Exall Energy Corporation
TSX : EE

Exall Energy Corporation

September 10, 2008 12:30 ET

Exall Announces Calgary Office Move and Operations Update

CALGARY, ALBERTA--(Marketwire - Sept. 10, 2008) - Exall Energy Corporation (TSX:EE) ("Exall" or the "Company") announces a Calgary office move and operations update.

Exall has moved its Calgary office to the following address:



Exall Energy Corporation
400, 715 - 5th Avenue SW
Calgary, Alberta T2P 2X6
Phone: 403-237-7820 Fax: 403-262-4723


Operations Update Highlights:

- The Marten Mountain horizontal well flowed at an average rate of 550 barrels of oil per day (BOPD) through August (325 BOPD net to Exall).

- Additional lands purchased at the September 3, 2008 Alberta Crown Land Sale will allow the drilling of an additional Marten Mountain well for the purpose of oil production and / or water injection.

- Three additional wells are planned on the Marten Mountain lands prior to end of this year, the first of these wells will spud on September 15.

- A horizontal well drilled in the Jayar pool in March is producing 148 BOEPD (net 21 BOEPD to Exall). A second horizontal well is planned at Jayar in Q4 2008.

- Exall plans a seismic program and well on its Aitken Creek discovery in British Columbia.

- Exall production averaged 510 BOEPD through August.

- Exall has arranged for an increased $4.5 million revolving loan facility with ATB Financial to finance its ongoing development.

Marten Mountain, Alberta

The Marten Mountain horizontal well was put back on production July 22. The well produced at an average rate of 550 BOPD (325 BOPD net to Exall) plus 170 MCFPD of solution gas through the month of August. The well is currently flowing at a stable rate of 420 BOPD (250 BOPD net to Exall). Exall plans to produce the well to the end of September, at which time the well will be shut in to allow the drilling of the three additional development locations established by this well.

The first well to be drilled in the Q4 program is a potential oil producer and / or water injection well on lands acquired at the September 3, 2008 Alberta Crown Land Sale. An abandoned well located on the lands, offsets a well that has produced 1.3 million Stock Tank Barrels (STB) of oil. Based on Exall's interpretation of the core, it has excellent Gilwood sand reservoir quality, logs and productive capacity. The original well was abandoned due to down-hole mechanical problems early in the life of the pool. Exall plans to re-drill the location from surface, penetrating the zone horizontally. It is anticipated that the well will initially produce oil prior to conversion to water injection. Exall has contracted the Akita #40 drilling rig to drill two to three wells, spudding the first before September 15.

The acquisition of the new lands has a major impact for Exall in that it brings control of the waterflood application process to Exall. Ownership of a water injection well will allow the company to apply for Waterflood Project status and Good Production Practice (GPP) approval, which will allow higher production rates from the currently producing 14-1 horizontal well, as well as subsequent development wells to be drilled this quarter. Construction of the pipeline and battery facilities currently under design will begin once Waterflood Project status is given and higher production rates have been approved. Exall has a 66 per cent working interest in the future development of the property.

Jayar, Alberta

The operator of the horizontal well drilled in March 2008 in the Jayar, AB area reports that the well is currently producing 150 BOEPD (21 BOEPD net to Exall), after cleaning up hydrocarbon-based fracturing fluid. Exall will be participating (8.75 per cent WI) in the drilling of another horizontal infill well in the pool to be drilled in the fourth quarter of this year. Jayar is a Dunvegan sand pool with original hydrocarbons in place of 37 million barrels of light oil and 40 BCF of sweet, rich gas. The pool has recovered less than 5 per cent of the original oil in place and 35 per cent of the gas to date. Exall believes that the recovery factor can be increased substantially through the drilling of horizontal infill wells. Exall has an average 14.5 per cent working interest in the property.

Aitken Creek, British Columbia

Exall is planning to conduct a seismic program and to drill a second well in the Aitken Creek, BC area this winter. The first well discovered gas in the Halfway and Baldonnel formations, but was suspended due to water production with the gas. The seismic program is planned to optimize the location of the next well on what has now been proven to be a new gas accumulation. Exall has a 22.5 per cent working interest in nine drilling spacing units in the Aitken Creek area.

Production Guidance

Total daily production for Exall averaged 510 BOEPD through the month of August, due largely to the Marten Mountain horizontal well. Production was composed of 85 per cent oil and NGL's and 15 per cent gas. Exall is projecting Q3 production to average 410 BOEPD, rising to 520 BOEPD in Q4, then increasing to 800 BOEPD in Q1 of 2009 and 1,000 BOEPD for Q2 as the result of the drilling and waterflooding activities.

Financial

Exall has arranged for an increased revolving credit facility with ATB Financial. The existing $3 million loan facility has been increased to $4.5 million. The increased loan facility and higher production rates from July to September will allow the company to continue the aggressive development schedule in Marten Mountain and the greater Mitsue, Alberta area as well as activity at Jayar and Aitken Creek.

About Exall

Exall Energy Corporation is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta, British Columbia and Texas. Exall is currently developing a new oil discovery in north-central Alberta which will add significant production over the next 6 months.

Contact Information

  • Exall Energy Corporation
    Frank S. Rebeyka
    Vice Chairman & CEO
    (403) 237-7820 x 226 or Cell: (403) 815-6637
    or
    Exall Energy Corporation
    Roger N. Dueck
    President & COO
    (403) 237-7820 x 223
    (403) 262-4723 (FAX)
    Website: www.exall.com