Sierra Vista Energy Ltd.

Sierra Vista Energy Ltd.

April 11, 2006 08:45 ET

Sierra Vista Reports First Quarter Operations, Property Acquisition & 2005 Reserve Additions

CALGARY, ALBERTA--(CCNMatthews - April 11, 2006) -

Not for dissemination in the United States or to U.S. persons.

During the first quarter of 2006 Sierra Vista Energy Ltd. ("Sierra Vista" or the "Corporation") (TSX VENTURE:SVR.A)(TSX VENTURE:SVR.B) participated in the drilling of six gross wells (5.25 net) resulting in three gross (2.5 net) cased wells and three gross (2.75 net) dry holes. The three abandoned wells were part of the Corporation's exploration program. Sierra Vista also entered into an agreement to purchase two sections of land, with a producing well, offsetting the Corporation's existing production in its core Ante Creek North area; and increased its land holdings in and around the Corporation's successful Ante Creek South exploration well by 10,880 gross acres (17 sections), 9,888 net acres (15.45 sections).

At Ronalane, in southeast Alberta, the Corporation drilled its first operated well. The 100% Before Payout (BPO), 55% After Payout (APO) well, was cased for Sawtooth oil and is currently producing at 40 barrels of oil per day at low water cuts. The development potential of this play is still being evaluated.

In the Cessford area of southern Alberta, Sierra Vista drilled two operated wells, 75% BPO and 45% APO, targeting deeper Glauconite gas pools. The first development well was successfully cased while the second one, an exploration well, was abandoned. The cased well has been completed and flow tested resulting in potential gas rates of 350 to 400 mcf per day at current pipeline pressure. The Corporation is currently exploring the available options for access to plants and markets.

At Kaybob, the Corporation drilled its deepest operated well to date at 2,425 meters. The 75% BPO and 48.75% APO well was cased to total depth and early indications show the presence of four prospective hydrocarbon producing horizons, including both primary target zones. Due to spring breakup the well cannot be completed and tested until road bans are lifted. The Corporation has surveyed a follow up development location on offsetting, 75% working interest, Sierra Vista land.

In the Ante Creek North area Sierra Vista has entered into an agreement to acquire a 100% working interest in two sections of land, with one producing oil well, directly adjacent to its existing production. As at March 1, 2006 the subject well was producing 40 boe per day.

As a follow up to the successful exploration well drilled in 2005 in the Ante Creek South area, the Corporation has entered into a number of farm-in agreements which will allow it to earn an interest in 10,880 gross acres (9,888 net acres) of land offsetting this newly drilled exploration well.

Subject to the fulfillment of its farm-in obligations, Sierra Vista will have increased its net land holdings by 12,096 acres or 103%, since January 1, 2006. Approximately 82% of this increase has been in the Corporation's core area of Ante Creek.

The Corporation's independent engineers, Sproule Associates Limited, have finalized their oil and gas reserves evaluation, effective December 31, 2005, for the wells in which Sierra Vista participated during 2005. The Corporation reports that, during the three month period since its inception as an operating entity in October of 2005, it has added Total Proved reserves of 315.7 mstboe and Total Proved & Probable reserves of 588.4 mstboe. These reserves were all added through the drill bit. Based on the productivity of the wells evaluated in this report the reserve life index (RLI) of the Total Proved reserves is 5.5 years and the Total Proved & Probable reserves is 8.7 years.

During March, 2006 the Corporation's production reached 300 boe per day, net of the 40 boe per day acquisition volume, which is effective March 1, 2006. During the latter half of March, production from the Corporation's Bigstone well was curtailed due to plant restrictions. The plant operator has indicated that this well should be back on production by the end of April, 2006. In addition to these volumes the Corporation has approximately 100 boe per day of behind pipe volumes that have been completed and flow tested at current gathering system pressures.

Sierra Vista is an Alberta-based company formed to participate in oil and gas exploration, development and acquisitions focusing in the Peace River Arch and South Central region of Alberta. The Corporation's shares trade on the TSX Venture exchange under the symbols SVR.a and SVR.b.

Forward Looking Statements: This document contains statements about future events that are forward looking in nature and as a result are subject to certain risks and uncertainties such as changes in plans or the occurrence of unexpected events. Actual results may differ from the estimates provided by management.

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 & Chief Executive Officer
    (403) 265-9393 ext 201
    (403) 265-9224 (FAX)
    Suite 850, 101-6th Avenue SW
    Calgary, Alberta T2P 3P4