In addition, an associated $48 - 52 million operating and $7 million general and administrative expenses budget has been approved equivalent to an average $12.00 - 13.00/bbl operating expense and $1.50 - 1.75/bbl general and administrative expenses, respectively. A total of 230 wells are planned for 2007, and the Company forecasts gross production exit rates for 2007 in the range of 12,000 to 14,500 barrels of oil per day.
This budget and work program is focused on development projects ($130 million, 90%) with near term cash flow and net present value additions, along with potentially high impact exploration and exploitation projects ($15 million, 10%) which will add material value if successful.
The Company is investing in Onion Lake conventional heavy oil production (87.5% WI) to both appraise and develop reserves, with expectations for significant production gains in 2007. Pearl encountered regulatory delays to its planned Q4 2006 drilling program, which has been postponed to January 2007. The Company is being actively assisted by its partner, the Onion Lake First Nations Band, in resolving the issues associated with regulatory delays.
There are several additional development projects that will be funded to develop production and reserves:
The Company has reserved additional contingent funds for these projects to accelerate further production additions which are dependent on weather, services availability and the timing of regulatory approvals.
The 2007 capital program also includes important exploration and exploitation projects funding for: exploration activities on more than 260,000 net undeveloped acres in western Canada (83.6% WI), the San Miguel tar sands project in Texas (heavy oil, 50% WI), Palo Duro basin exploration (unconventional gas, 30% WI), the Gulf of Mexico exploration (gas, 50-100% WI) and Druid (heavy oil, 100% WI).
The board has also authorized management to proceed with activities to rationalize non-core assets.
The Company also reports that it has granted incentive stock options to certain directors and officers of the Company. The options entitle such persons to purchase up to an aggregate of 1,377,000 common shares of Pearl at a price of $5.15 over a period of five years. The option grant is subject to all requisite regulatory approvals.
Pearl is a public company focused on delivering disciplined growth by establishing a North American portfolio of oil and gas projects with an emphasis on large resource opportunities.
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