Petro-Reef Resources Ltd.

Petro-Reef Resources Ltd.

September 27, 2010 16:20 ET

Petro-Reef Resources Ltd. Announces Operations Update

CALGARY, ALBERTA--(Marketwire - Sept. 27, 2010) - Petro-Reef Resources Ltd. (TSX VENTURE:PER),

Petro-Reef is pleased to announce that construction of its previously announced amine facility is expected to be completed on October 4, 2010. The original completion date of September 15 was pushed back due to wet weather which prevented the delivery of key equipment until this week. When the facility is completed, Petro-Reef anticipates initially bringing onstream approximately 200 - 300 boe/d of production, including an estimated 100-200 bbls/d of crude oil. 

With a completion date for the amine facility now finalized, Petro-Reef is in the process of submitting application to drill up to three follow-up locations on the same section as Petro-Reef's recent discovery well. Petro-Reef currently has two well licenses approved on the section, and has identified a third prospective follow-up location. Petro-Reef anticipates commencing drilling operations for the first follow-up well later this week. It is anticipated that the additional follow-up locations will be drilled in November. With the completion of the amine facility and the close proximity of the drilling locations to the new amine facility, any drilling success at the three follow-up locations will result in short lead time from test to onstream dates.

Consistent with its strategy of hedging production to provide certainty of cash flow to allow for capital expenditure planning, Petro-Reef is pleased to announce it has entered into a fixed price contract for 2,000 GJ / D for the period of January 1, 2011 – December 31, 2011 at a price of $4.675 / GJ. In addition to this latest hedging position, Petro-Reef currently has a floor of $4.00 / GJ on 3,000 GJ / D until March 31, 2010. Petro-Reef will continue to pursue additional hedging positions when opportunities arise to provide funding certainty for ongoing capital expenditures.

Forward-Looking Statements: All statements, other than statements of historical fact, set forth in this news release, including without limitation, assumptions and statements regarding reservoirs, resources and reserves, future production rates, exploration and development results, financial results, and future plans, operations and objectives of the Corporation are forward-looking statements that involve substantial known and unknown risks and uncertainties. Some of these risks and uncertainties are beyond management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, environmental risks, industry competition, availability of qualified personnel and management, availability of materials, equipment and third party services, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Corporation at the time of preparation, may prove to be incorrect. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Reference is made to barrels of oil equivalent (boe). Barrels of oil equivalent may be misleading, particularly if used in isolation. In accordance with National Instrument 51-101, a boe conversion ratio for natural gas of 6 Mcf : 1 bbl has been used, which 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 TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Petro-Reef Resources Ltd.
    John Pantazopoulos
    Vice-President Finance and CFO
    (403) 265-6444
    (403) 264-1348 (FAX)
    Petro-Reef Resources Ltd.
    970, 10655 Southport Road S.W.
    Calgary, Alberta T2W 4Y1