Press Release Source: Valkyries Petroleum Corp.
Valkyries Announces 2005 Annual Results and Filing of Statement of Reserves Data and Other Oil & Gas Information
Monday May 1, 4:05 pm ET
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 1, 2006) - Valkyries Petroleum Corp. (the "Company") (TSX VENTURE:VPC - News) is pleased to announce that it has today filed its 2005 audited consolidated financial statements and related Management's Discussion and Analysis for the year ended December 31st 2005. Valkyries has today also filed its Statement or Reserves Data and Other Oil & Gas Information of the year ended December 31, 2005 pursuant to National Instrument 51-101 Standards of Disclosure for Oil & Gas Activities of the Canadian Securities Administrators. A copy of these documents may be accessed electronically on the website System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
During 2005, the Company continued to execute an aggressive growth strategy, successfully completing two business acquisitions. Through our equity investment in Mintley (Caspian) Limited, completed in July 2005, we have acquired a 70% interest in the prospective Lagansky Block. The approximately 2,000 square kilometer block, located in the Russian sector of the Caspian Sea, provides us with a world class exploration asset. By acquiring a 51% interest in CJSC Kalmeastern ("Kalmeastern") earlier in 2005, which holds the Caspian Field license, we have added to our portfolio of Russian assets promising concrete production growth potential through developmental drilling. Additional acquisition activity continued in 2006 with the acquisition of a 50% interest in the Ashirovskoye Field in the Orenburg region of Russia.
Adding the results generated from our newly acquired ownership interest in Kalmeastern to a full year of operating results from our investment in ZAO Pechoraneftegas ("PNG") (acquired in August 2004) generated oil revenue of $49 million (2004: $11 million). PNG holds the producing Sotchemyu-Talyu field in the Komi Republic of Russia. Average net daily production rates of 3,013 and 534 barrels per day ("bbl/d") were recorded on PNG and Kalmeastern respectively. The 2005 capital programs focused on developmental drilling with 8 gross wells being completed in PNG and one well completed in mid-December in Kalmeastern. Continuous developmental drilling continues on both of these projects. The Company recorded a net loss from continuing operations of $12.9 million which includes a non-recurring $9.1 million financing charge associated with a bridge loan used in the acquisition of our interest in the Lagansky Block. Investment in key personnel, both Russian and expatriate, increased general and administrative expenses to $6.8 million. It is anticipated that production growth through successful developmental drilling on all development projects will generate positive operating cash flow in 2006. The exploration effort on the Lagansky Block will continue in 2006, utilizing the 268 kilometers of 2D seismic that was acquired during 2005.
Our net interest in Russian oil reserves at December 31, 2005 grew to 12.8 million barrels on a proved basis (2004: 11.4 million), proven plus probable grew to 22.4 million barrels (2004: 13.2 million barrels) and proven plus probable plus possible grew to 33.7 million barrels (2004: 13.2 million barrels). These year end reserves figures include a reduction of reserves at the Caspian Field from the previously disclosed figures. Reserves for this field net to the Company are now 3.2 million barrels (May 2005 - 7 million barrels), proven plus probable 9.4 million barrels (May 2005 - 22 million barrels) and proven plus probable plus possible of 20.8 million barrels (May 2005 -25 million barrels). The main reason for the reduction of these figures is the exclusion of most water flood related reserves in the probable category and, to a lesser extent, lower estimates of reservoir porosity and oil saturation due to recent drilling data.
Management still believes that the field will be amenable to water flooding and a pilot water flood project is being implemented to confirm this hypothesis. If successful, we believe there will be a significant shift in the possible reserves to the proven and probable category.
A report was prepared by DeGoyler and MacNaughton Canada Limited ("D&M Lagansky Report"), effective December 31, 2005, estimating the prospective resources of various prospects in the Lagansky Block. The report estimated gross oil resources on two prospects on the block generating a range of estimated-unrisked gross prospective oil resources from 472 million barrels to 1.5 billion barrels, with the best estimate of 940 million barrels of recoverable oil. The report further estimated a geologic risk adjusted gross prospective oil resource of 156 million barrels. The D&M Lagansky Report has been prepared in accordance with National Instrument 51-101 as it pertains to the evaluation of prospects and resource. We have filed the D&M Lagansky report on SEDAR and encourage you to review the report in its entirety for additional information.
Valkyries President and CEO Keith Hill stated, "We are pleased with the progress we have made this year and look forward to continued growth in the coming year. Additional drilling results will soon be available on all key projects and we plan to do a mid-year reserves update to incorporate these results."
Valkyries Petroleum Corp. is an upstream oil and gas company with exploration and producing interests in the Russia and is currently in advanced stages of evaluation and negotiation on several additional projects in Russia.
ON BEHALF OF THE BOARD
Keith C. Hill, President
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Contact:
Sophia Shane
Valkyries Petroleum Corp.
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
www.valpete.com
Source: Valkyries Petroleum Corp. |
