DeGolyer and MacNaughton Canada Limited, independent reserves evaluator, prepared a report in accordance with National Instrument 51-101 guidelines on these Alberta oil sand leases with an effective date of December 31, 2006. In this report DeGolyer and MacNaughton estimated that Pearl's working interest share of possible oil reserves within these leases was approximately 88 million barrels of possible recoverable oil reserves, effectively tripling Pearl's possible reserves. The 10% discounted value for these newly acquired reserves is approximately CAD$105,000,000 (net to Pearl) using forecast pricing and before taxes.
Through its 28.27% ownership in Serrano, Pearl has an additional indirect ownership of 24.8 million barrels of possible oil reserves and an additional 10% discounted value for these reserves of approximately $29,683,500.
The Company has plans to drill one appraisal well this winter and is in the process of preparing an application for required governmental approvals of a thermal pilot project utilizing SAGD technology. Upon confirmation of positive results from this appraisal well, Serrano as operator plans to initiate the SAGD single well pair pilot project commencing in the fall of 2008, pending regulatory approvals. Estimated drilling and facility costs of the SAGD pilot project are estimated to be $15,000,000 ($5,250,000 net to Pearl).
For the balance of 2007 Pearl and Serrano have plans to drill up to 50 additional wells in their Joint Venture heavy oil conventional focus area in Saskatchewan, commencing in early September.
Pearl President and CEO Keith Hill stated, "We are very pleased to add this large scale heavy oil property to Pearl's portfolio as a result of our investment in Serrano. We will aggressively pursue the SAGD pilot project which is the key to moving the possible reserve numbers into a proven and probable category."
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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