Highview Resources Ltd.
TSX VENTURE : HVW

Highview Resources Ltd.

October 30, 2006 18:08 ET

Highview Announces Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Oct. 30, 2006) - Highview Resources Ltd. (TSX VENTURE:HVW):

The precipitous decline in the price of natural gas since the beginning of the year continued through the third quarter. As a result Highview concentrated on the exploration or exploitation of our oil prospects during the summer. A number of drill ready natural gas prospects were deferred into the winter when prices are expected to recover, although it is uncertain as to how much the recovery will be.

FINANCIAL

Oil and gas revenues totaled $1,667,000 for the first nine months of 2006 down 22% from $2,146,000 in 2005. 97% of Highview's production is natural gas. Cash flow from operations was $346,000 in the first nine months of this year as compared to $473,000 in the first nine months of last year, a decrease of 17%.

The significant decrease in natural prices during 2006 has had a negative effect on the value of Highview's properties. Based on reduced commodity price forecasts and disappointing 2006 drilling results, Highview has calculated a ceiling test impairment of $3,051,000. Highview's net loss of $2,677,000 for the nine months ended August 31, 2006, compared to $176,000 for the same period last year, includes this impairment which is reduced by the associated future tax recovery of $986,000.

Capital expenditures for the first nine months of 2006 was $3,778,000 including $2,843,000 for the drilling, completing, testing and equipping of 8 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 $3,200,000. In May 2006, Highview closed a private placement of 11,800,000 flow-through shares for gross proceeds of $2,000,000.

OPERATIONS

Suffield

Highview completed a 5 well summer drilling program at Suffield in Saskatchewan. The Company drilled a Roseray oil well at 3-13 (WI 25%) and a water disposal well at 16-12. A battery upgrade is almost complete. The well is producing 50 bopd with a 90% water cut. After the disposal well is tied-in, production from this well is expected to increase significantly. The Company expects to start production from another shut-in Roseray well at 2-13 (WI 25%) after battery completion. Highview estimates that there are 160,000 barrels of recoverable oil in the pool.

Highview drilled 3 exploratory wells on our undeveloped lands in the area during the summer. At 7-14 (WI 35%) a Cantaur oil well was drilled. It produced oil for two months before it watered out. In addition 2 other Shaunavon tests were drilled with limited reservoirs being encountered in both. Highview has 10 sections of undeveloped land at Suffield to explore in 2007.

Wood River

The gas production from a well at 4-19 (WI 50%) declined to the point where the gas zone was suspended and the well has been completed as an oil well from a lower zone. Construction of an oil well battery is complete and the well is now producing at the rate of 50 bopd. If the well is able to sustain this production level, Highview anticipates that it will drill 3 additional wells into this pool in 2007.

Morningside

The 2 gas wells drilled at Morningside in 2005, 3-5 and 9-5 (WI 62.5%) have been completed and tested. The nearest plant is at full capacity and Highview is looking for an alternative tie-in point. Total initial production from these 2 wells is expected to be 800 Mcf/d.

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 in place. Highview will be working closely with the new operator in order to draft a plan to fully exploit additional natural gas opportunities at Newton.

Alexander

Highview intended to drill 3 gas wells at Alexander this fall but all 3 wells have been deferred into the winter due to weakening gas prices and uncertainty in the short term.

At 6-7 (WI 32%) a new pump has been installed and the well was put on production in August. It produced for a month at the rate of 25 bopd with a 70% water cut. It is currently standing for further evaluation.

OUTLOOK

Price uncertainty has driven Highview's management to pursue exploitation activities in our core areas, and to aggressively rework existing wells to increase production, during the balance of the year. Highview has internally developed a number of prospects in Alberta that we expect to drill in Q1 of 2007.

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.


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

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)