Pearl Closes Plan of Arrangement with Atlas Energy

Pearl Exploration and Production Ltd. and Atlas Energy Ltd. have closed the previously announced acquisition by Pearl of all of the issued and outstanding shares of Atlas pursuant to a court approved plan of arrangement involving Pearl, Atlas and the shareholders and optionholders of Atlas (the "Arrangement"). At a special meeting of the shareholders and optionholders of Atlas held on December 22, 2006, 42,940,542 shares, representing over 99% of the shares cast, were voted in favor of the Arrangement.

Pursuant to the terms of the Arrangement, Atlas shareholders will receive 0.82 of a share of Pearl for each share of Atlas held. Optionholders of Atlas who had not previously exercised or surrendered their options will receive $0.05 cash per option held. Atlas is now a wholly owned subsidiary of Pearl and the shareholders of Atlas are now shareholders of Pearl. The board of directors of Pearl is now comprised of eight directors, being the six directors of Pearl together with Lukas Lundin, the largest shareholder of Pearl, and Lloyd Arnason, formerly the Chairman of the Atlas board of directors.

Management of Pearl is now comprised of Gary Guidry, President and CEO; Gary Hyde, Chief Operating Officer; Arlene Weatherdon, Chief Financial Officer; George Lepine, Director Land and Legal; Gord Morrison, Director Business Development; Tim Bokenfohr, Director Marketing; Ron Davison, Development Projects Leader; and Harold Hay, Heavy Oil Business Unit Leader.

Following completion of the Arrangement, the estimated enterprise value of Pearl (which includes the assumption of total net debt of approximately $86 million) is approximately $678 million. The combined resource opportunities of both companies are expected to provide shareholders with growth potential from properties held in North America. Atlas is a heavy oil and natural gas exploration and development company with current (net to Atlas) production of approximately 5,700 barrels of oil equivalent per day ("boepd"). Key, high working interest projects of the combined company include: Mooney (heavy oil, 74% WI), Druid (heavy oil, 100% WI), Unity (shallow gas, 100% WI), Salt Lake (heavy oil and gas, 100% WI), Ear Lake (heavy oil and gas, 100% WI), Pikes Peak (heavy oil, 100% WI), Onion Lake (heavy oil, 87.5% WI) and Southern Alberta (shallow and medium gas, 88% WI). Atlas has over 260,000 net undeveloped acres (average 83.6% working interest). Other key projects include San Miguel, Texas (heavy oil), Palo Duro, Texas (shale gas) and Gulf Coast shallow water offshore (natural gas).

Management believes that the Arrangement is synergistic with Pearl's core assets around Onion Lake in N.E. Alberta and N.W. Saskatchewan and will allow the combined company to focus on optimizing value through low cost development, operating and product marketing. Pro forma production of approximately 7,800 boepd is expected from high working interest assets in concentrated operating areas. Pearl estimates that its development portfolio and the equity issue described below will allow the combined company to undertake an aggressive capital expenditure program in 2007.

Concurrently with the closing of the Arrangement, an aggregate of 16,153,845 common shares of Pearl (of which 1,709,401 shares are "flow-through" shares) were issued pursuant to the terms of subscription receipts issued as a part of Pearl's private placement which closed November 14, 2006. Upon issuance of such shares, an aggregate of $72,811,983.18, including interest, was released to Pearl from escrow.

Following completion of the Arrangement and the issuance of shares pursuant to the subscription receipts, Pearl has 131,737,087 shares outstanding of which Pearl shareholders hold 45.48%, former Atlas shareholders hold 42.26% and subscribers of the subscription receipts hold 12.26%.

All references in this release to boe's are based on a 6 to 1 conversion ratio. Boe's may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities of Pearl or Atlas within the United States. The securities of Pearl and Atlas have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws. Accordingly, the shares may not be offered or sold in the United States or to U.S. persons (as such terms are defined in Regulation S under the 1933 Act) unless registered under 1933 Act and applicable state securities laws or an exemption from such registration is available.