Petro-Reef Resources Ltd. report a production increase of 181 BOE/day and a 12% increase in proved plus probable reserves.

Petro-Reef has tied in its Alexander 09-12-56-27W4 step-out well producing from the Detrital oil zone. The well came on stream on October 26, 2011, and during the first 19 days on production the well has flowed at an average rate of 193 BOE/day 151 bbl/day of oil and 247 mcf/day of natural gas. Petro-Reef has a 94% working interest in the 9-12 well.

The Company believes that this step-out well in Section 12 confirms that the Detrital oil trend extends west from Section 7 where Petro-Reef has three wells producing from the same zone. The Company has completed the reprocessing of 35 sections of 3-D seismic data on its Alexander lands which has been incorporated into the October 1, 2011 independent reserves evaluation, prepared by McDaniel & Associates Consultants Ltd. Four additional Detrital development locations have been included in the McDaniel Update Report.

Petro-Reef's gross proved plus probable reserves at October 1, 2011 indicated an increase of 12% to 1,771,150 BOE from 1,580,000 BOE at December 31, 2010, after extensions, technical revisions, discoveries, acquisitions, economic factors, and production. After considering the production for the period January 1 to September 30, 2011 of 180,300 BOE, the 2011 reserve additions totalled 371,450 BOE which represents an increase of 24% over the 2010 year end reserves.

Using a 10% net present value, the value of proved plus probable reserves at forecast prices and costs was unchanged at $34,735,200 as compared with proved plus probable reserves of $34,741,400 as at December 31, 2010.

Petro-Reef's gross proved, probable plus possible reserves at October 1, 2011 totaled 2,623,050 BOE. Using a 10% NPV, the value of proved, probable plus possible reserves at forecast prices and costs totaled $56,281,100. The possible reserves include four potential development locations targeting the Detrital zone offsetting the Company's recent 09-12-56-27W4 well.

Only extensions to the existing producing zones were included in the possible reserves. The resource plays in the Nordegg at Goose River and the Wabamum and other plays identified by the seismic reprocessing at Alexander were not included in the evaluation.

Proved plus probable reserves were comprised of 47% natural gas and 53% crude oil and natural gas liquids.

Of the total proved plus probable reserves reported Petro-Reef's reserves are 54% proved and 46% probable.

Based on proved plus probable reserves and production volumes, Petro-Reef's reserve life index was 7.0 years on a proved plus probable basis at October 1, 2011 compared with 4.2 years at the end of 2010.

Tags: Petro-Reef Resources