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

Redcliffe Exploration Inc.

January 04, 2007 19:18 ET

Redcliffe Reviews 2006 Drilling Success, Initial 2007 Plans and Provides Update on Stallion Acquisition

CALGARY, ALBERTA--(CCNMatthews - Jan. 4, 2007) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

Redcliffe Exploration Ltd. (TSX VENTURE:REL.A) (TSX VENTURE:REL.B) ("Redcliffe" or the "Company") is pleased to announce the results of its 2006 drilling program. Since Redcliffe's Class A and Class B shares commenced trading on the TSX Venture Exchange on September 12, 2006, the Company has participated in the drilling of 11 (3.12 net) wells and 2 (0.54 net) re-entries, not including 2 (0.3895 net) wells drilled as part of the Stallion Energy Ltd. ("Stallion") transaction that are discussed separately below. This initial drilling program resulted in a 92% success rate with the casing or successful re-completion of 10 (2.66 net) potential gas wells and 2 (0.60 net) potential oil wells. Redcliffe elected not to participate in the casing of one (0.40 net) well. Of the 13 wells in which Redcliffe participated, the Company operated the drilling of 8 of these wells.

By year-end 2006, a total of 7 wells had been completed and tested. The most significant wells completed to date include the Harmatten 6-22 well that tested at rates of up to 1,600 mcfpd with associated liquids of 40 bopd; Redcliffe owns an 18.75% revenue interest in this well. A new oil pool discovery was made at Pembina 1-18 that tested oil rates of up to 100 bpd; Redcliffe owns a 22.5% interest in this well. The Crystal 2-6 well tested gas rates of up to 1,700 mcfpd with associated liquids of 35 bpd; Redcliffe owns an 18.75% interest in this well. The Pembina 3-29 well tested 1,000 mcfpd with associated liquids of 25 bpd; Redcliffe owns an 18.75% interest in this well. Of the total wells tested to date, Redcliffe estimates a net production potential of 175 to 225 boepd based on test rates and estimates of processing plant capacities and good production practice. Completion operations on the remaining wells will be undertaken during January. Estimates of production potential from these wells are premature at this time and will be reported upon completion of operations.

This high level of drilling activity is expected to continue throughout the first quarter of 2007. At year-end 2006, Redcliffe estimates remaining cash reserves of over $9 million. While most of the drilling in 2006 was focused in the general Pembina area of central Alberta, 2007 activity will focus on higher potential prospects in the Peace River Arch area of northwestern Alberta. Supporting this activity will be wells in the Leaman and Pine Creek areas, as well as follow-up wells to the successful Pembina program.

On November 21, 2006, Redcliffe announced its intention to complete a business combination with Stallion, a private oil and gas exploration company producing approximately 300 boepd. As part of the acquisition, Redcliffe agreed to participate for 50% of Stallion's interest in two wells to be drilled in the Gold Creek area of northwestern Alberta. These two wells have been drilled resulting in 1 (0.15 net) potential gas well and 1 (0.2395 net) dry hole. The cased well is currently being completed and tested by the operator. Excluding any potential contribution from this well, recent activity on Stallion wells has increased the production potential of Stallion to in excess of 400 boepd.

The Joint Information Circular outlining the Redcliffe-Stallion business combination is anticipated to be mailed to all shareholders on January 18, 2007. Shareholder approval will be sought at shareholder meetings currently scheduled to be held on February 13, 2007.

Cautionary Statements

Disclosure provided herein in respect of boe units may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Certain information set forth in this document, including managements' assessments of future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond these party's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, no assurance 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 will be derived there from. Each disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities legislation.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

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