Highview Resources Ltd.
TSX VENTURE : HVW

Highview Resources Ltd.

July 31, 2006 18:02 ET

Highview Announces Second Quarter Results

CALGARY, ALBERTA--(CCNMatthews - July 31, 2006) - Highview's (TSX VENTURE:HVW) second quarter activity focused on the development of the Suffield prospect in SW Saskatchewan and preparations for a drilling program at Alexander which is anticipated to be conducted in the fall.

FINANCIAL

Oil and gas revenues totaled $1,260,000 for the first six months of 2006 down 5% from $1,323,000 in 2005. Cash flow from operations was $313,000 in the first six months of this year compared to $222,000 in the first six months of last year an increase of 40%. Highview incurred a net loss of $253,000 for the period this year, compared to $263,000 for the same period last year. Capital expenditure for the first six months of 2006 was $2.6 million including $1.9 million for the drilling, completing, testing and equipping of 10 wells. In December of 2005, Highview closed a private placement of 11,555,079 flow-through shares and 6,250,000 common shares for gross proceeds of $3.2 million. In May 2006, Highview closed a private placement of 11,800,000 flow-through shares for gross proceeds of $2.0 million.

OPERATIONS

Natural gas production in the first six months of 2006 averaged 814 Mcf/d compared to 1045 Mcf/d for the same period in 2005. This 22% drop is attributed to the depletion of the natural gas reserves at Alexander and Newton. At Wood River 4-19, Highview has made a commingling application with the AEUB and when approval is granted the lower oil zone will be commingled and placed on production.

Suffield

The primary objective at Suffield was to drill a new well into an existing Roseray oil pool.

A comprehensive engineering assessment of the pool indicates that it potentially contains recoverable oil reserves of 160,000 BBL and that a new well drilled at 3-13 (WI 25%) should be able to successfully access the oil. Subsequent to the quarter end, Highview drilled the well. The new well is structurally higher than the existing wells in the pool and is in the early stages of production testing. During the third quarter, Highview plans to drill or convert an existing well for water disposal and upgrade the existing battery to handle larger volumes of fluid.

In addition, Highview drilled 2 exploration wells this quarter. At 7-14 (WI 35%), the Company drilled a Cantaur oil discovery which is estimated to contain 57,000 BBL of recoverable reserves of medium crude oil. The well commenced production on July 21 at 25 BBL/d with 30% water cut. The second well was a Shaunavon test at 14-13 (WI 35%). This well was not successful and Highview will perform an injectivity test to determine if it will be capable of water injection.

There are 4 Roseray wells currently standing which should be back on stream once the battery is put back into service. These wells are anticipated to add a further 20 BPOD net to Highview in Q3/Q4.

Alexander

At Alexander, Highview has licensed and built the locations for 3 new exploratory wells. Drilling is planned in the fall as soon as the joint venture agreement has been executed. During Q2, the operator of a well on our lands at 3-35 (WI 20%) re-completed an existing producing well in a lower BQ zone and the well is now producing 370 Mcf/d.

The partners in the northern four sections of this property have agreed to retest two wells (6-7 and 3-7) to determine if they are commercial. Both of these wells were completed and tested in the summer of 2005 with limited results. Highview is preparing to test these wells at minimum cost to determine if they can be productive with the appropriate infrastructure in place in order to dispose of any associated water.

Newton

During Q2 of 2006, production at Newton was once again curtailed due to the breakdown of a third party compressor station. Production was severely curtailed for almost 4 weeks until the compressor could be repaired. In addition, the previous operator of the Newton property was sold and a new operator is incoming. After the transaction has closed, Highview will be working closely with the new operator in order to draft a plan to fully exploit additional natural gas opportunities at Newton.

Morningside

In the fall of 2005, Highview participated in the drilling of 2 Belly River gas wells. After the wells were drilled the ownership changed as several of the partners relinquished their interests in the property resulting in Highview owning a 62.5% working interest in these wells. During Q2, the well at 3-5 was completed in the Belly River zone and flow tested at a rate of 500 Mcf/d. The second well at 9-5 will be completed in the Edmonton Sand by the end of Q3. Highview anticipates that both of these wells will be on stream by Q4.

Fosterton

Highview farmed out its interest in one half of a section at Fosterton in Saskatchewan over one year ago. The farmee drilled a discovery in the Roseray zone during Q2 of 2006 the well tested 200 BBL/d of oil before it was shut-in for the installation of a single well battery facility. The farmee has determined that there are at least 2 additional locations to be drilled on the property and upon a thorough geological and geophysical review wells should be licensed in the fall of 2006. Highview has a royalty interest in the discovery before payout and an 11.5% WI in the well and lands after payout.

OUTLOOK

Highview made the conscious decision to focus our exploration and exploitation program in 2006 on two core areas, Alexander and Suffield. The program is proceeding according to the plan and it will continue through Q3 2006.

Highview Resources Ltd. is a Canadian company engaged in exploration, development and production of oil and natural gas. Highview's common shares are listed on The TSX Venture Exchange under the trading symbol "HVW".

Forward-looking statements - the press release today contains "forward-looking" information. Actual results could differ materially from the conclusions, forecasts or projections in the forward-looking information. Certain material factors and assumptions were applied in drawing the conclusions or making the forecasts or projections as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing the conclusion or making the forecast or projection as reflected in the forward-looking information is contained in the press release.





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Contact Information

  • Highview Resources Ltd.
    John H. Cassels
    President & CEO
    (403) 261-9978
    (403) 261-4072 (FAX)
    or
    Highview Resources Ltd.
    Robert W. Lamond
    Chairman
    (403) 269-9889
    (403) 269-9890 (FAX)