Petro-Reef Resources Ltd.
TSX VENTURE : PER

Petro-Reef Resources Ltd.

April 30, 2007 19:03 ET

Petro-Reef Resources Boosts Reserves, Cash Flow in 2006

CALGARY, ALBERTA--(CCNMatthews - April 30, 2007) - Petro-Reef Resources Ltd. (TSX VENTURE:PER) increased its proved plus probable reserves by 167% in 2006 to 1.3 million barrels of oil equivalent from 503,500 BOE in 2005. Even though natural gas prices fell from $9.99 per thousand cubic feet (Mcf) in December 2005 to $6.13/Mcf in 2006, the present value of the company's reserves increased 28% to $23.9 million in 2006 from $18.6 million in 2005. This amount is based on an independent reserves report by Sproule Associates Limited as at December 31, 2006 using constant prices and costs and discounted 10% before taxes. Reserves were 93% natural gas and 7% crude oil and natural gas liquids.

The complete reserves report for 2006, prepared in accordance with National Instrument 51-101, is available on SEDAR at www.sedar.com and on Petro-Reef's website at www.petro-reef.ca.



2006 HIGHLIGHTS

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FINANCIAL 2005 2006 % Change
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Crude Oil and Natural Gas Revenue
Net of Royalties and ARTC $ 3,224,567 $ 5,749,891 +78
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Cash Flow from Operations 2,007,713 $ 3,557,432 +77
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Net (Loss) Earnings from Operations $ 248,714 $ 65,060 -80
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Net (Loss) Earnings per Share $ 0.01 $ 0.00 -
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Capital Expenditures $ 2,374,843 $ 7,888,288 +232
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Total Assets $10,462,289 $15,056,446 +44
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Bank Balance (Loan) $ 397,904 $ (376,613) -
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Shareholder's Equity $ 6,029,968 $ 7,919,194 +31
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Common Shares Outstanding
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End of Period 21,438,924 23,685,291 +10
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Weighted Average 18,994,641 22,313,869 +17
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OPERATIONS
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Average Production
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Crude Oil and NGLs (Bbls/day) 2 25 +1,150
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Natural Gas (Mcf/day) 1,080 2,615 +142
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Total BOE per day 6:1 182 455 +150
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Finding & Development Cost per BOE (1) $ 5.27 7.15 +37
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Netbacks ($ per BOE) (3) $ 34.90 22.93 -34
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Reserve Replacement Ratio 2.41 7.14
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Average Selling Price
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Crude Oil ($ per BOE) 59.97 64.15 +7
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Natural Gas ($ per BOE) 57.43 36.90 -36
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NGL ($ per BOE) 55.50 57.20 +3
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Reserves (Proved plus Probable)
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Crude Oil and NGLs (Bbls) 1,000 95,000 +9,400
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Natural Gas (MMcf) 3,754 7,505 +100
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Total BOE 503,500 1,345,833 +167
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Present Value of Reserves (M$) (2)
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Undiscounted before Taxes $ 26,119 $ 36,499 +39
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Discounted before Taxes at 10% $ 18,639 $ 23,857 +28
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Reserve Life Index (P+P) 22.5 yrs 33.9 +51
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(1) After revisions due to NI 51-101.

(2) Using constant prices and costs.

(3) Using a conversion of 6,000 cubic feet of natural gas for one barrel of
oil equivalent.

(4) Crude oil sales were non-operated and reported with total oil and gas
sales combined.


2006 Year in Review

Petro-Reef capitalized on continued drilling success and strong commodity prices in 2006 to earn $65,060 on cash flow from operations of $3.6 million. Oil and natural gas revenue increased 78% to $5.7 million in 2006 from $3.2 million in 2005. Production for 2006 averaged 455 BOE/d in 2006 compared with 182 BOE/d in 2005 and 172 BOE/d in 2004. Current production is estimated to be 700 BOE/d with approximately 400 BOE/d behind pipe. Delivery of a compressor in mid-May is expected to result in increased production from the field by the beginning of June, weather permitting.

The company's 2006 production came from two core properties, Alexander/Qui Barre and Peavey/Morinville, both located near Edmonton, Alberta. Alexander/Qui Barre produced 88 percent of total production while Peavey/Morinville accounted for 11 percent. The remaining production came from minor working interest and royalty properties. Approximately 96 percent of the production was natural gas with 4 percent as crude oil and natural gas liquids. Petro-Reef drilled 10 development wells and four exploration wells in 2006. Of these, 10 were completed as natural gas wells, one was completed as an oil well and three were dry and abandoned, for a success ratio of 79 percent. The company expects to spend $7.5 million to drill 16 wells (9.1 net) in 2007, all in Alexander/Qui Barre.

Petro-Reef's management's discussion and analysis and audited financial statements for the year 2006 are available on SEDAR at www.sedar.com and on Petro-Reef's website at www.petro-reef.ca.

Petro-Reef Resources Ltd. is a Calgary-based junior oil and gas company focused on petroleum and natural gas lease acquisition and exploration, and development of crude oil and natural gas properties in Alberta, Canada.

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

Contact Information

  • Petro-Reef Resources Ltd.
    Joseph Werner
    President
    (403) 265-6444
    (403) 264-1348 (FAX)
    or
    Petro-Reef Resources Ltd.
    Theodore M. Donhuysen
    Vice-President Exploration and Production, and COO
    (403) 265-6444
    (403) 264-1348 (FAX)
    or
    Petro-Reef Resources Ltd.
    970, 10655 Southport Road S.W.
    Calgary, Alberta T2W 4Y1
    Email: info@petro-reef.ca
    Website: www.petro-reef.ca
    or
    Bryan Mills Iradesso
    Geoffrey Vanderburg
    (403) 503-0144 ext. 203
    Email gvanderburg@bmir.com