Pearl Exploration and Production Ltd.
TSX VENTURE : PXX

Pearl Exploration and Production Ltd.

January 08, 2007 18:46 ET

Pearl Announces Sale of Gulf of Mexico Assets

CALGARY, ALBERTA--(CCNMatthews - Jan. 8, 2007) - Pearl Exploration and Production Ltd. ("Pearl" or the "Company") (TSX VENTURE:PXX) is pleased to announce that the Company has entered into a letter of intent with Kit Resources Ltd. ("Kit") (TSX VENTURE:KIT) pursuant to which Pearl will transfer all of its Gulf of Mexico assets to Kit in exchange for 10 million shares of Kit, each Kit share having a deemed value of $1.20.

The Gulf of Mexico assets to be transferred are comprised of Pearl's 100% working interest in five Gulf of Mexico offshore blocks, farm-in rights to acquire a 25% working interest in a sixth offshore block, and all physical data, work products and files and records associated with these blocks. Closing of the transaction is subject to completion by Kit, expected in early February, 2007, of a satisfactory due diligence review of the Gulf of Mexico assets, and all requisite regulatory approvals.

"This transaction will allow Pearl to continue to participate in high potential, shallow water natural gas exploration in the Gulf of Mexico through an equity ownership in Kit," advised Gary Guidry, President of Pearl. "It also relieves Pearl of any budget obligations for exploration or development in respect of these assets. As previously announced, 90% of the Pearl 2007 budget will be directed at near term cash flow and production development projects primarily located in Western Canada. In addition, 10% of the 2007 capital program will be directed at high potential exploration and exploitation opportunities, primarily located in Western Canada and Texas, which will have a significant impact if successful."

Pearl is a public company focused on delivering disciplined growth by establishing a North American portfolio of oil and gas projects with an emphasis on large resource opportunities. Additional information on Pearl is available on our website at www.pearleandp.com.

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company's capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

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

Contact Information

  • Pearl Exploration and Production Ltd.
    Gary Guidry
    President and Chief Executive Officer
    (403) 716-4051
    (403) 261-1007 (FAX)
    Email: gary.guidry@tykoil.coM
    or
    Pearl Exploration and Production Ltd.
    Gary Hyde
    Chief Operating Officer
    (403) 716-4063
    (403) 261-1007 (FAX)
    Email: gary.hyde@tykoil.com
    or
    Pearl Exploration and Production Ltd.
    Arlene Weatherdon
    Chief Financial Officer
    (403) 716-4051
    (403) 261-1007 (FAX)
    Email: arlene.weatherdon@tykoil.com
    or
    Pearl Exploration and Production Ltd.
    Sophia Shane
    Corporate Development
    (604) 806-3575
    Email: sophias@namdo.com
    Website: www.pearleandp.com