Petroflow Energy Ltd.
TSX VENTURE : PEF

Petroflow Energy Ltd.

March 26, 2008 10:55 ET

Petroflow Energy Ltd. Announces 2007 Reserves Information

CALGARY, ALBERTA--(Marketwire - March 26, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA.

Petroflow Energy Ltd. (TSX VENTURE:PEF) ("Petroflow" or the "Company") is pleased to announce the summary results of its year end December 31, 2007 reserve report, (the "Report") prepared by Haas Petroleum Engineering Services, Inc. ("Haas") as of January 1, 2008. The properties evaluated in the Report are located in Oklahoma, New Mexico, Texas and Alberta. The Report was prepared for the purpose of evaluating the Company's Petroleum and Natural Gas Reserves according to the Canadian Oil and Gas Evaluation Handbook (COGEH) with reserve definitions consistent with National Instrument 51-101 Standards of Disclosure for Oil & Gas Activities. In preparing the Report, Haas utilized the January 1, 2008 Summary of Price Forecasts as prepared by McDaniel & Associates Consultants Ltd., an excerpt of which is included below.

SUMMARY HIGHLIGHTS

All of Petroflow's reserves have been developed since August 2005. The Company initially acquired three producing properties with proved reserves of 1.6 million barrels of oil equivalent (boe) (proved plus probable reserves of 1.7 million boe) as of December 31, 2005. Since that time all growth has occurred through drilling activities, representing a two year compounded growth rate in proved reserves of 357% (proved plus probable reserves of 393%).

The revenue assumptions in the Report are based on new gas contracts which have been finalized under a Letter of Intent. Payments under these new terms are effective January 1, 2008, and have been made for January gas deliveries. Final contracts should be signed within 30 days.

Petroflow is pleased to report the summary highlights of the Report in comparison to the prior year with all dollar amounts in Canadian dollars unless otherwise stated (using a US dollar exchange rate of $USD 1.00 = $CAD 0.9913).

RESERVES

At December 31, 2007 proved plus probable reserves more than doubled, increasing to 26.2 million boe from 12.9 million boe at December 31, 2006, an increase of 103%. Proved plus probable reserves using constant 2007 year end prices were 26.1 million boe.

Total proved reserves also more than doubled, increasing to 20.4 million boe at December 31, 2007 compared to 9.6 million boe at December 31, 2006, an increase of 113%. Total proved reserves using constant 2007 year end prices were 20.3 million boe.

The value of before tax proved and probable reserves (NPV 10%) increased from $177.3 million to $358.1 million, based on forecast prices, an increase of 102%. The Report also quantified the NPV 10% value of proved plus probable reserves using December 31, 2007 constant prices at $309.3 million.

The value of before tax proved reserves (NPV 10%) increased from $145.1 million to $300.6 million, based on forecast prices, an increase of 107%. The Report also quantified the NPV 10% value of proved reserves using December 31, 2007 constant prices at $260.3 million.

All reserves added during 2007 can be attributed to successful drilling operations in Oklahoma and New Mexico.

The following tables provide additional information regarding the reserves and applicable net present values.



Summary of Oil and Gas Reserves
Forecast Prices and Costs

Oil & Condensate Natural Gas Natural Gas
Liquids
w.i.(1) n.r.i.(2) w.i. n.r.i. w.i. n.r.i.
Reserve Category Mbbl Mbbl Mbbl Mbbl Mmcf Mmcf

Proved Producing 1,366 1,130 1,588 1,270 29,998 24,715
Proved Developed
Non Producing 290 236 390 312 4,702 3,810
Proved Undeveloped 842 744 3,201 2,632 41,229 33,187
---------------------------------------------------------
Total Proved 2,498 2,110 5,179 4,214 75,929 61,712

Probable 650 527 2,293 1,834 16,875 13,587
---------------------------------------------------------

Grand Total 3,148 2,637 7,472 6,048 92,804 75,299
---------------------------------------------------------
---------------------------------------------------------

(1) w.i. refers to working interest reserves
(2) n.r.i. refers to net revenue interest (after royalty) reserves


Net Present Values of Future Net Revenues
Forecast Prices and Costs

Before Income Taxes
At 0% At 5% At 10% At 15%
Reserve Category $000 $000 $000 $000

Proved Producing 297,928 209,242 161,247 131,476
Proved Developed Non Producing 59,873 38,586 28,467 22,556
Proved Undeveloped 306,053 180,270 110,909 68,823
------------------------------------------
Total Proved 663,854 428,098 300,623 222,855

Probable 165,451 95,962 57,476 34,433
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Grand Total 829,305 524,060 358,099 257,268
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------------------------------------------


Summary of Oil and Gas Reserves
Constant Prices and Costs

Oil & Condensate Natural Gas Natural Gas
Liquids
w.i. n.r.i. w.i. n.r.i. w.i. n.r.i.
Reserve Category Mbbl Mbbl Mbbl Mbbl Mmcf Mmcf

Proved Producing 1,338 1,106 1,588 1,270 29,510 24,315
Proved Developed
Non Producing 290 236 390 312 4,596 3,722
Proved Undeveloped 841 744 3,201 2,632 41,120 33,097
---------------------------------------------------------
Total Proved 2,469 2,086 5,179 4,214 75,226 61,134

Probable 650 527 2,293 1,834 16,875 13,581
---------------------------------------------------------

Grand Total 3,119 2,613 7,472 6,048 92,101 74,715
---------------------------------------------------------
---------------------------------------------------------

(1) w.i. refers to working interest reserves
(2) n.r.i. refers to net revenue interest (after royalty) reserves


Net Present Values of Future Net Revenues
Constant Prices and Costs

Before Income Taxes
At 0% At 5% At 10% At 15%
Reserve Category $000 $000 $000 $000

Proved Producing 254,498 185,748 146,104 120,488
Proved Developed Non Producing 51,156 34,574 26,159 21,014
Proved Undeveloped 244,326 144,942 88,025 52,618
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Total Proved 549,980 365,264 260,288 194,120

Probable 141,043 82,407 49,045 28,717
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Grand Total 691,023 447,671 309,323 222,837
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Summary of Pricing Assumptions
As of December 31, 2007

WTI Natural Gas Natural Gas
Liquids
Cushing Henry Hub
($US/bbl) ($US/mmbtu) ($US/gal)
----------------------------------------------------------------------------

2008 Forecast Prices 90.00 7.75 1.30

December 31, 2007 Constant Prices 95.68 6.80 1.30


Forward-Looking Statements

This news release contains statements about oil and gas production and operating activities that may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation as they involve the implied assessment that the resources described can be profitably produced in the future, based on certain estimates and assumptions.

Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated by Petroflow and described in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, adverse general economic conditions, operating hazards, drilling risks, inherent uncertainties in interpreting engineering and geologic data, competition, reduced availability of drilling and other well services, fluctuations in oil and gas prices and prices for drilling and other well services, government regulation and foreign political risks, fluctuations in the exchange rate between Canadian and US dollars and other currencies, as well as other risks commonly associated with the exploration and development of oil and gas properties. Additional information on these and other factors, which could affect Petroflow's operations or financial results, are included in Petroflow's reports on file with Canadian securities regulatory authorities. We assume no obligation to update forward-looking statements should circumstances or management's estimates or opinions change unless otherwise required under securities law.

This announcement is not an offer to sell, or a solicitation of an offer to buy, Petroflow's shares in the United States. Petroflow's shares have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and have not been and will not be offered or sold in the United States except in transactions exempt from the registration requirements of that Act and applicable U.S. state securities laws.

BOEs derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf: 1 bbl). BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl 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 has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Macam Investor Relations
    Cameron MacDonald
    President & CEO
    (403) 695-1006 or Toll Free 1-866-264-0743
    or
    Petroflow Energy Ltd.
    John Melton
    President & CEO
    (504) 453-2926
    or
    Petroflow Energy Ltd.
    Duncan Moodie
    CFO
    (403) 539-4311