TRAFINA Energy Ltd.
TSX VENTURE : TFA.A

TRAFINA Energy Ltd.

April 04, 2011 08:30 ET

Trafina Energy Announces Updated Independent Report On Discovered Oil Initially-In-Place at McMullen, Alberta

CALGARY, ALBERTA--(Marketwire - April 4, 2011) -

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Trafina Energy Ltd. (TSX VENTURE:TFA.A) ("Trafina" or "the Company") is pleased to announce that McDaniel & Associates Consultants Ltd. ("McDaniel") has provided an updated report entitled "Evaluation of Discovered Oil Initially-in-Place in the McMullen Area – Wabiskaw Formation" (the "Updated McDaniel Report") relating to the Company's 33 sections of oil sands rights at a 100% working interest in northeastern Alberta.

An initial report (the "Initial McDaniel Report") was prepared by McDaniel estimating Discovered Oil Initially-in-Place for Trafina's 15 sections of oil sands rights at a 100% working interest in Township 77, Ranges 25 and 26, west of the 4th Meridian (the "Initial McMullen Lands"). The Initial McDaniel Report is dated January 31, 2011 with an effective date of January 31, 2011 and was prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH").

The Updated McDaniel Report is an estimate of the Discovered Oil Initially-in-Place ("OIIP") for Trafina's 33 sections of 100% working interest lands in Township 77, Ranges 25 and 26, west of the 4th Meridian, which includes the Initial McMullen Lands (collectively, the "McMullen Lands"). The Updated McDaniel Report is dated April 1, 2011 with an effective date of March 31, 2011 and was prepared in accordance with NI 51-101 and the COGEH. McDaniel was asked to provide an updated report following Trafina's purchase at an Alberta Crown land sale of an additional 100% working interest in 18 contiguous sections (11,520 acres) adjacent to the Initial McMullen Lands.

ESTIMATED DISCOVERED OIL INITIALLY-IN-PLACE(1)
AS OF MARCH 31, 2011
 
  Discovered OIIP (MMbbl)    
Category/Level of Certainty Updated McDaniel Report   Initial McDaniel Report   Increase 
Low Estimate(2) 254   167   52%
Best Estimate(3) 303   198   53%
High Estimate(4) 362   235   54%
 
(1) Discovered Oil Initially-in-Place is the quantity of oil that is estimated, as of a given date, to be contained in known accumulations prior to production. OIIP is the most specific category of resources that can be assigned at this stage because there is insufficient data available at this time to sub classify. The data required to sub classify is data such as viscosity and flow test data that will be obtained when the vertical wells are drilled. There is no certainty that it will be commercially viable to produce any portion of the resources.
(2) Low Estimate: This is considered to be a conservative estimate. It is likely that the actual quantities will exceed the low estimate. If probabilistic methods are used, there should be at least a 90% probability (P90) that the quantities will equal or exceed the low estimate.
(3) Best Estimate: This is considered to be the best estimate. It is equally likely that the actual quantities will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities will equal or exceed the best estimate.
(4) High Estimate: This is considered to be an optimistic estimate. It is unlikely that the actual quantities will exceed the high estimate. If probabilistic methods are used, there should be at least a 10% probability (P10) that the quantities will equal or exceed the high estimate.

Trafina plans to drill up to four vertical evaluation wells on the Initial McMullen Lands prior to the end of 2011. Road and lease surveys were completed in January 2011 and the Company has completed all necessary public and private consultations. On March 2, 2011 Trafina announced that the Energy Resources Conservation Board ("ERCB") had approved the Company's application for five vertical oil well licenses on the Initial McMullen Lands. As a result, Trafina commenced construction of an all-season road to the lands. The Company subsequently received two additional vertical oil well licenses on the Initial McMullen Lands, for a total of seven. On March 11, 2011, Trafina filed a Primary Recovery Scheme application with the ERCB. If approved, and depending on the success of the initial vertical well drilling program, as many as eight slant wells may be drilled from each existing vertical well surface lease. Under the Company's 2011 capital program, each successful vertical well may result in the drilling of up to eight slant wells that effectively exploit one quarter section of reserves. It is proposed that the slant wells would be drilled from the existing vertical well surface location thereby reducing developmental footprints.

On March 30, 2011 Trafina announced that it has filed and obtained a receipt for a preliminary short form prospectus in connection with a marketed public offering of units ("Units") on a reasonable best efforts agency basis for gross proceeds of a minimum amount of $5,000,000 and up to a maximum amount of $8,000,000 (the "Offering"). Each Unit will consist of one Class A common share ("Common Share") and one transferable Common Share purchase warrant ("Warrant") to acquire an additional Common Share for a period of 18 months from the date of closing, at a price to be determined following marketing of the Offering. The Company intends to use the net proceeds of the Offering to repay a portion of its outstanding indebtedness, reduce its working capital deficiency and fund a portion of its 2011 capital program.

About Trafina

Trafina is a junior oil and gas company based in Calgary, Alberta. The Company's main areas of interest are in the McMullen/Twin Lakes and Pembina areas of Alberta and in the Rangeview and Divide areas of southwest Saskatchewan with other operated production in Wetaskiwin, Retlaw and Ronalane in Alberta. Trafina also has non-operated production in Viking/Kinsella, Alberta and minor interests in Carson Creek/Judy Creek, Alberta. Trafina's shares trade on the TSX Venture Exchange under the stock symbol TFA.A.

Forward Looking Statements: This news release contains forward looking statements and forward looking information including, without limitation, regarding estimated primary recovery of OIIP, the timing for drilling vertical evaluation wells, the number of vertical evaluation wells that may be drilled and the subsequent drilling of slant wells (including, without limitation, the total number of such wells to be drilled), the receipt of necessary approvals for drilling to occur on the McMullen Lands, timing for construction of the Company's all-weather road and initial productivity and producing life of any such wells, and the anticipated proceeds to be raised pursuant to the Offering. Operational forward looking information is based on management's expectations regarding future growth, results of operations, production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and future economic conditions. Readers are cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Forward looking statements involves significant known and unknown risks and uncertainties. Reference is made to Trafina's annual information form and management's discussion and analysis for a description of some of the risks that could affect the Company's future results and could cause results to differ materially from those expressed in the Company's forward looking statements. The forward looking statements contained in this news release are made as at the date hereof and, except as required by applicable securities laws, Trafina does not undertake any obligation to update publicly or otherwise any such statements.

Neither the 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

  • Trafina Energy Ltd.
    Kelly J. Ogle
    President and Chief Executive Officer
    (403) 263-0800
    (403) 263-0811 (FAX)
    info@trafinaenergy.com
    or
    Trafina Energy Ltd.
    Robert W. Lamond
    Chairman
    (403) 269-9889
    (403) 269-9890 (FAX)