Midway Energy Ltd.

Midway Energy Ltd.

September 22, 2010 21:26 ET

Midway Energy Ltd.- Corporate and Operational Update

CALGARY, ALBERTA--(Marketwire - Sept. 22, 2010) - Midway Energy Ltd. ("Midway" or the "Company") (TSX:MEL) is pleased to provide a corporate and operational update.

Garrington Cardium Activity:

To date, the Company has completed the drilling of 17 (13.7 net) Cardium oil wells in Garrington, of which 14 new Cardium horizontal wells are now on production (11.4 net), including the three wells drilled in 2009. Current production from these 11.4 net wells is approximately 1,400 barrels of oil equivalent per day ("boepd") net to Midway.

Results from the last six wells, which were completed using 14 to 18 stages of frac, are significantly better than our first six wells which were all drilled to shorter horizontal lengths and were completed with ten stages of frac. The average rate for the first 30 days of production for our first six wells drilled was 164 boepd and the average rate for the first 30 days of production for the last six wells drilled increased significantly to 336 boepd.

Rates, on an individual well basis, for the last six wells drilled are as follows:

Well Location Average boepd Days on Production
2-12-35-4 W5M 522 30
4-7-35-3 W5M 191 30
4-12-35-4 W5M 322 30
13-18-35-3 W5M 440 30
15-13-35-4 W5M 384 15
2-11-35-4 W5M 156 15

Midway has entered into a rolling option farm-in agreement with a junior oil and gas company on 10 net sections of Cardium rights immediately offsetting Midway's lands in the Garrington area. Midway expects to drill its first well under the farm-in agreement prior to year end.

The Company is pleased with its success to date and is seeing increasingly stronger results in recently drilled wells while still being able to maintain an average drilling and completion cost of less than $2.5 million per well throughout the 14 wells drilled so far this year.

New Core Area:

The Company has entered into a farm-in agreement in the Swan Hills area of Alberta which complements its existing land position in Swan Hills. Under the terms of this agreement, Midway must drill one well prior to year-end to earn 100 percent in four sections of Beaverhill Lake rights, subject to a 10 percent gross overriding royalty, and has the option to drill a second well in 2011 to earn an additional 2.5 sections of land under the same terms. Midway believes that the lands it has targeted under the farm-in agreement are prospective for the emerging Beaverhill Lake carbonate light oil play. Midway is currently in the process of licensing its first horizontal well and will now have access to 9.5 net sections of Beaverhill Lake rights in Swan Hills on 100 percent Company owned and farm-in lands. All of the rights currently held by Midway are on Crown lands and are eligible for the 5 percent initial Crown Royalty.

Corporate Update:

  • Midway's average production for the month of August was approximately 2,350 boepd and current production is approximately 2,600 boepd. The Company is on track to meet its forecast exit production rates of 2,900 to 3,000 boepd without including any volumes that may be realized from drilling in Swan Hills.
  • The Company has completed a mid-year review of its credit facility which resulted in an increase in the facility from $40 million to $55 million.
  • Midway has entered into an agreement with NORREP Performance 2010 Flow-Through Limited Partnership to purchase 550,000 Midway common shares at a price of $3.65 per flow-through (CDE) common share. The funds received by Midway from this non-brokered private placement will be used to drill the first horizontal well at Swan Hills, which was not previously included in our 2010 budget.
  • Midway is pleased to announce the appointment of Craig Kolochuk as Land Manager. Craig will work alongside Hardy Isaak in Midway's Land Department.

About Midway

Midway is a public junior oil and gas company with production in Alberta and British Columbia. The Company's area of focus is on properties in Alberta, that have long life, high quality light oil and natural gas reserves with repeatable drilling upside. Midway currently trades on the Toronto Stock Exchange (TSX) under the Symbol "MEL".

Additional information regarding Midway is available under the Company's profile at www.sedar.com and its website at www.midwayenergy.ca.

Forward Looking Statements

This news release contains forward-looking statements relating to the Company's plans and other aspects of the Company's anticipated future operations, strategies, financial and operating results and business opportunities. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. Specifically, this press release contains forward-looking statements relating to the Company's plans to drill its first well pursuant to the Garrington farm-in; expectations regarding the lands targeted under the Swan Hills farm-in; treatment under royalty regimes; forecasted exit production rates and closing of the private placement and the use of proceeds therefrom. These forward-looking statements are based on various assumptions including the timing, location and extent of future drilling operations; estimates of future production; the state of the economy and the exploration and production business; results of operations; performance of existing and future wells; business prospects and opportunities; future exchange and interest rates, Midway's ability to obtain equipment in a timely manner to carry out development activities, impact of increasing competition, ability to market oil and natural gas successfully and the ability of Midway to access capital. While Midway considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, 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; general economic conditions in Canada, the U.S. and globally and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Midway believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this new 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.

Cautionary Statement

The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf:1 boe 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

  • Midway Energy Ltd.
    M. Scott Ratushny
    Chief Executive Officer
    (403) 216-2705
    Midway Energy Ltd.
    Douglas K. Smith
    Chief Financial Officer
    (403) 216-2705