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Friday January 29, 7:01 am Eastern Time
Company Press Release
Richland's Production Jumps With Successful Drilling and Exploitation at Paddle River
CALGARY, ALBERTA--Richland Petroleum Corporation today announced that five wells have been drilled over the past several months, all of them successful. In addition, excellent exploitation results from the recent Paddle River acquisition have boosted pr oduction. This drilling success launches the Company to a very good start in 1999, with increasing production volumes, despite the current low oil price environment.
At Carievale, Saskatchewan, a horizontal Frobisher well (W.I. 53 percent) was successfully completed and is producing approximately 200 BOPD, with five to six follow-up locations possible. At Kingsford, Saskatchewan a fourth well (W.I. 100 percent) was
drilled in the Midale zone and is producing approximately 100 BOPD of light crude oil.
In Alberta, Richland's exploitation of assets acquired in the Paddle River / Heldar area four months ago is meeting with excellent results. A new well (W.I. 100 percent) has recently been completed and is on stream at rates in excess of 4 MMCF per day a nd 150 BOPD of liquids. This new well, combined with the workover and recompletion of several existing wells, has increased total production from the area by 75 percent from 800 BOEPD at the time of the acquisition four months ago to more than 1,400 BOE PD today, 70 percent of which is natural gas. Total post-acquisition capital expenditures for the 600 BOPD increase in production are less than $2 million. With total capital invested in the Paddle River / Heldar project of $19.5 million and production
of 1,400 BOEPD, the cost per BOEPD to date is approximately $14,000 per BOEPD. In addition, Richland is in the process of negotiating the sale of the Paddle River gas plant, which will be subject to the completion of formal documentation for operating,
processing and transporting Richland's gas in the area. When this transaction is closed at the end of the first quarter of 1999, Richland will retain all lands, production and reserves and the net cost to Richland of the Paddle River / Heldar productio
n will be less than $6,500 per BOEPD. The sale of the gas plant will also reduce Richland's debt to cash flow to approximately 2 times, at current price levels.
At the Company's Firebird property in northwestern Alberta, a successful Slave Point gas well (W.I. 80 percent) has been drilled and is currently being tested, prior to being placed on production. At East Lost Hills, California, well control efforts are
continuing on the well (W.I. 4 percent) which blew out on November 23, 1998 and a relief well is drilling. Once the well is brought under control, plans call for the relief well to continue into the productive zone to further delineate the discovery.
Mr. Richard Todd, President and Chief Executive Officer, stated ''This string of drilling successes is great news for Richland at a time when the industry is generally depressed. The exploitation results at Paddle River demonstrate that our acquisition w as a good strategic move, while the East Lost Hills play continues to offer the potential to provide a significant increase in Richland's net asset value. With a year-end exit rate in excess of 4,000 barrels equivalent per day, gas exploration targets p lanned in Alberta and Paddle River gas exploitation ongoing, we are well positioned to continue the growth in production at Richland throughout 1999.''
Richland Petroleum Corporation is a public company involved in the exploration and development of crude oil and natural gas in western Canada and the United States. Its shares trade on the Toronto Stock Exchange under the symbol ''RLP''.
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