Pace Reports Operational Update and Increase in Credit Facility

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CALGARY, ALBERTA--(Marketwire - June 15, 2011) - Pace Oil & Gas Ltd. ("Pace" or the "Company") (TSX:PCE) is pleased to announce an operational update for the Haro Pekisko Oil program and the Dixonville waterflood as well as the expansion of its 2011 credit facility with its banking syndicate. We are also pleased to announce the results of an independent evaluation of our Haro Pekisko oil resource recently completed by McDaniel & Associates Consultants Ltd. ("McDaniel").

The Haro area is an area of seasonal access generally restricted to the winter months from January 1, until spring break-up around the end of March. During this limited season all drilling, completions, pipelining and operations must be completed. As a result of this remoteness, a very large oil resource opportunity in the Pekisko formation was underexploited, creating both a challenge and an opportunity for Pace. With our existing oil and gas operations in the Rainbow area as a foundation and operating base combined with our strong operational experience with similar remote programs, Pace established a large land base of over 137 gross (118 net) sections to pursue this opportunity.

This winter Pace successfully completed its planned Haro program during this limited window of opportunity. The results confirmed the presence of Pekisko oil across a large portion of Company lands and established a year round infrastructure footprint along the 35 kilometer Pekisko oil trend. The primary focus of our activities was the drilling of 5 (five) 100% horizontal wells to confirm the continuous nature of the oil bearing Pekisko formation along the trend, construction of over 25 kilometers of oil and gas gathering pipelines and the installation of field water handling facilities.

Pace's activities to date in the Haro area are the early stages of an oil resource development with different techniques and procedures being tested. We are encouraged by the continuous nature and extent of the Pekisko oil in the wells we have drilled along the trend, however, we have also encountered higher than anticipated water cuts in certain wells. Based on these results, we are reviewing the information we have compiled and evaluating the various completion techniques to optimize the oil production rates. We remain confident that our continued efforts will identify key processes to develop this large scale oil resource opportunity economically.

We are pleased to report McDaniel has estimated that effective June 15, 2011, Pace's net working interest Discovered Petroleum Initially-In-Place (DPIIP) for the Pekisko formation in Haro is 1.16 billion barrels. This is an estimate only and the actual DPIIP may be greater than or less than the estimates provided. DPIIP, also known as a "discovered resource", is defined as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for this volume of discovered petroleum initially-in-place at this time, and as such at the effective date of McDaniel's evaluation, it cannot be further sub-categorized. There is no certainty that it will be commercially viable to recover or produce any portion of the resources. It should be noted that Pace has not currently booked any reserves to its Haro Pekisko oil play.

Haro Pekisko is a medium term project within our portfolio of oil prospects and is part of Pace`s Engineered Oil Exploitation Initiative that includes waterfloods and Enhanced Oil Recovery (EOR) processes at Dixonville, Retlaw and Long Coulee. These projects are part of Pace`s tremendous inventory of oil and gas potential that have and is expected to continue to deliver strong economic reserve and production additions.

At Dixonville, we continue to add value and increase the potential by re-engineering our reservoir model with current information and interpretation as part of our ongoing waterflood optimization. We are very pleased with results to date and have recently increased production to over 3,100 bbls/d of light oil up from 1,800 bbls/d a year ago. We have completed Phase 3 of the waterflood, will initiate Phase 4 in Q3 and are also evaluating enhanced recovery techniques to increase overall recoveries. In addition, we have finalized our plans for drilling and injector conversions for the balance of the year on our recently acquired section 25.

Pace has completed its annual credit review with a syndicate of banks resulting in a $55 million increase, bringing the total borrowing base to $275 million and a decrease in interest rate margins. This 25% increase from the previous borrowing base of $220 million is a direct result of Pace's solid reserve base and its strong results in 2010 and the first quarter of 2011. The terms of the credit facility remain unchanged from the previous arrangement but with a more favorable interest rate pricing grid. The syndicate of banks is led by Canadian Imperial Bank of Commerce with National Bank of Canada as syndication agent and includes Bank of Montreal, The Bank of Nova Scotia, Alberta Treasury Branches and HSBC Bank Canada.

The increase in Pace's credit facility reflects the high quality of its reserve base with 63% of its reserves being proved developed producing and 72% of its reserves being proven. In addition, the reserves are now approximately 50% weighted to oil and liquids. With only $170 million drawn on the facility today, Pace has greater financial flexibility to pursue its capital program in the second half of 2011 and into 2012.

Pace's common shares trade on the TSX under the symbol PCE.

ADVISORY

Natural gas is converted to barrels of oil equivalent ("boe") at a ratio of six thousand cubic feet to one barrel of oil. Boe's may be misleading, particularly if used in isolation.

FORWARD-LOOKING STATEMENTS

Certain statements contained within this press release constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. The use of any of the words "targeting", "continue", "until", "forecast", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future. In addition, this press release contains forward-looking statements with respect to: (i) Pace's drilling plans and the results therefrom including expectations regarding well completions and the start-up of new wells; (ii) future development and exploration activities and the timing thereof; (iii) Pace's plans for the development of its proven and probable undeveloped reserves. With respect to the forward-looking statements contained in this press release, Pace has made assumptions regarding:

Although Pace believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Pace can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. These statements speak only as of the date of this press release or as of the date specified in the documents incorporated by reference into this press release, as the case may be. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to:

other factors which are included under "Risk Factors" in Pace's Annual Information Form on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this document speak only as of the date of this document and Pace does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

 
Pace Oil & Gas Ltd.
Fred Woods
President & CEO
(403) 303-8505
fwoods@paceoil.ca

Pace Oil & Gas Ltd.
Judy Stripling
Executive Vice-President & CFO
(403) 303-8502
jstripling@paceoil.ca