Excelsior Energy Limited
TSX VENTURE : ELE

Excelsior Energy Limited

June 25, 2009 16:40 ET

Excelsior Announces Independent Resource Estimates and 45% Increase in Contingent Resources at Hangingstone

CALGARY, ALBERTA--(Marketwire - June 25, 2009) - Excelsior Energy Limited (TSX VENTURE:ELE) ("Excelsior" or "the Company") is pleased to announce the completion of an updated independent evaluation of bitumen resources on Excelsior's Hangingstone property ("Hangingstone" or "Hangingstone Asset"), near Fort McMurray, Alberta. The report was prepared to provide an independent assessment of the results of a 29 core well drilling program at Hangingstone completed in March, 2009. The Company has now drilled a total of 55 wells on the Hangingstone property where Excelsior has a 75% working interest in 39 contiguous sections of oil sands rights. Excelsior's drilling objectives in the 2008/2009 winter drilling program were to increase drilling density in the COGD pilot project area and to further delineate a thick channel sand system discovered by core wells in early 2008. The Company met all of its objectives with excellent well results.

As with last year the resource estimates were prepared by independent petroleum engineers McDaniel & Associates Consultants Limited ("McDaniel"). The McDaniel report ("the Report") was prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101. The effective date of the evaluation is July 1, 2009. The Report incorporates the McDaniel price deck as at April 1, 2009 in the forecast price scenario.

"Excelsior is very pleased with the incremental 50 million barrel increase of net Contingent Resources assigned at Hangingstone. The Company's performance and results to date equates to a very attractive full-cycle finding cost of $0.30 per best estimate contingent barrel" commented David Winter, CEO and President of Excelsior, "An extensive channel system has been delineated in the western part of the property with excellent, thick continuous net pay which gives Management the confidence to estimate potential productivity in excess of 50,000 barrels of bitumen per day from Hangingstone."

Discovered and Undiscovered Petroleum Initially-in-Place

McDaniel has recognized best estimate Discovered Petroleum Initially-in-Place of 1.808 billion barrels on the Hangingstone Asset in proximity to well control (Excelsior working interest share before royalty) with a low estimate of 1.262 billion barrels and a high estimate of 2.361 billion barrels. The area included in Discovered Petroleum Initially-in-Place assignments, based on well control, amounts to approximately 24% of the gross Hangingstone lands. Generally, McDaniel's methodology for the assignment of Discovered Petroleum Initially-In-Place requires a minimum delineation density of one well per square mile. Discovered Petroleum Initially-in-Place increased by 14% on a year over year basis.

McDaniel has determined additional prospectivity in an Undiscovered Petroleum Initially-in-Place assignment. The Report assigns 2.849 billion barrels of best estimate Discovered and Undiscovered Petroleum Initially-in-Place to the Hangingstone Asset (Excelsior working interest share before royalty) with a low estimate of 2.137 billion barrels and a high estimate of 3.561 billion barrels. Discovered and Undiscovered Petroleum Initially-in-Place declined 6% on a year over year basis as the drilling results modified the mapping of undiscovered petroleum.

Contingent Resources

The Report assigned Contingent Resources to the Hangingstone Property based on the well delineation density achieved as of July 1, 2009. Best estimate Contingent Resources were estimated at 172 MMbbls (Excelsior working interest share before royalty); low estimate Contingent Resources were estimated at 127 MMbbls and high estimate Contingent Resources were estimated at 230 MMbbls. The assigned Contingent Resources are further categorized as economic. Contingent Resources have increased 45% on a year over year basis.

The Report estimated that Excelsior's best estimate Contingent Resources would generate $2.205 billion of future net revenue after deduction of $3.299 billion in future full-cycle capital requirements over a 30 year field life and abandonment costs of $54.4 million resulting in a net present value before income tax discounted at 10% ("NPV10") of $208 million. On a NPV10 unit basis the report valued Excelsior's Contingent Resources at $1.21 per barrel.

McDaniel calculates Contingent Resources based on that portion of Discovered Petroleum-Initially-in-Place that meets the requisite minimum qualitative and quantitative criteria to be exploited using conventional SAGD technology. The Contingent Resource volumes have not been classified as Reserves at this time pending further delineation drilling, development planning and regulatory applications.

Share Value based on Contingent Resource and Common Shares Outstanding

On a per share basis the estimated NPV10 for best estimate Contingent Resources equates to $1.45 per Excelsior common share outstanding, the estimated NPV10 for the high estimate Contingent Resources equates to $3.86 per Excelsior common share outstanding. There are approximately 143 million Excelsior common shares outstanding.

Prospective Resources

McDaniel also assigned Prospective Resources to Hangingstone. Best estimate Prospective Resources were estimated at 75 MMbbls (Excelsior working interest share before royalty); low estimate Prospective Resources were estimated at 49 MMbbls and high estimate Prospective Resources were estimated at 92 MMbbls. Prospective Resources declined 13% on a year over year basis as resources previously assigned as Prospective Resources were upgraded to Contingent Resources based on the drilling results.

McDaniel calculates Prospective Resources based on that portion of Undiscovered Petroleum-Initially-in-Place that is expected to meet the requisite minimum qualitative and quantitative criteria to be exploited using conventional SAGD technology. The Prospective Resource volumes have not been classified as Contingent Resources at this time pending additional delineation drilling.



Summary Tables

----------------------------------------------------------------------------
Summary of Discovered and Undiscovered
Petroleum Initially-in-Place
Hangingstone, Excelsior Working Interest Share Before Royalty
McDaniel & Associates - July 1, 2009
(Billions of barrels)
----------------------------------------------------------------------------
Low Best High
Estimate Estimate Estimate
----------------------------------------------------------------------------
Discovered Petroleum
Initially-in-Place 1.262 1.808 2.361
----------------------------------------------------------------------------
Discovered and Undiscovered
Petroleum Initially-in- Place 2.137 2.849 3.561
----------------------------------------------------------------------------


----------------------------------------------------------------------------
Summary of Contingent and Prospective Resources
Hangingstone, Excelsior Working Interest Share Before Royalty
McDaniel & Associates - July 1, 2009
(Millions of barrels)
----------------------------------------------------------------------------
Low Best High
Estimate Estimate Estimate
----------------------------------------------------------------------------
Contingent Resources 127 172 230
----------------------------------------------------------------------------
Prospective Resources 49 75 92
----------------------------------------------------------------------------


----------------------------------------------------------------------------
Petroleum Initially-in-Place and Resource Volumes (Best Estimate)
Hangingstone, Excelsior Working Interest Share Before Royalty
Year over Year comparison
(Millions of barrels)
----------------------------------------------------------------------------
July 1, 2008 July 1, 2009 % Change
----------------------------------------------------------------------------
Discovered Petroleum 1,587 1,808 14%
Initially in-Place
----------------------------------------------------------------------------
Contingent Resources 119 172 45%
----------------------------------------------------------------------------
Discovered and Undiscovered 3,041 2,849 -6%
Petroleum Initially-in-place
----------------------------------------------------------------------------
Prospective Resources 86 75 -13%
----------------------------------------------------------------------------


Definitions:

1) Discovered Petroleum Initially-in-Place

- Defined as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of Discovered Petroleum Initially-in-Place includes production, reserves, and contingent resources; the remainder of the volume is unrecoverable.

2) Undiscovered Petroleum Initially-in-Place

- Defined as that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of Undiscovered Petroleum-Initially-in-Place is referred to as Prospective Resources; the remainder is classified as unrecoverable.

3) Contingent Resource

- Defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Economic contingent resources are those contingent resources that are currently economically recoverable.

4) Prospective Resource

- Defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development.

5) Low Estimate

- Defined as a conservative estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term reflects P90 confidence level.

6) Best Estimate

- Defined as the best estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used this term is a measure of central tendency of the uncertainty distribution (P50).

7) High Estimate

- Defined as an optimistic estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used the term reflects a P10 confidence level.

About Excelsior Energy

Excelsior is an early stage, oil sands company with 58 operated sections on two contiguous blocks in the Hangingstone and West Surmont areas of the Athabasca Oil Sands Region near Fort McMurray, Alberta. The Company has developed a proprietary in situ combustion technology ("Combustion Overhead Gravity Drainage" or "COGD") which has game-changing potential in the development and recovery of heavy oil and bitumen. An application for an experimental pilot project to field demonstrate the COGD technology will be submitted in at the end of the second quarter of 2009 with a targeted start up in early 2011. In addition the Company indirectly holds a 100% working interest in UK North Sea Licences P1500 and P1691 covering four part-blocks through its 75% owned subsidiary ENS Energy Ltd. Excelsior's strategy is to capture oil and gas appraisal and development opportunities where we can leverage Management's diverse international operating, heavy oil and field development expertise with developing technologies to produce oil and gas.

Estimations of reserves and future net revenue discussed in this press release constitute forward looking statements. See "Forward Looking Statements" below.

Forward Looking Statements

This press release contains forward-looking statements. Management's assessment of future plans and operations, expected production levels, operating costs, capital expenditures, the nature of capital expenditures, methods of financing capital expenditures, future engineering reports and the timing of increases in production may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, 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, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward looking statements contained in this press release are made as at the date of this press 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information