Primary Petroleum Corporation

Primary Petroleum Corporation

November 29, 2007 08:30 ET

Primary Petroleum to Acquire the Prairie Dell Field and 70,000 Acres in Montana

CALGARY, ALBERTA--(Marketwire - Nov. 29, 2007) - Primary Petroleum Corporation (TSX VENTURE:PIE) ("Primary" or the "Company") announced today that it has agreed to acquire subject to certain conditions and board and regulatory approval, the shares of AP Petroleum Company LLC ("AP Petroleum"), a private Montana corporation. AP Petroleum owns 100% interest in the Prairie Dell gas field, 31 producing wells, production facilities, 81,300 (gross) or 78,500 (net) acres of prospective oil and gas leases in Montana, and over 10 miles of 2D seismic and 3 sq. mi. of 3D seismic data. The overriding royalty is 12.5% on all of the leases owned by AP Petroleum.

The total consideration for this proposed acquisition is approximately C$3,482,500. This consideration is made up of a cash payment of C$2,625,000 plus approximately 1,071,875 units of Primary. Each unit will consist of one common share plus a one year warrant exercisable into one common share at a price of $1.10.

In addition, the parties expect to finalize the transaction structure, complete due diligence, receive consent from the Venture Exchange and enter into a formal agreement as soon as possible, at which time Primary expects to issue a further press release setting out final details of the transaction.

Currently 31 gas wells are producing from the Bow Island, Sunburst and Swift Formations at a rate of 360,000 cubic feet per day (60 boe/d) (barrels of oil equivalent per day). The current sale price is US$6.10 per thousand cubic feet of gas.

Primary has reviewed the Prairie Dell field for potential infill and development wells. The preliminary findings of this review have identified 13 infill locations and one re-completion. Based on previous testing, the Devonian and Madison formations have been identified for future gas production potential as the Potlack #1 well tested 2.6 million cubic feet gas per day (433 boe/d) and the Madison formation tested 20 boe/d (116 mcf/d). Neither zone has produced to date. The Company has reviewed the undeveloped lands and its preliminary findings show gas potential in the Sawtooth, Bow Island and Eagle formations.

An independent evaluation report of the Prairie Dell field, effective January 01, 2007, was prepared by AJM Petroleum Consultants of Calgary, AB. The reserve estimates set forth in this report and summarized below were prepared in accordance with the Canadian Oil and Gas Evaluation Handbook. The report estimated the Proved Plus Probable Reserves to be 1.4 billion cubic feet gas (240.7Mboe). Based on price and cost forecasts and the aggregate consideration of approximately $3,482,500, Primary will be paying $14.47/boe in connection with this acquisition.

"We are very pleased with this acquisition as it is in close proximity to our current projects in Montana," stated Mike Marrandino, President & CEO. "This producing field and gas facilities along with the undeveloped prospective leases provides Primary with further potential for growth. We are moving forward with our mandate in Montana to acquire undervalued oil & gas prospects; exploit them using current modern geological science in order to increase production, reserves and shareholder value. Upon completion of this transaction, Primary's prospective oil and gas land holdings in Montana will increase by 26% to over 385,000 net acres."

The Company will pay a finder's fee, payable in cash and/or securities to certain entities, in connection with the introduction of this acquisition made by the finders. Such finders' fees will be paid in accordance with TSX Venture Exchange policies.

In this press release we have derived barrels of oil equivalent (BOEs) 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.

Primary is a growing oil and gas company actively engaged in exploration and development activities in Montana and Alberta with its head office in Calgary and offices in Shelby, Montana. Primary's management and technical teams include accomplished oil and gas exploration and development personnel, with extensive experience. The Company's mandate is to continue to aggressively acquire oil & gas prospects of merit in the Sedimentary Basin of the Western United States and Western Canada with a focus on acquiring assets in Montana and the surrounding states whereby Primary Petroleum maintains control of its own land plays and drilling operations.

To find out more about Primary Petroleum Corporation (TSX VENTURE:PIE) please visit the Company's website at

This news release contains certain forward-looking statements relating, but not limited, to Primary's business prospects and strategies, plans and expectations concerning the proposed acquisition of AP Petroleum. Statements concerning reserves, production and potential production are also forward-looking statements, as they reflect estimates as to the volume and nature of petroleum deposits that will be found to be present upon drilling, and, in the case of reserves, the expectation that the deposits can be economically exploited in the future. There can be no assurance that the proposed acquisition of AP Petroleum will be completed as proposed or at all. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could" or similar words suggesting future outcomes. Readers are cautioned to not place undue reliance on forward-looking information because it is possible that Primary will not achieve the predictions, forecasts, projections and other forms of forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties. A change in any one of these factors could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include, but are not limited to, the following: market conditions, law or government policy, operating conditions and costs, project schedules, operating performance, demand for oil, gas and related products, price and exchange rate fluctuations, commercial negotiations or other technical and economic factors. For additional information relating to risk factors please refer to "Risk Factors" in Primary's prospectus dated August 17, 2007 relating to its initial public offering of securities and filed on SEDAR at Primary undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Because of the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors should not place undue reliance on these forward-looking statements.

This news release has been prepared by management. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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