Reef Resources Ltd.
TSX VENTURE : REE

Reef Resources Ltd.

January 12, 2011 09:48 ET

Reef Resources Ltd. Corporate Update and Objectives for 2011

CALGARY, ALBERTA--(Marketwire - Jan. 12, 2011) -

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

Reef Resources Ltd. (TSX VENTURE:REE) ("Reef" or the "Company") reports on developments during 2010 and objectives for 2011.

Reef made significant progress in 2010 including the following key milestones:

  • Achieved production of oil and natural gas condensates by executing a Natural Gas Recycling and Enhanced Oil Recovery (EOR) program on its Ontario property;

  • Secured a $1.65 million participating loan from Solo Oil plc, a London AIM listed company;

  • Added a seasoned international oil and gas executive to its Board of Directors. David Lenigas heads up a number of international companies involved in the resource sector and is assisted at Solo Oil by Neil Ritson who has 34 years of oil and gas sector experience including as BP's International Chief Geophysicist and Business Unit Leader for both Norway and Alaska;

  • Completed a multi stage horizontal frac in Ausable #2;

  • Purchase of the previously leased natural gas compressor; thereby increasing net operating income.

Corporate objectives for 2011 include:

  • Drill, core and complete the new Ausable #5 oil well which is expected to spud before the end of January 2011. This well will increase overall production and will provide valuable geological data for future gas storage.

  • Fish frac tools that have impeded production from the Ausable #2 utilizing the drilling rig available after Ausable #5 is drilled;

The EOR and Gas Recycling Program initiated in October 2010 has so far produced 20 to 40 barrels per day of oil and petroleum condensate since start-up. The company will be optimizing its downhole pumping configuration in the near future to increase production including the installation of a hydraulic/venturi pump in Ausable #1 on a trial basis.

The current EOR program confirms the Company's assessment that the Ausable pinnacle reef will produce considerably more oil and natural gas liquids by re-pressurizing and recycling natural gas through the reservoir.

The proposed EOR program involves:

  • purchasing low cost natural gas to pressurize the reef and increase recycle volumes, thereby increasing production;
  • drilling four new horizontal wells;
  • installing a refrigeration plant to strip natural gas liquids (NGL's).

It is anticipated that up to 5 mmcf/day of natural gas will be injected and recycled through the reef using two of the four new horizontal wells. The goal is to produce significant levels of oil and natural gas liquids (propane, butane and condensate) from the other two new horizontal production wells in addition to the existing four wells. The recycled natural gas will be processed using a -40C refrigeration plant to recover propane, butane and condensate.

Natural gas recycle and EOR projects of this type have been conducted elsewhere in Western Canada and globally with excellent results achieving up to 80% recovery factors. Reef's goal is to have the four horizontal wells and associated on-site infrastructure in operation by summer 2011.

The Company has identified three additional Silurian pinnacle reefs within its 23,000 acre 3D seismic database. Reef is also in preliminary discussions with another Alberta based company that has also identified additional pinnacle reefs in the same region. A joint venture may be pursued to co-develop or otherwise exploit these reefs using gas recycle and EOR programs.

Reef was formed to participate in the exploration, development and production of conventional crude oil and natural gas reserves in Ontario and Western Canada. The Company's strategy is to build shareholder value through internally generated exploration and development drilling and through selective acquisitions.

The Company's Ontario asset has gas storage rights and gas re-injection permit for the EOR and gas recycle program. 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.

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
    or
    Reef Resources Ltd.
    Larry Olson
    Vice President, Finance
    (250) 460-2640
    or
    Reef Resources Ltd.
    665 8th St. SW
    Calgary, AB
    T2P 4H5