Point North Energy Ltd.
TSX : PNY

Point North Energy Ltd.

March 28, 2006 00:41 ET

Point North Provides Tax Status and Reserves Update

CALGARY, ALBERTA--(CCNMatthews - March 28, 2006) - Point North Energy Ltd. (TSX:PNY) announces a tax status and reserves update.

In connection with completion of Point North's 2005 year end audited financial statements, the company has determined that it has a 2005 potential tax liability of up to $7 million arising primarily from a taxable gain on the sale of various assets as part of the reorganization of Purcell Energy Ltd. completed in November 2005. The amount of the tax liability, which was unanticipated, is subject to confirmation by the tax authorities. The company is finalizing the amount of the tax liability and will provide further information with its audited 2005 year end financial statements, which are to be released on March 31, 2006.

Point North also announces that its proved and probable, gross working interest reserves for Fort Liard for the year ended December 31, 2005, based on an independent engineering evaluation, are 4.6 bcf and have a before tax present value of $9.2 million discounted at 10%, compared to 21.2 bcf and a $42.5 million present value as at December 31, 2004. There was no reduction to the original gross raw gas in place reserves for Fort Liard of 695 bcf. In addition to the impact of drilling and production results at Fort Liard that were previously disclosed by the company, management believes that at least part of the reduction in reserves is due to Point North's higher concentration risk than was the case for Purcell Energy at the end of 2004.

Point North's total proved plus probable gross working interest reserves of oil and gas for the year ended December 31, 2005, based on an independent engineering evaluation, are 1,155,000 boe with a 10% before tax net present value of $15.8 million. The company has undeveloped lands of 24,018 net acres, which management estimates has a market value of approximately $3.0 million. Complete reserves information will be included with Management's Discussion and Analysis and National Instrument 51-101 filings to be filed on March 31, 2006.

Point North has no bank debt at the present time. The company is a northern-focused junior oil and gas exploration and development company with assets in Fort Liard, N.W.T., northeast B.C., and northwest Alberta, and is the successor company to Purcell Energy Ltd. after a corporate reorganization completed on November 2, 2005.

Forward Looking Statements

Information in this press release contains forward-looking statements including expectations of future production and components of cash flow and earnings. Investors are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Point North. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to; operational risks in exploration, development and production, delays or changes in plans, risks associated with the uncertainty of reserves estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The risks outlined above should not be construed as exhaustive. Investors are cautioned not to place undue reliance on any forward-looking information. Point North undertakes no obligation to update or revise any forward-looking statements.

Note

In this news release the term barrel of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of one boe for 6,000 cubic feet of natural gas is based on an energy-equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.

Contact Information

  • Point North Energy Ltd.
    John Emery
    President & C.E.O.
    (403) 269-5803
    (403) 264-1336 (FAX)
    Website: www.pointnorthenergy.com
    or
    Iradesso Communications Corp.
    Stephanie K. Mesher
    (403) 503-0144 ext. 216