TRAFINA Energy Ltd.
TSX VENTURE : TFA.A

TRAFINA Energy Ltd.

January 10, 2011 08:30 ET

Trafina Energy Places First Cardium and Upper Shaunavon Oil Wells on Production and Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Jan. 10, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Trafina Energy Ltd. ("Trafina" or "the Company") (TSX VENTURE:TFA.A) is pleased to announce that its first Cardium oil well in the west Pembina area of west central Alberta has been placed on production. Over the 10-day period ending January 4, 2010, the well produced an average of 262 barrels of oil per day (bopd). Trafina has a 24.375% working interest in the well, resulting in net production of 64 bopd. This amount does not include load oil because no oil was used in the drilling and completion operations.

Although a pumpjack has been installed, the Cardium well is currently flowing naturally and management believes it may be some time before the well requires artificial lift. On January 6, 2011, solution gas sales from the well also commenced; a gas rate has yet to be determined. This is the first of four (one net) non-operated Cardium horizontal wells the Company expects to drill. The license for the second well has been issued, and drilling is expected to commence late in the first quarter of 2011. If successful, the second Cardium well will lead to the drilling of up to two additional Cardium wells.

Trafina is also pleased to announce that its first Upper Shaunavon horizontal well has also been placed on production. The Company drilled the well in November 2010 at its Rangeview/Divide property in southwest Saskatchewan. A screw pump was installed, and over the past several days the pump has been sped up in order to lower the fluid column in the well. The well is producing approximately 2,006 barrels per day of total fluid with a 96.5 percent water cut, which equates to a gross oil rate of 60 bopd (48 bopd net). As the speed of the pump is increased and the fluid column is drawn down, it is possible the oil rate will increase. Trafina intends to drill at least two additional Upper Shaunavon wells and at least two Madison wells at Rangeview/Divide later in 2011. Trafina has an 80 per cent working interest at Rangeview/Divide.

As announced on November 18, 2010, Trafina entered into a definitive agreement with a private oil and gas company to purchase for cash an undivided 100 percent working interest in certain lands in northeastern Alberta. The agreement also provides Trafina with the opportunity to earn a 25 percent interest in additional lands and provides access to approximately 24,000 gross acres (18,100 net acres) of undeveloped land. The lands are prospective for Wabiskaw heavy oil, and are on trend with an emerging large scale development by a senior, integrated oil and gas company. In addition to the purchase of 100 percent of 15,680 acres, Trafina committed to drill two wells (one net) to earn 50 percent of the farmor's working interest in an additional 8,320 acres, with the farmor retaining a 25 percent net interest. The operator has served notice for the drilling of these two wells and expects drilling to begin late in the first quarter of 2011. Trafina anticipates that these first two wells will provide a view of how operations take place in this burgeoning development area and thereby allow the Company to prepare for its own four-well drilling program on its 100 per cent lands later in 2011 or the winter of 2012.

When Trafina's current management team was put in place in October 2008, Company average production was 280 barrels of oil equivalent per day (boepd), weighted 90 per cent to natural gas. Since that time, Trafina has disposed of non-core assets and refocused the Company, concentrating on becoming more oil weighted while managing debt levels in an extremely soft gas price environment. Today, average Company production is estimated to be in excess of 500 boepd, weighted approximately 40 percent to oil and 60 percent to gas.

About Trafina

Trafina is a junior oil and gas company based in Calgary, Alberta. The Company's main areas of interest are in the Rangeview and Divide areas of southwest Saskatchewan and in the Pembina area of Alberta with other operated production in Wetaskawin, 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 regarding the Company's first Cardium well, Upper Shaunavon horizontal well and its northeastern Alberta lands including, without limitation, with respect to production quantities and duration, the drilling of further wells and timing thereof, including a second Cardium well and, if successful, a further two Cardium wells, at least two additional Upper Shaunavon wells and at least two Madison wells at Rangeview/Divide, anticipated timing for drilling two Wabiskaw heavy oil wells on the Company's northeastern Alberta lands and timing for the Company's four-well drilling program on such lands. 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 involve significant known and unknown risks and uncertainties. Reference is made to Trafina's annual information form for the year ended December 31, 2009 dated April 30, 2010 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.

Basis of Presentation and Cautionary Statement: Information in this press release expressed in boes is derived by converting natural gas to oil in the ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil. 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.

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)