RedWater Energy Corp.
TSX VENTURE : RED

RedWater Energy Corp.

May 09, 2011 06:15 ET

RedWater Announces Drilling Success /Accelerates Drilling Program

OKOTOKS, ALBERTA--(Marketwire - May 9, 2011) - RedWater Energy Corp. ("RedWater" or the "Company") (TSX VENTURE:RED) is pleased to report the production test results of its recently drilled oil well in the Redwater area. The well, drilled in late March and tested for two days, produced an average rate of 75 barrels of clean light oil per day. Management has spent considerable time reworking the geology in the area and believes that it has discovered a new Manville light oil pool. The discovery sets the stage for the drilling of 3-6 offset wells. The Company anticipates further production testing in early June with full production to begin in July.

CURRENT PRODUCTION AND LAND HOLDINGS

Current production is 65 boepd, primarily from the Wabamun zone, in the Westlock Area. The production is split 50/50 between medium gravity oil and natural gas. RedWater owns and operates 65+ sections of primarily 100% working interest mineral holdings in central and southern Alberta.

NEW PRODUCTION BEHIND PIPE

The Company has an additional 265 boepd of tested production in various stages of equipping, re-activation and tie-in. This pending production is primarily light oil in the Redwater area and heavy oil at Fairydell-Bon Accord. Behind pipe production is split 65% oil and 35% natural gas. Oil production is comprised of 115 bopd of light Manville oil at Redwater and 60 bopd of Leduc heavy oil at Fairydell-Bon Accord. Additionally, RedWater has approximately 540 mcf/d (90 boepd) of potential gas production slated to come on-stream.

2011 DRILLING PROGRAM

Phase 1:

RedWater plans to continue its previously announced 2011 Phase 1 exploration and development program in June with the drilling of 5 conventional wells, targeting light Manville oil in the Redwater area. The total cost of the program is estimated at $2.5 million to be financed through cash on hand, bank credit facilities and cash flow.

Phase 2:

RedWater plans on initiating a 2nd phase of drilling 5-6 wells in 2011, starting in the fourth quarter, targeting Viking light oil through horizontal drilling and Manville light oil through conventional drilling. In its Phase 2 drilling program, the Company plans to drill up to 2 horizontal Viking wells and up to 3-4 conventional Manville wells with a total estimated capital cost of $3.9-$4.4 million. Drilling will be contingent on available capital and Phase 1 drilling success.

SUMMARY

RedWater expects production to increase to 330 boepd over the next few months with the equipping and tie-in of existing wells. Management's previously announced 2011 production targets remain unchanged with average production of 200-250 boepd and exit production of 400 boepd. The Company will recommence Phase 1 drilling in June. Plans are underway for the possible drilling of an additional 5-6 wells to follow starting in the fourth quarter. Further guidance towards production targets will be released once the Phase 1 drilling and completion program has concluded.

Business of RedWater Energy Corp.

RedWater Energy Corp. is a junior oil and gas exploration and development company. RedWater is engaged in the acquisition, enhancement and exploration of conventional oil and gas projects in Western Canada with a focus on developing high working interest light oil opportunities. RedWater's core properties are located in Redwater, Westlock, Fairydell-Bon Accord and Long Coolee areas of Alberta. www.redwaterenergy.com.

Note: BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 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 information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Although RedWater believes that the expectations reflected in forward looking statements are reasonable, it can give no assurances that the expectations of any forward looking statements will prove to be correct. Except as required by law, RedWater disclaims any intention and assumes no obligation to update or revise any forward looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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