Masters Energy Inc.
TSX : MSY

Masters Energy Inc.

June 14, 2007 18:23 ET

Masters Energy Inc. Announces Enhanced Oil Recovery Project

CALGARY, ALBERTA--(Marketwire - June 14, 2007) - Masters Energy Inc. (TSX:MSY) ("Masters" or "the Company") has contracted an engineering consulting firm, specializing in enhanced oil recovery, to evaluate the Company's oil producing property at Little Bow. The Little Bow property has produced for a total of 30 years and has been under waterflood for 25 of those years. The Company currently produces 700 barrels per day of crude oil at Little Bow.

Core studies to date, indicate that an Alkaline Surfactant Polymer ("ASP") flood could significantly enhance the recovery of oil. The consultant has completed a fluid study and an initial core analysis that indicate the ASP fluids are compatible with the fluids and rock characteristics of the Little Bow reservoir and that the reservoir is a very good candidate for an ASP flood.

Masters' 2006 year end reserve evaluation, performed by McDaniel and Associates ("McDaniel"), estimates that the pool contains approximately 30 million barrels of original oil in place, of which, approximately 36 percent of the original oil in place has been recovered to date. McDaniel, further estimates an additional 9% (to a total of 45 percent) of original oil in place is ultimately recoverable under the current waterflood program. The ASP flood is designed to decrease interfacial tension and improve the vertical sweep efficiency, resulting in higher ultimate oil recovery than would be achieved with the existing waterflood. Analogous oil reservoirs have experienced incremental oil recoveries between 12 and 25 percent of original oil in place. Similar performance at Little Bow would potentially increase incremental recoverable reserves by 3.6 to 7.5 million barrels (2.8 to 5.8 million barrels net to Masters). McDaniel did not assign any reserves to the ASP project in their latest corporate reserve evaluation (December 31, 2006). Analogous pools, utilizing the ASP floods, tend to increase daily production by 4 to 7 times initial rates within 2 to 3 years of injection.

The next phase of core work will more accurately determine the expected incremental recovery by implementing the ASP flood. The results should be available in the third quarter.

Initial capital cost to implement the ASP flood is estimated to be $15 to $18 million. Assuming the necessary regulatory approvals are received on a timely basis the following schedule is envisioned:

- Facility construction - fourth quarter 2007 to first quarter 2008

- Start of ASP injection - second quarter 2008

- Initial production response - third quarter 2008

- Peak production - 2010

Masters Energy Inc. is an Alberta based corporation engaged in the business of acquiring or exploring for and developing oil and natural gas reserves in western Canada. Masters' common shares are listed on the Toronto Stock Exchange under the trading symbol "MSY".

ADVISORY

The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. Certain information regarding the Company, including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, impression of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources: as a consequence, actual results may differ materially from those anticipated. The Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements.

Non-GAAP Measurements - This news release contains the term cash flow from operations, which should not be considered an alternative to, or more meaningful than net earnings or cash flow from operating activities as determined in accordance with Generally Accepted Accounting Principles ("GAAP") as an indicator of the Company's performance. Management believes that in addition to net earnings, cash flow is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities before the consideration of how those activities are financed or how the results are taxed. Masters' determination of cash flow from operations may not be comparable to that reported by other companies. The reconciliation between net earnings and cash flow from operations can be found in the statements of cash flows in the financial statements.

BOE Presentation - The calculations of barrels of oil equivalent ("boe") are based on a conversion rate of six thousand cubic feet ("mcf") of natural gas to one barrel ("bbl") of crude oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl 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

  • Masters Energy Inc.
    Geoff Merritt
    President and CEO
    (403) 290-1785
    or
    Masters Energy Inc.
    Randall Boyd
    Chief Financial Officer
    (403) 290-1785
    Website: www.mastersenergy.com