Pearl Exploration Increases Stake in Mooney Field
Pearl Exploration and Production Ltd. has signed a Letter of Intent to acquire a 24% working interest in the Mooney oil field from Ravenwood Energy Corp. ("Ravenwood"), a private oil and gas company. Pearl is the operator of the Mooney field situated in northern Alberta and currently holds a 74.1% working interest. The acquisition of Ravenwood's working interest will bring Pearl's working interest in the field to over 98% and immediately adds approximately 625 boepd in current production.
Pursuant to the Letter of Intent, Pearl will purchase Ravenwood's working interest for the sum of $20,000,000 effective July 1, 2007. The transaction is expected to close in early August at which time Pearl will provide this sum, net of industry standard adjustments, utilizing 50% in the form of cash and 50% in the form of Pearl common shares at a deemed price of Cdn $5.12 per share (closing trading price as of July 13, 2007 on the TSX Venture Exchange).
Located in north-central Alberta, the Mooney field is one of Pearl's best performing assets. Mooney is a conventional heavy oil field, which produces from the Bluesky sand formation. A high recovery factor is expected due to the combination of relatively low viscosity 16 degree API gravity oil and favorable reservoir characteristics which facilitates efficient oil flow. Pearl has mapped the potential area of the Mooney Bluesky heavy oil pool at approximately 50 sections, and a stratigraphic well program is ongoing to further delineate the field's areal extent.
The reservoir properties and the high quality oil also make the pool conducive to water flooding which is expected to further enhance recovery. A preliminary water flood simulation study showing higher secondary recoveries has been prepared by independent reservoir engineering consultants. Pearl commenced water flooding this pool in July 2006 after converting the original horizontal oil well in the pool to a water injector with current injection rates at approximately 1,200 barrels per day. A positive response to this water injection was observed in the two offsetting oil producers and an expansion of the water flood project area is planned in 2007.
Keith Hill, President and CEO of Pearl, commented, "We are very pleased to have the opportunity to consolidate our working interest in this high quality asset. The project has significant upside and we fully intend to aggressively maximize its potential. It will also be a strong contributor to our production and cash flow goals for 2007 and beyond."
The foregoing transaction is subject to due diligence and all requisite regulatory approvals.
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