CALGARY, Nov. 2 /CNW/ - Upper Lake Oil and Gas Ltd. (TSX :UP) ("Upper Lake" or the "Company") today provided production guidance and announced that its Board of Directors has approved a preliminary capital budget for fiscal 2008 of up to $12 million.
Certain information included in this News Release constitutes forward-looking information, including information concerning 2007 exit production rate assumptions for the Company and the number of wells in which the Company expects to participate prior to the end of 2007. Readers should review the cautionary statement that appears at the end of this News Release.
Prior to year end, Upper Lake expects to participate in the drilling of four to seven wells, including a 100% working interest well in its core area in Ferrybank, Alberta. Based on risked production adds from the wells to be drilled, coupled with natural declines on existing production, Upper Lake anticipates a year-end exit rate of approximately 700 to 800 barrels of oil equivalent per day. Upper Lake is currently debt free and has a revolving credit line of $8 million.
The Board of Directors of Upper Lake has approved a preliminary 2008 capital program of between $9 and $12 million. The 2008 capital program assumes the drilling of between eight (6.0 net) and 12 (9.0 net) wells and assumes expenditures have been broken down as follows: $7.5 to $10.5 million for drilling, completion and equipment and $1.5 million for land and seismic. The 2008 capital budget is based on an average natural gas price of $6.50 per gigajoule at AECO and $60 per barrel for oil and liquids. Any significant variations from these assumed commodity prices may cause decreased or increased activity by the Company. Although the preliminary 2008 capital budget makes no provision for potential acquisitions, the business plan of Upper Lake anticipates growth either through property or corporate acquisition transactions.
Upper Lake is also pleased to announce that its board of directors has approved the following appointments: Mr. David R. Keenan to the position of Vice President, Engineering; Mr. David A. Cheesman to the position of Vice President, Exploration; and Mr. Gary Taylor to the position of Controller. Mr. Don D. Copeland, Executive Chairman, and Mr. Kelly J. Ogle, President and CEO, welcome Messrs. Keenan, Cheesman and Taylor to the management team and anticipate that these experienced individuals will play key roles in Upper Lake's growth and success.
By way of background, Upper Lake announced on October 15, 2007 that shareholders, optionholders and warrantholders of Diamond Tree Energy Ltd. ("Diamond Tree") approved an arrangement involving Upper Lake, Diamond Tree and Crocotta Energy Inc. ("Crocotta") at a special meeting on October 12, 2007. In connection with the arrangement, Diamond Tree shareholders received one share of Upper Lake for each Diamond Tree share and Crocotta acquired all of the issued and outstanding common shares of Diamond Tree in exchange for Crocotta common shares. In connection with the arrangement, certain oil and gas properties of Diamond Tree in central and eastern Alberta, consisting of exploration assets, producing properties, related tangibles and undeveloped lands, were transferred to Upper Lake. Additional information concerning the asset transfer and the business of Upper Lake is included in the Management Information Circular and Proxy Statement forwarded by Diamond Tree to its securityholders in connection with the October 12, 2007 meeting of the Diamond Tree securityholders, which has been filed under the Upper Lake profile on SEDAR at www.sedar.com.
Certain information set out in this News Release constitutes forward-looking information. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "intend", "could", "might", "should", "believe" and similar expressions. Forward-looking statements are based upon the opinions and expectations of management of the Company as at the effective date of such statements. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that those expectations will prove to have been correct. Forward-looking statements are subject to certain risks and uncertainties that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as the volatility of prices for oil and gas and other commodities, commodity supply and demand, fluctuations in currency and interest rates, inherent risks associated with the exploration and development of oil and gas properties, ultimate recoverability of reserves, timing, results and costs of exploration and development activities, timing and costs of facilities and pipeline construction, availability of financial resources or third-party financing, availability of drilling and related equipment and new laws and regulations (domestic and foreign). Accordingly, readers should not place undue reliance upon the forward-looking statements contained in this News Release and such forward-looking statements should not be interpreted or regarded as guarantees of future outcomes. Forward-looking information respecting anticipated drilling activities for the balance of 2007 is based upon the current capital budget developed for the Company (which is subject to change), prior exploration and development drilling activities conducted by Diamond Tree Energy Ltd., the results of prior exploration and development drilling activities in the Ferrybank area, the receipt of all necessary regulatory approvals in a timely manner and industry conditions including proposed royalty changes. Forward-looking information respecting anticipated 2007 exit production rate assumptions is based upon current production from the Company's oil and gas properties, anticipated exploration and development drilling activities for the balance of 2007, historical success rates associated with exploration and development drilling in the Ferrybank area, management's prior experiences with the tie-in of successful wells in the Ferrybank area, the availability of transportation and processing infrastructure, management's evaluation of the individual wells to be drilled, historical production rates and other data associated with prior wells drilled in the Ferrybank area and industry conditions including proposed royalty changes. The forward-looking statements of Upper Lake contained in this News Release are expressly qualified, in their entirety, by this cautionary statement. Additional information concerning the various risk factors to which Upper Lake is exposed in the conduct of its business (and which may affect the expectations or outcomes reflected in the forward-looking statements contained in this News Release) are described in publicly available documents filed by or on behalf of Upper Lake with certain securities regulatory authorities in Canada, which are available through SEDAR at www.sedar.com, including the September 12, 2007 Management Information Circular and Proxy Statement prepared by Diamond Tree Energy Ltd. in connection with the special meeting of the securityholders of Diamond Tree Energy Ltd. held on October 12, 2007.
A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.