Buffalo Oil Corporate Update - Press Release
(Few minor problems at start of the 2006, but market guidance for 2006 remain unchanged - average production for 2006 remains between 1,500 and 1,600 boe/d with a year-end exit rate between 1,800 and 2,000 boe/d. Buffalo's cash flow estimate for 2006 is approximately $10.5 million.)
biz.yahoo.com
CALGARY, ALBERTA--(CCNMatthews - Feb. 14, 2006) - The Buffalo Oil Corporation ("Buffalo") (TSX VENTURE:BFO - News) has finalized its 2006 capital expenditure program and expects to commence drilling by month-end. Buffalo plans to drill ten wells in the first half of 2006, including its second exploration well in the Peace River Arch of Alberta, which will be drilled at George. In southeast Saskatchewan, the first of three horizontal wells targeting oil in the Frobisher formation has been licensed at Heward. Eight drilling locations have been surveyed and the company is in the process of acquiring surface leases at Frog Lake, Alberta.
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Buffalo exited 2005 at a production rate approximating 1,300 boe/d. Since January 1, 2006, production disruptions at Frog Lake and a higher than anticipated production decline at the Corporation's new well in Heward reduced this production rate to 1,200 boe/d. At Frog Lake, mechanical problems caused by high initial sand production in newly drilled heavy oil wells resulted in temporarily reduced oil production rates. Based on the historical performance of offset heavy oil wells, sand production will diminish and the new wells should achieve the expected production levels by the end of the first quarter 2006. In addition, a recently re-completed gas well at Frog Lake is unable to deliver production to its full capability until the gas gathering system is optimized. The Corporation is reviewing alternatives to add compression to the gas gathering system.
There are no changes to Buffalo's market guidance for 2006 as a result of these developments. The Corporation's forecast average production for 2006 remains between 1,500 and 1,600 boe/d with a year-end exit rate between 1,800 and 2,000 boe/d. Buffalo's cash flow estimate for 2006 is approximately $10.5 million.
Buffalo restated its financial statements for the nine months ended September 30, 2005. Buffalo determined that it had prematurely recorded the liability for future income taxes which arises on the issue of flow-through common shares. The amount of $381,200 was recorded on the previously-issued balance sheet as a liability before the related resource expenditures were renounced to shareholders. This restatement had no impact on net earnings or cash flows for the three and nine months ended September 30, 2005.
Buffalo is an emerging Canadian junior oil and gas company engaged in the exploration, development and production of oil and gas reserves in the provinces of Alberta and Saskatchewan.
Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf : 1 Bbl is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. |
