CALGARY, ALBERTA--(Marketwire - April 21,
2009) - NAL Oil & Gas Trust (the "Trust" or "NAL") (TSX:NAE.UN)
provides an update on recent corporate activities.
BUILDING ON CARDIUM OIL MOMENTUM IN CENTRAL ALBERTA
Building on recent success in NAL's emerging Cardium oil resource
play in central Alberta, NAL is pleased to announce that it has entered
into a joint venture agreement with a senior industry partner. The
arrangement consists of a three year commitment to spend $50 million
(Trust - 65%, Manulife Financial Corp. - 35%) that provides NAL an
opportunity to earn in over 150 sections of freehold and crown acreage.
The agreement is exclusive to NAL and structured to be extended for up
to an additional six years for a potential total commitment of $150
million. This transaction doubles NAL's Cardium acreage position adding
land south of NAL's Garrington area.
The Cardium formation will be the primary target, utilizing
horizontal drilling and fracture stimulation technology to maximize
resource recovery potential. The Viking and Mannville formations also
offer multi-zone potential for liquids rich natural gas and light
gravity sweet crude oil, adding good option value to this opportunity.
In addition to this partnership agreement, NAL was successful in the
March 4, 2009 Alberta Crown land sale, acquiring acreage of
approximately ten sections. This land is adjacent to the Trust's most
recent successful drilling locations in Sylvan Lake and adds further
horizontal drilling prospects to NAL's inventory.
In aggregate, these transactions have increased NAL's horizontal
Cardium oil prospect inventory by approximately 50%, to more than 200
potential locations. It is expected that the inventory of drilling
prospects will continue to grow as the resource continues to be
delineated.
CARDIUM PLAY OVERVIEW
NAL drilled and completed three horizontal wells in the Cardium
trend at Garrington in the fourth quarter 2008. These wells are now on
stream with three month production profiles that are above economic
thresholds using forward strip pricing without considering royalty
incentives. These early positive results have validated a follow-on
program of 12 horizontal wells with two locations being drilled in the
first quarter of 2009. Initial completion results are in line with
previous wells and it is expected that this new production will be on
stream in early April. The Trust will drill two or three locations
related to this new opportunity during 2009.
NAL's current horizontal drilling in the Cardium trend is characterized by:
- Initial production rates after load fluid recovery of 300 - 500 boe/d
- Three month production rates of 100 - 200 boe/d
- Expected six month production rates of 75 - 100 boe/d declining exponentially at 10 - 15%
- Light sweet crude oil (48 degrees API) with no associated water
- Average vertical depth of 2,200 meters with a 1,000 meter horizontal leg
- Between five and eight fracture stimulations per well
- Reserves per well: 150 - 200 MMboe
- Cost per well: $3.5 million average (costs are expected to be lower in the last six months of 2009)
Please click the following link to view the NAL Sylvan Lake Acreage map: http://media3.marketwire.com/docs/421nae.pdf
ALBERTA GOVERNMENT ROYALTY INCENTIVES
The net present value ("NPV") of projects in NAL's central Alberta
Cardium oil program, discounted at ten percent, is improved by
approximately 30% as a result of the recently announced Alberta
Government's stimulus program. This positive impact does not include the
drilling royalty credit of $200 per meter drilled, that NAL estimates
to equate to approximately $600,000 per well at a 40% credit rate. Due
to the high initial production rates, the first year royalty incentives
as proposed are meaningful and may lead to incremental capital spending
in the latter half of 2009 and in early 2010.
OUTLOOK
"The addition of this acreage consolidates NAL's position in the
emerging horizontal Cardium oil resource style play which has been
identified, developed and executed by our technical and operating
teams," commented NAL's President and CEO, Mr. Andrew Wiswell. "Further,
these transactions represent another strategic step toward positioning
NAL as a sustainable yield oriented E&P company well beyond 2010."
NAL Oil & Gas Trust provides investors with a yield-oriented
opportunity to participate in the Canadian Upstream Conventional Oil and
Gas Industry. The Trust generates monthly cash distributions for its
Unitholders by pursuing a strategy of acquiring, developing, producing
and selling crude oil, natural gas and natural gas liquids from pools in
southeastern Saskatchewan, central Alberta, northeastern British
Columbia and Lake Erie, Ontario. Trust units trade on the Toronto Stock
Exchange under the symbol "NAE.UN".
Contact Information:
NAL Oil & Gas Trust
Clayton Paradis
Manager, Investor Relations
(403) 294-3620 or Toll Free: 1-888-223-8792
(403) 515-3407 (FAX)
Email: investor.relations@nal.ca
Website: www.nal.ca