RedStar Oil & Gas Inc.

RedStar Oil & Gas Inc.

November 21, 2006 09:15 ET

RedStar Oil & Gas Inc. Announces $5.6 Million in Seismic Sales and Updates Fourth Quarter Planned Activities

CALGARY, ALBERTA--(CCNMatthews - Nov. 21, 2006) -

Not for distribution to U.S. newswire services or for dissemination in the United States of America.

RedStar Oil & Gas Inc. (TSX VENTURE:RED) ("RedStar" or the "Company") is pleased to provide the following corporate update:

RedStar is pleased to announce today that it has completed two separate sales of licensed copies of a portion of its Cutbank Ridge 3-D seismic data to two large independent oil and gas producers operating in the Cutbank Ridge area. The data was sold for gross proceeds of $6.8 million, netting RedStar after-transaction fees of approximately $5.6 million. This capital will be deployed in the Company's fourth quarter exploration program and for general working capital purposes. After these sales, RedStar continues to maintain its 94% proprietary ownership in the 400 square mile Cutbank Ridge 3-D seismic database. RedStar will continue to seek similar sales to other companies operating in the Cutbank Ridge area.

In the Greater Sierra area, the Company's fourth quarter capital activities consist of drilling two exploratory wells. These locations are based on the interpretation of the 388 square miles of seismic data shot during the first half of 2006 by the Company's geophysical team. In addition, the Company will complete, test and tie-in one well which was drilled in the first quarter of 2006 and perform three minor workovers on existing wells in order to re-establish production that was either shut-in or curtailed due to non-operated facility issues this past summer.

The Company plans on drilling seven development wells and one additional exploratory well in the first quarter of 2007 in the Greater Sierra area with a portion of the funds received from the above mentioned seismic sales, additional seismic sales, operating cash flow and its credit facilities. Six of the wells in the program are still subject to final approval from the Company's Board of Directors.

In the Peace River Arch area, RedStar participated in the drilling of two wells (0.71 net) in the first half of 2006 and is in the process of having them evaluated and tied in.

Cautionary Statements

Certain information set forth in this document, including management's assessment 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 this 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 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. RedStar disclaims any intention or obligation to update or revise any forward-looking statements that are a result of new information, future events, or otherwise, except as required in accordance with applicable securities laws.

Per barrel of oil equivalent amounts have been calculated using a conversion of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). (Barrel of oil equivalents (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf:1bbl 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 Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • RedStar Oil & Gas Inc.
    Chester J.R. Krala
    President and Chief Executive Officer
    (403) 699-3069
    RedStar Oil & Gas Inc.
    Lawrence F. Walter
    Chief Financial Officer
    (403) 699-3061