Redcliffe Exploration Inc. announced its capital program and exploration focus for 2008.
Redcliffe has budgeted $17.5 million for exploration and development in 2008. Redcliffe currently plans to drill 11-16 wells primarily in the Peace River Arch ("PRA") area of northwestern Alberta. This program is based upon the success achieved to date in this basin at Gold Creek, Wapiti and Elmworth. The first of these wells is scheduled for drilling in March at Gold Creek. The remainder of the program will be focused in the second half of 2008. Included within this program will be 3-5 wells in the Pembina area. Two of these will complete the earning on our major Pembina block announced last year and one well will test a new prospect multi-section farm-in recently completed with a major Canadian Trust. These wells are anticipated to commence drilling in June 2008.
Redcliffe currently has an inventory of over 30 drilling prospects, which will be focusing on lower risked development prospects in 2008 to maximize the facility and transportation expansions undertaken in 2007. While Redcliffe fulfilled its 2007 flow through commitments, it retains a commitment to expend an estimated $5.7 million in additional flow-through exploration expenditures in 2008, a portion of which has already been incurred to date. These expenditures will be focused in the PRA targeting liquid rich natural gas at below 2000 metres. Such drilling will qualify for reduced royalty rates under the proposed new Alberta royalties starting in January 1, 2009.
While all capital expenditures are reviewed quarterly in the case of junior exploration companies, it is important to identify primary targets and objectives. In terms of capital spending, Redcliffe will be restricted to funding these expenditures through a combination of cash flow, debt and new equity. These levels are themselves dependent on present and forecasted future oil and gas product pricing as well as the investment environment towards the fiscal regime in which Redcliffe explores. Western Alberta, and more specifically, Peace River Arch, will remain our primary focus for 2008.
Based on this capital program, Redcliffe anticipates averaging 1400 boepd for 2008. We have established an exit rate target of 2000 boepd at this time. Achieving these average and exit rates will depend on existing well performance, timing and success of new wells, and processing access and capacity limitation.
A revised corporate presentation may be accessed at our website effective March 4, 2008 detailing specific areas of capital focus and upside potentials from this drilling.
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