Redcliffe Exploration Inc.
TSX VENTURE : RXI.A
TSX VENTURE : RXI.B

Redcliffe Exploration Inc.

April 12, 2007 07:30 ET

Redcliffe Exploration Inc. ('Redcliffe') Provides an Update on Current Production, Q1 Drilling Results and 2007 Planned Activity

CALGARY, ALBERTA--(CCNMatthews - April 12, 2007) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS.

Redcliffe Exploration Inc. (TSX VENTURE:RXI.A) (TSX VENTURE:RXI.B) ("Redcliffe" or the "Company") is an exploration and development junior oil and gas company focused in the Pembina and Peace River Arch areas of Alberta. The Company commenced operations in September 2006. Redcliffe targets multi-zoned natural gas targets at depths up to 2800 meters with a corporate balance between lower risk prospects in the Pembina area and higher potential prospects in the Peace River Arch.

Production Update

Redcliffe is currently producing at an estimated 500 boepd, 84% of which is natural gas. This production includes the recent Gold Creek 4-11 well that has been brought on production at approximately 2,000 mcfpd plus associated liquids. Redcliffe has a 40% interest in this gas discovery. In addition, existing drilled and tested wells are expected to provide approximately 400 boepd once tie-in, facility and transportation/processing arrangements are complete. The majority of this new production is scheduled to be on production by the end of July 2007. Since a portion of this facility construction is being undertaken by third parties Redcliffe has no direct control as to the exact timing. The timing of the initial production from the second gas discovery at Gold Creek will have a major impact on these production levels. Redcliffe has a 22.5% interest in this well that tested over 1,400 boepd of natural gas and associated liquids from two zones. The third party downstream facility expansion is expected to be complete by July and this well will be brought onto production at that time.

Q1 2007 Drilling Activity

Redcliffe participated in the drilling of 3 (1.225 net) wells in the first quarter of 2007 resulting in 2 (0.625 net) gas wells and 1 (0.414 net) dry hole. Both of the successful wells have identified at least one follow-up location. All of these wells were drilled in the Company's core Pembina focus area. The two successful gas wells will be brought on production late in the second quarter subject to normal access and third party facility considerations.

2007 Planned Drilling Activity

Redcliffe is proposing to undertake an active drilling program focused on natural gas during 2007. The capital budget has been established at $20 million, of which over 70% will be allocated to the drilling and completion of 25 wells, including the three wells drilled in the first quarter. This activity will be split approximately 67% in the Pembina project area and 33% in the Peace River Arch. Funding for this program will be provided by a combination of cash flow, available bank lines and public or private equity financings. As such the ultimate extent of the program will be subject to market conditions that include oil and gas pricing as well as the availability of equity and flow through funding. Redcliffe has current tax pools of over $59 million to shelter future income and enhance our access to flow through equity financings.

Highlights of this planned 2007 drilling activity will include:

- Follow-up drilling in the Gold Creek area to the two major 2006 gas and liquids discoveries;

- New exploration on six drilling prospects in the Wapiti/Elmworth area and the additional 4,280 net acres acquired by the Company at Crown land sales since the beginning of 2007; and

- Follow-up drilling to the 2006 gas and oil discoveries in the Pembina core area where Redcliffe has identified over 20 drilling locations.

On the acquisition front, Redcliffe will continue to seek out strategic asset acquisitions in 2007. During the second quarter the Company plans to initiate discussions with Redcliffe Energy Ltd. ("REL") towards merging this private company into Redcliffe Exploration Inc. REL was created in November/December 2005 with the expressed purpose to develop exploration prospects for the planned public entity. REL is currently producing approximately 100 boepd (40% Nat. Gas and 60% Oil+NGL's) with a further 275 (80% Nat. Gas and 20% Oil+NGL's) boepd awaiting tie-in. These tie-ins are wells partnered with Redcliffe. Independent committees from both Boards of Directors along with appropriate financial advisor(s) will negotiate the terms and structure of this transaction subject to requisite regulatory authority.

2007 will be a formative year in the establishment of Redcliffe as a growing junior in the oil and gas sector. It would be premature to set specific average or exit rate production predictions due to the moving pieces associated with the production tie-ins, the potential acquisition of REL and the significant planned capital program at this time. However, with current production levels increasing and with these potential additions Redcliffe will look to exceed the 1000 boepd plateau during 2007 and anticipates further increases by year-end.

Redcliffe's strategy is to build shareholder value through internally generated exploration and development drilling, and through selective acquisitions.

Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect the Corporation's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. BOE may be misleading, particularly if used in isolation. A BOE conversion 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

  • Redcliffe Exploration Inc.
    Daryl H. Connolly
    President & CEO
    (403) 539-8440
    (403) 539-8433 (FAX)
    Email: dconnolly@redcliffe.ca
    or
    Redcliffe Exploration Inc.
    George Gramatke
    Vice President, Finance & CFO
    (403) 539-8442
    (403) 539-8433 (FAX)
    Email: ggramatke@redcliffe.ca