Solara Exploration Ltd.

Solara Exploration Ltd.

May 12, 2011 09:30 ET

Solara Announces 2011 Capital Expenditure Program

CALGARY, ALBERTA--(Marketwire - May 12, 2011) - Solara Exploration Ltd. (TSX:SAA.A) ("Solara" or the "Company") announces that it plans to drill up to ten (10) wells on various operated oil projects situated in Alberta during the balance of 2011. The Company's net capital expenditure program of approximately $11 million will be funded from three sources including discretionary cash flow, proceeds from the sale of non-strategic assets and available operating lines. Solara may also undertake equity financings if its capital expenditure program is expanded as a result of drilling success on its budgeted projects.

At Pembina Buck Lake, Solara plans to operate and participate in the drilling of four Cardium horizontal wells to follow up on its drilling successes in 2010 and in the first quarter. In 2010, the Company operated the drilling and completion of three horizontal wells into the Cardium formation in the Buck Lake area. One of the wells was placed on production in late November, 2010 with the remaining two wells commencing production in February, 2011. Solara participated in a fourth well in March which has been drilled and completed, and is awaiting stimulation operations scheduled for June. The Company controls a 40% working interest in two of the proposed new horizontal wells and a 26.7% working interest in the remaining two horizontal wells to be drilled in 2011.

On the Company's operated Dewberry heavy oil project located in eastern Alberta, Solara plans to drill an additional two horizontal wells to evaluate both the Sparky and Dina formations on its 100% working interest lands. Solara also plans to drill up to two additional vertical wells on the project prior to year end. Since 2009, Solara has drilled and completed 14 oil wells in various formations on the Dewberry property.

Solara has plans to drill two conventional vertical wells at its new heavy oil pool discovery located at Borradaile in eastern Alberta at a 100% working interest. As well, the Company has plans to drill a conventional vertical well to evaluate the oil potential of the McLaren formation at Rivercourse located in eastern Alberta.

The Company's capital expenditure program is designed to further optimize its oil projects on which Solara has drilled 14 oil wells in 2010 with a 100% drilling success rate. Based on year end 2010 reserve additions resulting from its drilling program, Solara's finding costs were approximately $8.65/BOE for the year. Including produced oil and gas volumes for 2010, the Company almost doubled its proved plus probable oil and gas reserves, adding approximately 1,000,000 BOE by year end. All of the Company's financial and operating fundamentals increased significantly for the comparative annual and quarterly periods for 2009 and 2010. Gross revenues increased by 46% and 126%, respectively, for the comparative annual and fourth quarterly periods for the two most recent fiscal years. Funds from operations increased by 55% year over year and by 546% in the fourth quarter 2010 compared to the prior period. Daily oil and gas production increased by 83% for the fourth quarter 2010 compared to the prior period in 2009.

Solara was successful in raising approximately $6.7 million during 2010 to fund its capital expenditure program which was focused entirely on oil projects. The Company's lender increased its operating lines from $9.25 million to $13.5 million in recognition of production and reserve additions achieved by year end. The three Cardium oil horizontal wells drilled by Solara in 2010 had test rates which were some of the highest initial rates for the similar Cardium horizontal oil wells drilled in the Pembina area since 2008. The Company has approximately 250 BOE/d behind pipe awaiting completion operations based on management's internal assessments of initial test results which may not be indicative of long term daily production rates. As part of its ongoing asset rationalization program, the Company sold a non-strategic asset in March, 2011 for $4.1 million which materially reduced its bank debt. It also has pending asset dispositions totaling $1.4 million scheduled to close within the next few weeks. As a result of its significantly enhanced cash flow from higher oil and gas production levels in the first quarter, 2011, Solara is fully current with all of its financial obligations and has unutilized operating lines at its disposal.

About Solara Exploration

Solara Exploration is a publicly traded junior oil and gas company focused on the exploration, development and acquisition of oil and natural gas in Western Canada.


This news release may contain certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. 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.

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

76,534,902 Class A Shares

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Contact Information

  • Solara Exploration Ltd.
    Donald R. Holding
    President and Chief Executive Officer
    (403) 537-0458
    (403) 537-0462 (FAX)

    Solara Exploration Ltd.
    1800, 444 - 5th Avenue S.W.
    Calgary, Alberta, Canada T2P 2T8