Regal Energy Ltd.
TSX VENTURE : REG

Regal Energy Ltd.

January 17, 2006 17:48 ET

Regal Energy Ltd. Announces Significant Farm-In and Commencement of Trading

CALGARY, ALBERTA--(CCNMatthews - Jan. 17, 2006) - Regal Energy Ltd. (TSX VENTURE:REG) (TSX VENTURE:RGN) ("Regal" or the "Company") is pleased to announce that it has executed a significant farm-in at Garrington, Alberta and that its reorganized common shares will begin trading on the TSX Venture Exchange on January 19, 2006. The Company is also taking this opportunity to provide an operational and corporate update.

Garrington, Alberta Farm-in

Regal has signed a multi-well farm-out and option agreement encompassing over 30 sections of land in the Garrington area of west central Alberta. Regal has agreed to drill and complete a minimum of six wells in the initial program with drilling to commence by February 15, 2006, pending rig availability. The majority of the farm-out lands are contiguous and the Farmor currently holds an average working interest of approximately 66 percent. Under the terms of the agreement, Regal will pay 100 percent of the Farmor's share of drilling and completion costs to earn 50 percent of the Farmor's working interest. Drilling of the proposed locations will target natural gas in Cretaceous age sands. "We are very pleased that Regal has secured this opportunity in such a highly competitive area" said Douglas McNichol, President and CEO of Regal.

Commencement of Trading

TSX Venture Exchange Inc. has provided its final acceptance of the business combination of Regal Energy Corp. and Azeri Capital Inc. to form a new oil and natural gas exploration and development company, Regal Energy Ltd. The common shares of Regal are expected to commence trading on the TSX Venture Exchange at the opening of trading on Thursday, January 19, 2006 under the new symbol "REG". The Regal Energy Corp. ("RGN") common shares will be delisted from the TSX Venture Exchange at the close of trading on Wednesday, January 18, 2006.

Operational Update

Following the completion of three recently drilled wells, Regal's production rate is expected to increase to 240 Boe/d (240 Mcf/d gas, 200 Bbl/d oil) by the end of January. Two wells were drilled at Atlee Buffalo resulting in a producing Glauconitic oil well and a potential Bow Island gas well.

At Sounding Lake, in east central Alberta, Regal's well encountered oil pay in two Mannville zones. The lower oil zone was completed and is expected to be placed on production before the end of January. Regal has earned a 100 percent interest in the well subject to a convertible overriding royalty until payout at which time its interest will revert to 50 percent. A decision to drill offsetting development locations will be based on the performance of the discovery well. Regal has also earned an interest in 320 acres of land as a result of drilling the well. An exploratory Mannville oil target, on a separate geologic feature, is located on the earned acreage and is now in the Company's prospect inventory.

At Kaybob, in west central Alberta, Regal has completed lease construction work at its drilling site and anticipates commencing operations by early February. The Company's working interest in the well has increased to 61.2 percent from its previously announced 50 percent. The location is immediately adjacent to a previously drilled well completed in a lower formation. Logs indicate two zones with by-passed pay in the Cretaceous Viking and Gething formations. Nearby wells have produced up to 3 Bcf and 1 Bcf, respectively, from these zones and, initial production rates from nearby wells have ranged from 0.5 MMcf/d to as high as 2 MMcf/d from each zone.

Corporate Update

Following the closing of the recent flow-through financing, the Company's drilling successes and the Garrington farm-in, Regal expects to participate in the drilling of up to 20 wells during 2006. The capital program will be funded through a combination of working capital, cash flow and bank debt. Regal now has established tax pools and credits of $55 million that can be applied against future income. The Company is actively seeking opportunities to acquire companies and properties on a tax efficient basis.

ADVISORY - Certain information regarding Regal set forth in this release, including management's assessment of the Company's future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing, and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

Issued and Outstanding Common Shares: 22,709,178

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

Contact Information

  • Regal Energy Ltd.
    Douglas O. McNichol
    President and Chief Executive Officer
    (403) 509-2581
    Email: dmcnichol@regalenergy.ca
    or
    Regal Energy Ltd.
    Wayne R. Wilson
    Vice President Finance and Chief Financial Officer
    (403) 509-2584
    Email: wwilson@regalenergy.ca
    or
    Regal Energy Ltd.
    Suite 1520, Life Plaza
    734 - 7th Avenue S.W.
    Calgary, Alberta T2P 3P8