Valiant Energy Inc.
TSX : VLE

Valiant Energy Inc.

September 28, 2005 09:15 ET

Valiant Energy Inc.: News Release

CALGARY, ALBERTA--(CCNMatthews - Sept. 28, 2005) - Valiant Energy Inc. (TSX:VLE) ("Valiant") is pleased to announce an update of operations.

Recent Drilling Results

Valiant announces that it has achieved a 90 % success rate in its drilling program to date. Valiant, which was created through a Plan of Arrangement, concluded on July 6, 2005, between Forte Resources Inc., Thunder Energy Inc. and Mustang Resources Inc., is continuing its drilling program on lands in its core areas of Niton and Leaman, Alberta, West Central, Alberta, the Peace River Arch area, Alberta, and the Laprise area in N.E. B.C. Results for wells drilled to date are 4.0 gross (2.76 net) oil wells, 5.0 (1.33 net) gas wells and 1.0 (0.25 net) dry and abandoned wells.

Leaman - Valiant recently cased the Leaman 02/12-31-57-9W5 well, which is an indicated Paleozoic oil/ gas development well. Valiant has a 100 % success rate in six wells which have been drilled and cased in a newly defined Paleozoic medium gravity oil pool at Leaman, in which Valiant's working interests range from 94% to 100 %. Initial test rates for the wells range from 100 - 300 boepd each. In approximately two weeks, Valiant will commence a new round of drilling in the Leaman property, starting with three additional delineation wells in the Paleozoic oil pool and an exploratory well targeting a separate feature. In addition, Valiant has participated in a successful gas well targeting a shallower Cretaceous age zone.

Currently, five wells are producing from the Paleozoic pool at a combined net production rate of approximately 550 boepd. Productive capability is in excess of 900 boepd, however the Company has chosen to produce the wells below this rate as it determines characteristics of this new pool. These new oil wells are eligible for increased allowable production rates of up to 125 bopd per well for four months, after which the provincial allowable rate of 50 bopd is applied. After conducting an engineering study of pool depletion strategies, Valiant has applied to the Alberta Energy and Utilities Board for Good Production Practice status for the pool. If granted, the wells will be produced at Company-discretionary rates above the 50 bopd allowable rate to rates closer to each well's productivity while maximizing pool recovery. A ruling is expected prior to year-end. Valiant has also installed central fluid handling and gas conservation facilities for the Leaman pool.

Niton - Valiant has recently drilled and completed a Rock Creek oil well with initial productivity greater than 200 bopd of light oil. Valiant now has interests ranging from 33% to 55 % in four wells drilled into a Rock Creek oil pool, with current net production of approximately 180 bopd. Valiant has commenced an engineering study to optimize development of the pool.

Peace River Arch -Surface land owner issues have delayed the commencement of planned drilling and well re-entry programs on Valiant's land holdings in the Grande Prairie area. Subject to a satisfactory resolution of these issues, the Company anticipates drilling a Banff formation exploratory test (35 % working interest) prior to year-end.

N.E. B.C. - Valiant recently participated as to a 40 % working interest (32 % revenue interest) in a Bluesky formation indicated gas well at Laprise. Completion work is expected to commence shortly. The Company has plans to participate in the drilling of two additional wells prior to year-end.

Production

From an initial corporate production rate of 300 boepd in July, 2005, Valiant's production rate has increased to a current level of approximately 900 boepd before royalties. The Company reiterates its forecast target 2005 exit production rate of 1200 boepd.

Capital Expenditures, Bank Borrowing Facility, Corporate

Valiant's approved 2005 budget for capital expenditures was previously set at $15.0 million, comprised of $8.0 million for drilling and completion, $5.4 million for facilities and workovers, and $1.6 million for land, seismic and capitalized G&A. As of the end of August, approximately $8.0 million has been spent on programs in Valiant's core areas and spending is on track to achieve budgeted expenditure levels.

The Company also announces that it has finalized its banking line of credit with its primary lender whereby the credit limit of $6.0 million will increase to $7.2 million by October 31, 2005 with a provision for increases up to $8.8 million by January 31, 2006, subject to certain conditions having been met.

Valiant has a full complement of technical and support staff in place to manage expected growth. Officers and directors are:



R. Bruce Hammond President and C.O.O.
Doug N. Baker C.F.O.
Christine Robertson V.P. Engineering
Tom MacKay Chairman and C.E.O.
W. Peter Comber Director
Greg S. Fletcher Director
David V. Richards Director
Glen Roane Director


FORWARD LOOKING STATEMENTS

This press release may contain forward-looking statements including expectations of future production, cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (eg. Operational risks in development, exploration and production: delays or changes in plans with respect to exploration or development projects or capital expenditures: the uncertainty of reserve estimates; the uncertainty of estimates an projections relating tot production, costs and expenses and health, safety and environmental risks), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect the Company's operations or financial results are included in Valiant's reports on file with Canadian regulatory authorities.

Valiant is a new Calgary based oil and gas exploration and production company created as part of the Plan of Arrangement of Forte Resources Inc. with Thunder Energy Inc. and Mustang Resources Inc. Common shares outstanding are 16. 2 million basic and 17.8 million fully diluted. Valiant's shares trade on the Toronto Stock Exchange under the trading symbol "VLE".

Contact Information

  • Valiant Energy Inc.
    Douglas N. Baker
    Chief Financial Officer
    (403) 237-5163
    Email: dbaker@valiantenergy.ca
    or
    Valiant Energy Inc.
    Tom MacKay
    Chairman and Chief Executive Officer
    (403) 237-5163
    Email: tmackay@valiantenergy.ca
    or
    Valiant Energy Inc.
    2400, 500 - 4th Avenue S.W.
    Calgary, Alberta T2P 2V6
    (403) 237-5163
    (403) 237-5256 (FAX)
    Website: www.valiantenergy.ca