NuLoch Resources Inc.
TSX VENTURE : NLR.A
TSX VENTURE : NLR.B

NuLoch Resources Inc.

March 29, 2006 18:45 ET

NuLoch Announces Reserves and Operations Update

CALGARY, ALBERTA--(CCNMatthews - March 29, 2006) -

NuLoch Resources Inc. (TSX VENTURE:NLR.A) (TSX VENTURE:NLR.B) (the "Company") announces net petroleum and natural gas reserve additions of 1,988,000 boe for the year ended December 31, 2005 with a finding, development and acquisition cost of $10.77 per boe. The additions consist of 1,327,000 boe proved and 661,000 boe probable and are 100 percent natural gas. The Company drilled 43 wells (42.9 net) in 2005.

NuLoch retained AJM Petroleum Consultants ("AJM") to conduct the evaluation of the Company's petroleum and natural gas reserves as at December 31, 2005. The report was compiled pursuant to the guidelines of National Instrument 51-101.

Reserves are summarized in the following tables:



Company Gross Reserves as at December 31, 2005
----------------------------------------------------------------------
Light & Natural
Medium Natural Gas
Oil Gas Liquids Total
mbbls mmcf mbbls mboe
------- ------- ------- -------
Proved producing - 495 - 83
Proved non-producing - 1,478 - 246
Proved undeveloped - 5,955 - 992
------- ------- ------- -------
Total proved - 7,928 - 1,321
Probable - 3,964 - 661
------- ------- ------- -------
Proved + probable - 11,892 - 1,982
------- ------- ------- -------
------- ------- ------- -------


Many well completion and tie-in operations straddled December 31, 2005, the effective date of the reserve evaluation. Subsequent to the report date, certain of the proved non-producing and proved undeveloped reserves were converted to proved producing which now accounts for 32% of total proved + probable reserves.



Forecast Net Revenue (Before Income Tax) as at December 31, 2005
----------------------------------------------------------------------
$000s, discounted at 0% 5% 10% 15%
-------- ------- ------- -------

Proved producing 1,770 1,776 1,636 1,482
Proved non-producing 7,323 5,725 4,682 3,959
Proved undeveloped 21,205 14,900 10,776 7,958
-------- ------- ------- -------
Total proved 30,298 22,401 17,094 13,399
Probable 22,613 11,780 6,770 4,250
-------- ------- ------- -------
Proved + probable 52,911 34,181 23,864 17,649
-------- ------- ------- -------
-------- ------- ------- -------


Future prices used in the forecast of net revenue are based on those estimated by AJM as at December 31, 2005 as summarized below:



Forecast of Future Prices
-----------------------------------------------------------------------
Oil Oil Natural Gas
WTI Edmonton AECO Average
Year $US/bbl $CDN/bbl $CDN/mcf
---- ------------- ------------- -------------

2006 60.00 69.60 11.50
2007 61.20 71.00 10.50
2008 62.45 72.50 8.90
2009 61.60 71.50 8.50
2010 59.55 69.10 8.70
2011 55.15 63.90 8.90
2012 56.35 65.30 9.10
2013 57.45 66.60 9.30
2014 58.60 67.95 9.50
2015 59.75 69.30 9.75
2016 60.90 70.70 10.00
2017 62.10 72.10 10.20
2018 63.40 73.60 11.45
2019 64.65 75.10 10.70
2020 65.95 76.60 10.90
2021 67.30 78.20 11.15
2022 68.65 79.80 11.45
2023 70.00 81.40 11.70
2024 71.40 83.05 12.00
2025 72.80 84.70 12.20
Thereafter, annual change 2.0% 2.0% 2.0%

Reserve Reconciliation
-----------------------------------------------------------------------
Light & Natural
Medium Natural Gas
Oil Gas Liquids Total
mbbls mmcf mbbls mboe
------- ------- ------- -------
Proved
July 1, 2005 - - - -
Operational additions - 7,952 - 1,326
Acquisition additions 1 31 1 7
Revisions (1) (23) (1) (6)
Production - (32) - (6)
------- ------- ------- -------
December 31, 2005 - 7,928 - 1,321

Probable
July 1, 2005 - - - -
Operational additions - 3,964 - 661
Acquisition additions - 9 - 2
Revisions - (9) - (2)
Production - - - -
------- ------- ------- -------
December 31, 2005 - 3,964 - 661

Proved + probable
July 1, 2005 - - - -
Operational additions - 11,916 - 1,987
Acquisition additions 1 40 1 9
Revisions (1) (32) (1) (8)
Production - (32) - (6)
------- ------- ------- -------
December 31, 2005 - 11,892 - 1,982
------- ------- ------- -------
------- ------- ------- -------


Finding costs are derived by dividing all exploratory, development and acquisition costs incurred in a period by the proved and probable reserves added in that period. These FD&A costs are further adjusted to include any future development activity required to place the reported reserves on production.

The average FD&A costs for 2005, including future development costs, are estimated at $10.77 per proved + probable boe and $16.13 per proved boe.

Operational Update

NuLoch's current production base and most of its prospects are focused on natural gas and our long-term outlook for the commodity remains very positive. However, natural gas prices have recently entered a period of high volatility and the Company is prudently adjusting its strategy. We believe that opportunities to farm-in on natural gas prospects may be enhanced in the near-term and we are directing our efforts to take advantage of these changes in the market. We will defer further drilling of the proved undeveloped locations on our Enchant Second White Specks shallow gas property until the fall of 2006 with a view to capturing higher natural gas prices next winter.

Drilling of the Mannville natural gas locations, previously discussed in our news release of January 16, 2006, is expected to commence in April. We have committed to drill three wells and may drill up to six.

NuLoch has recently obtained an opportunity to drill a further Mannville well at Enchant targeting natural gas that is scheduled for the second quarter of 2006.

For 2006, the Company is budgeting a $13.7 million capital program, expects production to average 500 boe/d and generate cash flow of $4.1 million utilizing a natural gas price forecast that averages $7.79 per mcf at AECO.

The Company's Chairman, Allan Spurgeon, comments "I am delighted with the progress of the Company since its grass-roots start-up in July 2005. We completed two financings raising $12.3 million, drilled, completed and tied-in over 40 wells, added nearly 2 million long-life barrels at competitive FD&A costs, while adding 500 boe/d of initial production. Now that we have established our base we can focus on exploration as our next phase of development."

Cautionary Statements

Certain statements in this document or incorporated herein by reference may constitute "forward-looking statements". These forward-looking statements can generally be identified as such because of the context of the statements including words such as the Company "believes", "anticipates", "expects" or words of a similar nature. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's products; industry capacity; the ability of the Company to implement its business strategy, including exploration and development activities; the ability of the Company to complete its capital programs; successful negotiations with bankers and other third parties; the success of exploration and development activities; production levels; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations); site restoration costs; and other circumstances affecting revenues and expenses.

Disclosure provided herein in respect of boe units may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf of natural gas to 1 bbl of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.

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

Contact Information

  • NuLoch Resources Inc.
    James N. McIndoe
    President and CEO
    (403) 920-0455
    (403) 920-0457 (FAX)
    Email: nuloch@nuloch.ca
    or
    NuLoch Resources Inc.
    2200, 444 - 5th Avenue SW
    Calgary, Alberta T2P 2T8