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

Redcliffe Exploration Inc.

February 12, 2010 09:15 ET

Redcliffe Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Feb. 12, 2010) -

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

Redcliffe Exploration Inc. ("Redcliffe" or the "Company") (TSX VENTURE:RXP.A) (TSX VENTURE:RXP.B) is pleased to provide the following operational update.

Drilling Results

In October 2009, Redcliffe announced a winter drilling program focused in the Gold Creek and Pembina areas of Alberta. Since that announcement, the Company has successfully drilled 4 (2.45 net) wells, resulting in 1 (0.25 net) oil well and 3 (2.2 net) potential natural gas wells.

The first well of the program (25% WI) was drilled horizontally at no cost to Redcliffe in December 2009 at Pembina for Cardium oil. The well was placed on production in January 2010 and after recovering load fluid, is currently being produced by the operator at approximately 125 bbl/d of light sweet Cardium oil. With the success of this well, the Company expects to drill a second horizontal well on the section in Q2 2010. Redcliffe has 12 (7.7 net) sections of land with Cardium potential.

Also during December 2009, Redcliffe drilled and subsequently cased a vertical well (100% WI) at Wapiti targeting Nikanassin gas and associated liquids. The well encountered two zones within the Nikanassin Formation. Operations have been delayed due to some downhole operational problems, but the well is now perforated and awaiting a fracture stimulation when equipment becomes available. The Nikanassin Formation represents a resource-style play that offers upside from natural gas prices combined with the predictable nature of a large gas deposit development utilizing horizontal drilling and multi-staged stimulation techniques. Redcliffe's first quarter drilling program at Gold Creek is focused on the establishment of the Nikanassin formation as a "resource" style asset. Vertical wells drilled to the north and utilizing optimized fracture completion techniques have achieved initial rates in the 3 to 5 mmcf/d range and other operators in the area have recently drilled horizontal Nikanassin wells. Redcliffe estimates that it has exposure to Nikanassin potential in approximately 88 sections in this core area at an average controlled working interest of 65%.

During Q1 2010, the Company participated in the drilling and casing of a vertical well (33% WI) at Gold Creek targeting Nikanassin gas and associated liquids, as well as secondary up-hole horizons. We anticipate the well to be completed by the operator before breakup.

Also during Q1 2010, Redcliffe drilled and cased a vertical well (87% WI) at Karr targeting the Montney Formation. This strategic well was drilled to establish Montney gas and liquid potential on the southern portion of the Company's Karr lands and adjoins the recent multi-well horizontal Montney activity of an operator to the immediate North. The well has been extensively sidewall-cored for reservoir optimization purposes and is expected to be completed and tested before breakup. Redcliffe maintains an approximate 91% working interest in the 15 sections of land over this prospect.

Remaining Q1 2010 Drilling Program

Redcliffe previously announced the proposed drilling of a horizontal Montney well (100% WI) as part of a multi-well13.5 section farm-in at Karr and Gold Creek. However, due to the length of time required to drill such a well horizontally (45 - 50 days) plus the uncertainty as to the availability of completion and stimulation equipment in the area, the risk of having the operation extend into break-up with associated access issues was considered too high. As a result, the Company plans to build the lease for this location and commence drilling after break-up.

In the Gold Creek area, Redcliffe has 1 (0.5 net) additional vertical non-operated well planned in Q1 2010, targeting Nikanassin gas and associated liquids, as well as secondary up-hole zones. We anticipate this well will be spud prior to month-end.

The Company has an extensive inventory of follow-up drilling locations and will finalize its remaining 2010 drilling program once its winter drilling program is complete.

Other Operational and Financial Updates

The Company's production for Q4 2009 averaged 862 boe/d (69% natural gas), with certain wells continuing to produce on a restricted basis due to transportation constraints. With the inclusion of the Cardium oil well drilled in Q4 2009, current production is approximately 950 - 975 boe/d (67% gas), with 3 wells waiting on completion. The Company does not expect to see increases in production from the winter drilling program until late Q1 2010 or Q2 2010.

The Company's net debt at December 31, 2009 is estimated at $6.4 million, against existing bank lines of $14.1 million.

The Company has entered into physical delivery contracts for 3,000 GJ/d for the months of April 2010 to October 2010, inclusive, at an average price of $5.41/GJ ($5.70/mcf); these contracts represent the only commodity contracts outstanding for 2010 at this time.

The Company expects to release its 2009 audited financial results and NI 51-101 reserve disclosures in late April 2010.

Redcliffe is a Calgary based company exploring for oil and gas in Alberta. The Company has a significant land base of 118 (77 net) sections in the Peace River Arch south of Grande Prairie, as well as additional lands in and around Pembina, including 12 (7.7 net) sections with Cardium oil potential. Production is focused in the Gold Creek/Wapiti area of northwestern Alberta and the Pembina area of central Alberta.

Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, capital expenditures and the timing thereof and expected timing and results from operations, that involve substantial known and unknown risks, uncertainties and assumptions, certain of which are beyond the Company's control. Such risks, uncertainties and assumptions include, without limitation, those associated with oil and gas exploration, development, exploitation, production, marketing, processing 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 that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports, including the Company's annual information form for the financial year ended
December 31, 2008, 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.

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts 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)
    dconnolly@redcliffe.ca
    or
    Redcliffe Exploration Inc.
    George Gramatke
    Vice President, Finance & CFO
    (403) 539-8442
    (403) 539-8433 (FAX)
    ggramatke@redcliffe.ca