Reef Resources Ltd.
TSX VENTURE : REE

Reef Resources Ltd.

October 07, 2011 08:30 ET

Reef Resources Ltd. Announces 100 bopd Test Rate for Ausable #1

CALGARY, ALBERTA--(Marketwire - Oct. 7, 2011) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES FOR DISSEMINATION IN THE UNITED STATES.

Reef Resources Ltd. (TSX VENTURE:REE) ("Reef" or the "Company") announces that it has completed its production testing of its Ausable well #1 using hydraulic venturi downhole pump technology. The computed average daily production rate over the test period was 103 bopd.

The Company is now in the process of installing the permanent venturi pumping equipment in Ausable well #1. The new pumping equipment will be installed in the recently drilled Ausable well #5 followed by Ausable well #2 and Ausable well #4. Clean up on the Ausable #2 horizontal well is completed and the new pumping equipment will be installed upon completion of production flow testing.

During the test period the venturi was run for a number of periods to test the surface and downhole pumps and to optimise pump rates and fluids. Reef estimates that the stabilized long term production rate for Ausable well #1 using venturi pumping will be between 50 - 70 bopd and is confident that the production rates for the additional production wells (Ausable #2, Ausable #4 and Ausable #5) will also achieve similar production levels upon installation of venturi pumps. Ausable well #1 was previously being pumped using a traditional beam pump and was recently producing between 5 and 10 bopd. These estimates represent production prior to the full execution of the Enhanced Oil Recovery ("EOR") program.

Ausable well #3 is currently operating as an injection well for the Enhanced Oil Recovery program. The EOR program is at a preliminary stage, presently injecting only 100 mcf/d. The full execution of the EOR program involves injecting increasing amounts of natural gas in order to re-pressurize and sweep the reef plus the completion of additional production/injection wells. Under the full EOR program, re-pressurization of the reservoir will have a significant positive impact on overall field production and recovery factors.

The Company also announces that it has received all government approvals for the installation of a connecting pipeline for its Airport South #1 natural gas well located on its nearby Airport South reef. Natural gas from the Airport South #1 well will provide additional natural gas for the Ausable reef EOR injection program and will increase the injection rate to between 200 – 300 mcf/d. Additionally, recent gas analysis of Airport South #1 revealed 30 bbls of gas liquids per mmcf which will enhance the overall production of the Ausable reef.

Arnie Hansen, President stated, "We are delighted with the production rate we are achieving in Ausable well #1 as it does demonstrate the production potential of the Ausable field with appropriate pump and EOR technology. We anticipate additional production from the EOR program will be equally exciting We are encouraged by the results as it pertains not only to bringing Ausable well #1 on production but also as a successful solution for achieving maximum production from Ausable well # 2, Ausable well # 4 and Ausable well # 5."

Footnote: The Company's Ontario asset has gas storage rights, gas re-injection permit for gas recycle, NGL recovery, enhanced oil recovery and arbitrage. A key component of Reef's Ontario strategy is to identify and exploit undervalued prospects in the Ontario basin by utilizing the company's 23,500 acres of proprietary 3D seismic. In addition to its Ontario Properties, Reef has identified multiple oil and gas acquisition and development opportunities throughout Canada.

The term barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions herein are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Forward Looking Statements — This news release contains certain forward-looking statements, which include assumptions with respect to the valuation of Reef's reserves, funds raised from a financing and future capital expenditures. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. 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.

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.

Contact Information

  • Reef Resources Ltd.
    Arnie Hansen
    President & CEO
    (403) 251-9447

    Reef Resources Ltd.
    Larry Olson
    Vice President, Finance
    (250) 490-3378

    Reef Resources Ltd.
    2020 - 801 6 Ave SW
    Calgary, AB T2P 3W2