5506 (FAX)