Sierra Vista Energy Ltd.
TSX VENTURE : SVR.A
TSX VENTURE : SVR.B

Sierra Vista Energy Ltd.

November 28, 2006 12:40 ET

Sierra Vista Announces Continued Drilling Success & Production Growth

CALGARY, ALBERTA--(CCNMatthews - Nov. 28, 2006) -

NOT FOR DISTRIBUTION IN THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Sierra Vista Energy Ltd. (TSX VENTURE:SVR.A) (TSX VENTURE:SVR.B) ("Sierra Vista" or the "Company") announces the successful completion and testing of their 5 well Q2/Q3 drill program and the commencement of their Q4 winter program. Production for Q3 was similar to Q2 as most of the Company's new wells will not be brought on production until December of this year. As at the third week of November, 2006, the Company's production was in excess of 250 boepd. Sierra Vista is targeting a 2006 exit rate of 500 boepd and with the bulk of the flow-through exploratory drilling completed, the Company will now focus on bringing production volumes on stream during 2007.

At Ante Creek South, the Company completed and tested two wells targeting light (40 degree API), sweet oil from the Montney formation. The first well, which is 100% owned and operated by Sierra Vista encountered 25 feet of Montney pay, however, was completed in an uphole zone and is currently producing clean oil. The wellbore contains two additional uphole zones one of which yielded a very light, sweet oil during drilling operations. The Company plans to test this zone during Q1 of 2007. With success, the Company will have proven up two new oil pool discoveries in this one wellbore. The second well which is non-operated (85% Sierra Vista) was completed in the Montney formation. Due to downhole mechanical problems the well has had limited production time however the test rates are similar to other Montney wells at 100 bopd and solution gas rates at 165 mcfd and increasing. This well encountered an oil column in excess of 18 feet thick which helps to further delineate the productive portion of the Montney formation from the northern wells almost 2 miles away.

A second Lakota drilling rig has been brought in to drill the Company's final commitment exploration well for 2006. The well spud on November 26, and is currently drilling. This well will allow the Company to earn a 60% working interest in 2 sections of land offsetting its previous successful exploration well in Ante Creek South.

In Ante Creek North, the Company has drilled and cased its first earning well as part of the multi-well ARC Resources Ltd. ("ARC") farm-in program. This well will be completed and placed on production prior to year end. A second well has been spud and is currently drilling. As per our commitment to ARC, the first 3 wells in this program will be drilled prior to year end 2006, with another two (possibly three) to be drilled prior to April 30, 2007. The first earning well will provide the Company with the opportunity to drill up to 7 follow up wells on 80 acre spacing and 15 wells on 40 acre spacing. Sierra Vista's earned interest is 65%. By incorporating directional drilling techniques, the Company has designed the follow-up development drilling program to allow 6 wells to be drilled from one surface lease. This will significantly reduce the per well capital costs with respect to rig moves, lease construction, surface facilities and tie-ins and also the well operating costs.

During Q3, the Company participated in the sixth and final farm-in well on the original 2005 Ante Creek farm-in lands. This well has been completed and tested at rates of 250 bopd and 1.2 mmcfd of gas. Although the initial rates are very encouraging, Montney wells display a very typical decline profile, stabilizing at rates approximating 20% to 25% of the initial test rates after 2 to 3 months of production, then exhibits a very shallow, long life decline.

A second Kaybob well was drilled during Q3 and was recently completed in an uphole Nordegg gas zone. Early results indicate a flow rate of 250 mcfd of gas however this rate should improve substantially with the removal of approximately 60 meters of frac sand still in the well bore.

Commissioning of the 100% owned and operated Kaybob compressor facility is underway with gas sales planned for the week of November 27, 2006. The initial capacity of this facility will be 1.5 mmcfd but will be expandable to 2.0 mmcfd. Production from the two Sierra Vista operated wells is expected to be in the range of 1.0 mmcfd to 1.25 mmcfd gross (0.75 to 1.0 mmcfd net). The facility may be further expanded at a later date to accommodate third party processing needs.

At Dimsdale, the Company participated in an exploration well as part of the 2005 flow-through program. Completion results for the primary zone were inconclusive and the zone has been suspended. A secondary uphole zone has been completed and tested at stabilized rates of 700 mcfd (20% Sierra Vista). This well will be placed on production during Q1 2007.

The Company's Bigstone well continues to be shut-in due to plant restrictions at the Talisman operated Bigstone plant. This well represents approximately 80 boepd net to Sierra Vista. Current indications are that this well should be back on production by the end of March, 2007. The Company plans to drill one more exploratory well (40% Sierra Vista) in the Bigstone area during Q1 2007.

As the Company completes its exploratory well drilling commitments, related to the initial $13.0MM flow-through financing in fall of 2005, it is now able to direct more of its time, efforts and capital to developing its core property of Ante Creek. The results from the Ante Creek South wells continue to support the existence of a new Montney pool as well as the discovery of three new uphole zones which to date had not been encountered in the northern wells. The Company has acquired 75 km of 2D seismic over these lands and is currently reprocessing this data to identify follow up locations and decide how best to exploit these new uphole zones.

Sierra Vista is excited about the long term prospects for the Ante Creek property. To date the drilling program has focused on earning a large contiguous land base which the Company will operate. This land base provides the Company with a large inventory of development drilling opportunities will allow for a long term balanced growth in shareholder value. As the Ante Creek property continues to develop it is becoming more apparent that this property has all the characteristics of a true resource play. The Company continues to prove up a larger resource base with each well drilled which, based on internal mapping, is now in the range of 120 million barrels of oil and 70 bcf of gas in place under the Sierra Vista lands. The production characteristics of the wells are becoming very repeatable and, we are starting to see the capital costs per well drop as we begin to employ the multi-well pad drilling practices.

Sierra Vista is a junior oil and gas company engaged in the exploration for, and development and production of, crude oil and natural gas focusing in the Peace River Arch and South Central regions of Alberta. The Corporation's shares trade on the TSX Venture Exchange under the symbols "SVR.A" and "SVR.B".

This news release shall not constitute an offer to sell or the solicitation of any offer to buy securities in any jurisdiction. The Sierra Vista shares and Warrants have not been nor will be registered under the United States Securities Act of 1933, and they may not be offered or sold in the United States absent registration or an exemption from registration.

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

Contact Information

  • Sierra Vista Energy Ltd.
    Mr. Mark Malouin
    President & CEO
    (403) 265-9393 ext 201
    (403) 265-9224 (FAX)
    or
    Sierra Vista Energy Ltd.
    Mr. Bruce Stewart
    Chief Financial Officer
    (403) 265-9393 ext 205
    (403) 265-9224 (FAX)
    or
    Sierra Vista Energy Ltd.
    Suite 850, 101 - 6th Avenue SW
    Calgary, Alberta T2P 3P4
    Website: www.sierravista.ca