Ironhorse Oil & Gas Inc. - Completes and Production Tests Pembina Oil Wells
Calgary, Alberta CANADA, May 05, 2009 /FSC/ - Ironhorse Oil & Gas Inc. (IOG - TSX Venture), ("Ironhorse" or the "Company") is pleased to provide the following operational update.
On February 18, 2009 the Company previously announced that it had drilled two (0.4 net) Nisku oil wells. In late April Ironhorse participated in the completion of both the 14-5-50-6W5 ("14-5 well") and 9-5-50-6W5 ("9-5 well") oil wells and performed an extensive production test on the 9-5 well. On a combined basis the two wells flowed oil at rates of over 3,200 barrels per day plus associated solution gas and liquids which brought the combined flow rates for the two wells to approximately 4,000 (800 net) boe per day. The 9-5 well produced approximately 2,500 barrels of light sour oil before being shut in.
Ironhorse together with its partners is expeditiously evaluating tie-in options which will allow the Company to produce the oil and gas. We expect the oil wells to be placed on production in the fourth quarter of 2009. The exact timing will depend on regulatory issues pertaining to the pipeline route. The two oil wells are initially expected to produce at a combined rate of 1,000 (200 net) boe per day. The production rates will subsequently be increased to over 4,000 (800 net) boe per day when the Company receives "Good Production Practice" approval by establishing a pressure maintenance scheme in order to optimize the recovery of oil. This will require the Company to participate in the drilling of a water source well and water injection well.
The Company is currently producing 1,300 boe per day primarily from its Shackleton property in Saskatchewan. During the first quarter the Company undertook capital expenditures of $6 million to drill, complete and place on production 32 (16 net) wells in Shackleton which brought the total number of producing gas wells to 100 (50 net) and to drill two (0.4 net) oil wells in Pembina. As a result of these capital expenditures net debt at the end of the March was $11.3 million. Ironhorse's banker recently completed its interim review and confirmed that our available credit facility would continue at $14.5 million with interest payable at prime plus 1%. The Company believes that its successful first quarter 2009 drilling program will result in an increase in its available credit facility when the annual banking review is done in the third quarter of 2009.
In addition to placing the Pembina oil wells on production this year, Ironhorse is pursuing other exploration opportunities which will fulfill its remaining flow through share expenditure obligations estimated at $2 million.
For further information, please contact:
Rob Solinger
VP Finance & CFO
(403) 355-3620
rsolinger@ihorse.ca
or visit our website at www.ihorse.ca.
Ironhorse Oil & Gas Inc. is a Calgary-based junior oil and natural gas production company trading on the TSX Venture Exchange under the symbol "IOG".
"Neither 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."
Forward Looking Statements
Statements throughout this release that are not historical facts may be considered to be "forward looking statements". These forward looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including management's assessment of future plans and operations, drilling plans and timing thereof, expected production rates and additions and the expected levels of activities may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and changes in the regulatory and taxation environment. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manor; and field production rates and decline rates. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this release are made as at the date of this release.
Boe Conversion - Certain natural gas volumes have been converted to barrels of oil equivalent ("boe") whereby six thousand cubic feet (mcf) of natural gas is equal to one barrel (bbl) of oil. This conversion ratio is based on an energy equivalency conversion applicable at the burner tip and does not represent a value equivalency at the wellhead.
Source: Ironhorse Oil & Gas Inc. (TSX-V: IOG) http://www.ihorse.ca
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