CALGARY, Jan. 12 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company")
(TSX-V: WAV.A and WAV.B) entered 2006 with strong production rates, producing
more than 1,600 boed for the first week of the year, with current production
of more than 1,700 boed. On this basis, production has increased more than
660 per cent or more than 400 per cent on a per share basis as compared to
Breaker's 2004 exit rate. Breaker accelerated its 2006 capital program towards
the end of 2005, and is currently in the field with one rig drilling, one rig
set to move this weekend, and ongoing pipelining operations. Breaker has
approximately 450 boed of behind-pipe volumes at East Prairie and Girouxville.
Northern and West Central Alberta
At Hamburg South, the first of two high impact Deep Devonian locations
has spudded and is about halfway to total depth. Breaker will maintain a 46.5%
revenue interest in both wells, by paying 28.5% of the drilling and completion
costs, reducing its capital exposure on deep wells while retaining a
significant portion of the upside.
At Girouxville, the company's high impact light oil discovery continues
to produce at over 100 bbl/d from a secondary zone, with the primary zone yet
to be completed. The primary zone is anticipated to be capable of
150-200 bbl/d of light oil production. A 3D seismic program has been acquired
and interpreted over the new discovery, newly-acquired offsetting lands, and
portions of the company-operated BHL 'B' Pool nearby. Three on-trend locations
targeting similar high-impact, multi-zone light oil have been picked and are
being prepared for drilling in the second quarter, after breakup. All lands
and production in this area are held 100%.
At East Prairie, equipping and tie-in operations are in progress on
several of the company's wells that were drilled and tested in 2005 with a rig
scheduled to move this weekend to drill the first of two new Viking locations.
Two Viking oil wells have been placed on production, with associated gas tied
in for one with the other to follow later in the first quarter. The new
Gething discovery is currently being pipelined, and will be placed on
production at restricted rates, as the company's drilling success in this area
is beginning to get ahead of compression capability. As such, field processing
capabilities are currently being re-evaluated and recommendations will be
tabled in the near term in order that Breaker produces and processes its
reserve base in the most cost effective manner. Current production at East
Prairie is over 460 boed, representing a greater than 530 percent increase
since purchasing the property a year ago, with approximately 275 boed of
additional tested, behind pipe capability yet to be equipped for production.
Breaker operates and holds a 75% working interest in all production at East
Prairie.
Southern Area
At Domremy Saskatchewan, the company drilled and cased one well for its
long-term Second White Specks gas shale project. Completion operations on this
well will commence after the winter season, when field services will be more
accessible and cost effective.
The large heavy oil resource delineated at Suffield will be moved forward
this quarter via the completion and pilot production of its most recent well.
Significant activity in the Company's Southern Alberta Area will commence
after breakup, to avoid unnecessarily competing for higher-priced services in
the winter season, highlighted by a large Provost drilling program to follow
up the successes of 2005.
Breaker has a 2006 capital budget of approximately $30 million which is
forecast to result in average 2006 production of 1,975 boed with an exit rate
of 2,250 boed, generating cash flow of $21.9 million (assuming an AECO natural
gas price of $9.00 and US$55.00 per barrel WTI). This budget will be fully
funded by cash flow and Breaker's bank line. It includes significant drill
programs in all of Breaker's core exploration and development areas, following
up on the successes of 2005. Breaker has a large inventory of behind-pipe
productivity and low-risk development drilling locations.
Breaker Energy Ltd. is a junior oil and gas company focused on creating
shareholder value by growing per share production and reserves through
acquisitions and a focused exploration, development and exploitation plan.
Breaker has access to a land base of over 400,000 acres in Western Canada.
Breaker Energy trades on the TSX Venture Exchange under the symbols WAV.A
and WAV.B.
NOTE: Boe means barrel of oil equivalent on the basis of 1 boe to 6,000
cubic feet of natural gas. Boe's may be misleading, particularly if used in
isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas
is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the wellhead.
Boe/d means a boe per day.
ADVISORY: This press release may contain forward-looking statements
including management's assessment of future plans and operations, 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 materially from those anticipated. These
risks include, but are not limited to: the risks associated with the oil and
gas industry (e.g. 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 and projections relating to
production, costs and expenses and health, safety and environmental risks),
acquisitions, commodity price and exchange rate fluctuation and uncertainties
resulting from competition from other producers and ability to access
sufficient capital from internal and external sources. Additional information
on these and other factors that could affect Breaker's operations and/or
financial results are included in Breaker's reports on file with Canadian
securities regulatory authorities.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
%SEDAR: 00021180E
