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

NuLoch Resources Inc.

March 18, 2008 16:25 ET

NuLoch Resources Announces 47% Increase in Year-end Reserve Value

CALGARY, ALBERTA--(Marketwire - March 18, 2008) - NuLoch Resources Inc. (TSX VENTURE:NLR.A) (TSX VENTURE:NLR.B) increased its proved plus probable reserve value by 47 percent to exit 2007 at $34.4 million (before tax, 10 percent DCF). Reserve volumes increased by 23 percent to 2.7 million boe. The increase in value reflects NuLoch's success in augmenting its large, long-life, shallow gas reserve base by drilling wells with higher netbacks and higher productivity.

NuLoch was incorporated on May 13, 2005 and commenced operations on July 1, 2005. Production averaged 304 boe/d in 2007 and, currently, is approximately 440 boe/d. Two natural gas wells (2.0 net) are awaiting tie-in and have been classified as proved undeveloped in the December 31, 2007 reserve report. A third well (0.6 net) was completed in January 2008, is awaiting tie-in, and its reserves have been classified as probable. These three wells are expected to commence production in the second quarter at a combined net rate of approximately 2.0 mmcf/d (330 boe/d).

Reserves of Petroleum and Natural Gas

NuLoch retained AJM Petroleum Consultants (AJM) to conduct the evaluation of the Company's petroleum and natural gas reserves effective as at December 31, 2007. AJM's report was compiled pursuant to the guidelines of National Instrument 51-101.

The successful 2007 drilling program provided a 37 percent increase to proved and probable reserve volumes. After accounting for revisions and production, overall reserves have increased by 23 percent. Additions to proved reserves, net of revisions, replaced production by 2.9 times. Net proved and probable additions replaced production by 5.4 times.

The value of reserves has increased by 47 percent to $34.4 million.



Changes in Reserves
----------------------------------------------------------------------------
(Mboe) Value
---------------------------- Before Tax
Proved Probable Total 10% DCF
-------- -------- -------- ----------
December 31, 2006 1,450 712 2,162 $23,444
Additions 448 360 808
Revisions (130) (74) (204)
Production (111) - (111)
-------- -------- -------- ----------
December 31, 2007 1,657 998 2,655 $34,427
-------- -------- -------- ----------
-------- -------- -------- ----------
Percentage changes
Additions 31 % 50 % 37 %
Revisions (9)% (10)% (9)%
Production (8)% - (5)%
-------- -------- -------- ----------
Overall change 14 % 40 % 23 % 47 %
-------- -------- -------- ----------
-------- -------- -------- ----------

Company Gross Reserves as at December 31, 2007
----------------------------------------------------------------------------
Light &
Medium Natural
Oil Gas NGL Total
(Mbbls) (MMcf) (Mbbls) (Mboe)
------- ------- ------- -------
Proved producing 153 3,869 6 804
Proved non-producing - - - -
Proved undeveloped - 5,033 15 853
------- ------- ------- -------
Total proved 153 8,902 21 1,657
Probable 84 5,341 23 998
------- ------- ------- -------
Total proved and probable 237 14,243 44 2,655
------- ------- ------- -------
------- ------- ------- -------

Forecast Net Revenue as at December 31, 2007
----------------------------------------------------------------------------
Before Income Tax
-------------------------------
$000s, discounted at 0% 5% 10% 15%
------- ------- ------- -------

Proved producing 21,324 17,697 15,118 13,238
Proved non-producing - - - -
Proved undeveloped 13,358 8,981 6,148 4,230
------- ------- ------- -------
Total proved 34,682 26,678 21,266 17,468
Probable 32,285 19,422 13,161 9,739
------- ------- ------- -------
Total proved and probable 66,967 46,100 34,427 27,207
------- ------- ------- -------
------- ------- ------- -------

After Income Tax
-------------------------------
$000s, discounted at 0% 5% 10% 15%
------- ------- ------- -------

Proved producing 19,313 16,221 13,990 12,346
Proved non-producing - - - -
Proved undeveloped 10,124 6,631 4,340 2,779
------- ------- ------- -------
Total proved 29,437 22,852 18,330 15,125
Probable 24,265 14,502 9,737 7,149
------- ------- ------- -------
Total proved and probable 53,702 37,354 28,067 22,274
------- ------- ------- -------
------- ------- ------- -------

Future prices used in the forecast of net revenue are based on those
estimated by AJM as at December 31, 2007. The first five years of forecast
prices are summarized below:


Five-Year Forecast of Future Prices
----------------------------------------------------------------------------
Oil Oil Natural gas
WTI Edmonton AECO average
Year ($US/bbl) ($CDN/bbl) ($CDN/Mcf)
---- ------------- ------------- -------------

2008 85.00 85.65 6.90
2009 81.60 84.75 7.75
2010 81.15 87.05 8.10
2011 79.60 87.25 8.50
2012 77.95 85.40 8.65


Reserve Reconciliation (Company Working Interest)
----------------------------------------------------------------------------
Light &
Medium Natural
Oil Gas NGL Total
(Mbbls) (MMcf) (Mbbls) (Mboe)
------- ------- ------- -------
Proved
December 31, 2006 87 8,116 11 1,450
Operational additions 80 2,090 20 448
Acquisition additions - - - -
Revisions 2 (740) (9) (130)
Production (16) (564) (1) (111)
------- ------- ------- -------
December 31, 2007 153 8,902 21 1,657

Probable
December 31, 2006 44 3,996 2 712
Operational additions 40 1,790 21 360
Acquisition additions - - - -
Revisions - (445) - (74)
Production - - - -
------- ------- ------- -------
December 31, 2007 84 5,341 23 998

Proved plus probable
December 31, 2006 131 12,112 13 2,162
Operational additions 120 3,880 41 808
Acquisition additions - - - -
Revisions 2 (1,185) (9) (204)
Production (16) (564) (1) (111)
------- ------- ------- -------
December 31, 2007 237 14,243 44 2,655
------- ------- ------- -------
------- ------- ------- -------


Wells Drilled in 2007

A total of $7.5 million was invested in the 2007 capital program. Nine (7.1 net) wells were drilled in the year. Of this total, three (2.6 net) are natural gas wells scheduled to commence production in the second quarter of 2008. The other three successful wells (1.7 net) were on production in 2007.



Natural Success
Oil gas Suspended Dry Total ratio
------- ------- ------- ------- ------- -------
Gross 1 5 - 3 9
Net 0.3 4.0 - 2.8 7.1 61%


Finding, Development and Acquisition (FD&A) Costs

For 2007, FD&A costs were $17.76 per proved boe and $10.28 per proved plus probable boe before including revisions to prior year reserve estimates.

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

The Company has not yet released its audited financial statements for the year ended December 31, 2007. Additions to property and equipment in 2007 are estimated at $7,621,000 but are subject to audit and may be revised as necessary.



FD&A Costs
For the period from inception to December 31, 2007
(Thousands)
----------------------------------------------------------------------------
Cumu-
2005 2006 2007 lative
-------- -------- -------- --------

Additions to property and equipment $11,482 $11,552 $ 7,621 $30,655

Add (deduct):
Change in asset retirement
obligations (393) (20) (68) (481)
Office equipment (120) (17) (8) (145)
Change in future development costs
- Proved reserves 10,437 (1,997) 410 8,850
- Probable reserves - - 351 351

-------- -------- -------- --------
$21,406 $ 9,518 $ 8,306 $39,230
-------- -------- -------- --------
-------- -------- -------- --------

FD&A costs per boe
- Proved $ 16.13 $ 40.90 $ 25.02 $ 20.71
- Proved plus probable $ 10.77 $ 33.50 $ 13.75 $ 13.64


Alberta - New Royalty Framework

On October 25, 2007, the Government of Alberta disclosed its proposal for a new royalty structure to become effective on January 1, 2009. Royalties calculated pursuant to the proposal are sensitive to well production rates and commodity prices for oil and natural gas. The proposals may be subject to modification and have not yet been enacted. However, based upon currently available information, AJM has estimated that the Company's net present value of future cash flows from proved plus probable reserves, before-tax and using a 10 percent discount factor, would decrease by approximately 6 percent effective December 31, 2007.

ADVISORIES

Use of Barrels of Oil Equivalent (boe)

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 may not represent a value equivalency at the wellhead.

Use of Estimates

The net present value of future net revenue attributable to the Company's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment costs for only those wells assigned reserves by AJM. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to effects of aggregation. Actual recoveries may be greater than or less than the estimates provided herein and there is no guarantee that the estimated reserves will be recovered. It should not be assumed that the values of future net revenue attributable to the Company's reserves represent the fair market value of those reserves.

Calculation of Finding, Development and Acquisition Costs

Finding costs per boe of reserves added are a rough measure of the average per unit costs of finding and developing petroleum and natural gas reserves.

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 reserve additions for that year.

Forward-Looking Statements

Certain statements in this document or incorporated herein by reference constitute "forward-looking statements". These forward-looking statements can generally be identified as such because of the context of the statements, including words indicating that the Company "believes", "anticipates", "expects", "plans" 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); asset retirement obligations; and other circumstances affecting revenues and expenses.

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

Contact Information

  • NuLoch Resources Inc.
    R. Glenn Dawson
    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