Petro-Reef's Drilling Success to Double Oil Production

Petro-Reef Resources noted that additional exploration drilling success with its latest exploration well in Alexander will double its oil production.

Petro-Reef has drilled a second exploration well on its acreage immediately adjacent to the Corporation's existing producing area. Petro-Reef commenced testing operations and during an extended test from a deeper exploration zone, the well flow-tested at a stabilized rate of approximately 550 mcf/d of natural gas and 125 bbls/d of crude oil (225 boe/d total production). In the well, Petro-Reef identified two uphole zones which appear to have significant production potential. Petro-Reef intends to test these two potentially high impact zones in the next three weeks. With infrastructure in close proximity, Petro-Reef anticipates the well will be brought on-stream for a 30-day production test by year-end at approximately 400 mcf/d of natural gas and 125 bbls/d of crude oil for an estimated production addition of approximately 200 boe/d. Based on the expected increase in crude oil production when this well is brought on-stream, Petro-Reef's crude oil production will double to 250 bbls/d.

This new oil zone is a new crude oil formation which is in addition to the two zones which Petro-Reef recently received downspacing approval for. Petro-Reef has mapped this new zone and it potentially extends across lands controlled by Petro-Reef.

Petro-Reef recently completed drilling a third exploration well (100% working interest) and will be testing the well in the next month. Petro-Reef anticipates results in the coming weeks and will provide an additional operational update as information becomes available.