Press release from Marketwire
Birchcliff Energy Ltd. Announces Sale Process, Production Update, Material Mid-Year Reserve Additions and Updated Montney/Doig Resource Assessment
Monday, October 03, 2011
Birchcliff Energy Ltd. Announces Sale Process, Production Update, Material Mid-Year Reserve Additions and Updated Montney/Doig Resource Assessment02:02 EDT Monday, October 03, 2011CALGARY, ALBERTA--(Marketwire - Oct. 3, 2011) -NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICABirchcliff Energy Ltd. ("Birchcliff")(TSX:BIR) is pleased to announce that as a result of unsolicited expressions of interest in Birchcliff, the Board of Directors, has determined to commence a public sale process, seeking offers to purchase all of the outstanding shares of Birchcliff. At this time there can be no assurance that this process will result in an acceptable transaction.Jeff Tonken President and Chief Executive Officer of Birchcliff said:Birchcliff's two resource plays continue to meet or exceed Birchcliff's expectations and Birchcliff is on track to meet its guidance for 2011 and to meet its November 1, 2012 milestone for completion of the Phase III expansion of its Pouce Coupe South Gas Plant (the "PCS Gas Plant") which will result in 2012 exit production of approximately 28,000 boe per day.Current production is approximately 19,250 boe per day."Birchcliff is commencing a sale process from a position of strength with a very focused, high working interest, operated, low cost asset base with significant growth potential. Birchcliff is well financed and is not facing any operational, financial or internal challenges that would necessitate a sale. However, in light of the recent expressions of interest that have been received, the Board of Directors believes it is in the best interests of all shareholders to explore the opportunity to sell Birchcliff at an acceptable price.If Birchcliff does not conclude a satisfactory transaction, it is well positioned to continue to grow through the drill bit and to execute its 2011 and 2012 capital programs and its long term development plans for its substantial resource base, which plans include the doubling of the processing capacity of the PCS Gas Plant from 120 mmcf/day to 240 mmcf/day in 2014."Birchcliff has engaged Scotia Waterous, GMP Securities L.P., and Cormark Securities Inc. to seek potential purchasers and advise the Board of Directors of Birchcliff with respect to the sale process. Birchcliff expects to open a Data Room as soon as reasonably possible. Birchcliff does not intend to make any further announcements regarding the sale process unless and until the Board of Directors has approved a specific transaction or otherwise deems that disclosure of developments is appropriate.Mr. Seymour Schulich, Birchcliff's largest shareholder, who holds approximately 26% of the outstanding shares of Birchcliff, said: "I fully support Mr. Tonken and his team in this potential sale endeavour. If a reasonable price cannot be achieved at this time, I am happy to continue as Birchcliff's major shareholder and I will continue to support Birchcliff at every opportunity." Further information regarding this opportunity is posted on the Scotia Waterous website at www.ScotiaWaterous.com and a current Birchcliff corporate fact sheet is posted on the Birchcliff website at www.birchcliffenergy.com. Updated Reserves and ResourcesBirchcliff is also pleased to announce the results of its mid-year independent reserves evaluation and an updated Montney/Doig resource assessment, both of which were prepared effective June 30, 2011 by independent reserves evaluator, AJM Deloitte ("AJM").Jeff Tonken said: "Birchcliff's team is very proud of the significant production and reserves growth that has been achieved in 2011 through drilling operations: To June 30, 2011 we added approximately 31.4 million boe of proved plus probable reserves before productionAt June 30, 2011, Birchcliff had 229.3million boe of proved plus probable reservesAt June 30, 2011, on the Montney/Doig Natural Gas Resource Play, Birchcliff had 1.1 Tcfe (185.3 million boe) of proved plus probable reservesThe June 30, 2011 resource assessment contains best case estimates for Birchcliff's Montney/Doig Natural Gas Resource Play of 2.6 Tcfe of Contingent Resources and 16.5 Tcfe of Prospective ResourcesTo date proved plus probable reserves have been attributed to only 104.6 net sections (21%) of the 494 net sections of land Birchcliff holds on the Montney/Doig Natural Gas Resource PlayBirchcliff's lands provide in excess of 1,900 net potential Montney/Doig horizontal natural gas drilling locations of which only 16% have been assigned proved plus probable reserves in the AJM Evaluation."June 30, 2011 Independent Reserves EvaluationBirchcliff has had its reserves evaluated by AJM or its predecessor, an independent qualified reserves evaluator, in accordance with National Instrument 51-101 and the Canadian Oil and Gas Evaluation Handbook ("COGEH") effective at December 31, 2010 and at June 30, 2011. Reserves estimates stated herein are extracted from the relevant evaluations prepared by AJM.AJM has estimated that at June 30, 2011, Birchcliff had 229.3 million boe of proved plus probable reserves and 121.7 million boe of proved reserves in its evaluation report dated September 23, 2011 (the "AJM Evaluation"). Birchcliff's proved plus probable reserves are comprised of 17% light oil and NGL's and 83% natural gas. Birchcliff expects that based on its current drilling activities, a further significant increase in both proved developed producing reserves and proved plus probable reserves will be reflected in its annual 2011 year-end independent reserves evaluation. The AJM Evaluation estimates Birchcliff's reserves and pre-tax discounted future net revenues based on forecast prices and costs are set forth in the following table: mmboeNPV 0% (MM$)NPV 5% (MM$)NPV 8% (MM$)NPV 10% (MM$)(effective date)June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,Proved Developed Producing29.830.81,0051,007800787713696666647Total Proved121.7114.03,4663,3612,4542,2352,0361,8171,8101,600Probable107.687.23,8423,1022,1471,6331,5801,1801,307968Total Proved plus probable229.3201.17,3086,4634,6013,8683,6162,9973,1172,568* Note: NI 51-101 disclosure requires Birchcliff to provide the following warning - The estimates of discounted future net revenues disclosed in this table do not represent fair market values.** Note: AJM relied upon its forecast of commodity prices that was in effect on June 30, 2011 which can be found at www.ajmpc.com.The forecast AECO natural gas price per mcf used by AJM in the AJM Evaluation for the years 2011 through 2015 is $4.10, $4.60, $5.20, $5.50 and $5.85.Highlights of AJM Evaluation as at June 30, 2011Proved plus probable reserves increased to 229.3 million boe, an increase before production of 31.4 million boe, which is a 16% increase from December 31, 2010.Birchcliff added 9.9 boe of proved plus probable reserves for each boe that was produced (990% reserve replacement).Proved plus probable reserves per share increased by 12.8% from December 31, 2010 to 1.81 boe/share using shares outstanding at June 30, 2011.Birchcliff's reserve life index on a proved plus probable basis at June 30, 2011 was 32.6 years (assuming a production rate of 19,250 boe per day).Total proved reserves increased to 121.7 million boe, an increase before production of 10.9 million boe, which is a 9.6% increase from December 31, 2010. Proved developed producing reserves of 29.8 million boe represent an increase of 2.2 million boe before production, which is a 7.1% increase from December 31, 2010.Proved Developed Producing ReservesAs a result of a prolonged spring break-up and very wet weather through the months of June and July, many of the wells drilled in early 2011 were not yet on production by June 30, 2011 and accordingly, the reserves associated with those wells did not qualify at June 30, 2011 as proved developed producing reserves for the purposes of the AJM Evaluation. Since June 30, 2011, Birchcliff has brought on production 8 (6.6 net) Montney/Doig horizontal wells and 4 (4.0 net) wells at Worsley. Birchcliff expects to bring on production, before year-end, an additional 8 (7.1 net) Montney/Doig horizontal wells and 17 (12.5 net) other wells. Birchcliff expects that at year-end the reserves associated with these wells will be classified as proved developed producing reserves and this will result in a significant increase in Birchcliff's proved developed producing reserves at December 31, 2011. Montney/Doig Natural Gas Resource Play Reserve DetailsBirchcliff increased by 17% its proved plus probable Montney/Doig reserves attributed to horizontal wells to 1.1 Tcfe (185.3 mmboe) at June 30, 2011, as compared to approximately 0.95 Tcfe (158.4 mmboe) at December 31, 2010.The following table sets forth reserves data attributable only to Birchcliff's horizontal wells on the Montney/Doig Natural Gas Resource Play, the number of horizontal wells to which reserves were attributed and the future capital associated with such reserves:Montney/Doig Natural Gas Horizontal Resource Play Reserves Data (Horizontal wells only)Natural GasNatural Gas LiquidsTotalExisting Horizontal Wells and Future Horizontal Well LocationsEstimated Net Future Capital(Bcf)(mbbl)(mboe)GrossNet($millions)June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,June 30 2011,Dec 31 2010,Proved Developed Producing1059967265818,19517,214534843.840.000Total Proved5464943,9863,57195,04285,970245221197.3177.3797(1)597(2)Proved plus probable1,0639118,1256,653185,301158,403366321299.2259.01,223(1)938(2)Includes Future Plant Capital of approximately $160.5 million for the Phase III and IV expansions of the PCS Gas Plant to 240 mmcf per day of total capacity. Includes Future Plant Capital of approximately $57 million for the Phase III expansion of the PCS Gas Plant to 120 mmcf per day of total capacity.Birchcliff believes that the ultimate recovery from its Montney/Doig horizontal natural gas wells will continue to improve year over year to the extent that production history demonstrates that the terminal declines of these wells are at a lesser rate than that forecast by AJM. In addition, as drilling and completion technologies continue to improve, recovery factors and production rates from this unconventional resource should also improve.Basal Doig/ Upper Montney Play Land and Horizontal Wells DataJune 30, 2011GrossNetNumber of sections to which AJM attributed reserves73.861.3Number of existing wells and future horizontal well locations to which AJM attributed proved plus probable reserves(1)232187.8Average ultimate recoverable volumes estimated by AJM per existing horizontal well (Bcfe)4.4Average proved plus probable reserves attributed by AJM per future full-length horizontal well location (Bcfe)3.8Average number of net existing horizontal wells and future horizontal well locations per net section to which reserves were attributed by AJM3.06Includes both full-length and half-length horizontal wells.Middle/Lower Montney Play Land and Horizontal Wells DataJune 30, 2011GrossNetNumber of sections to which AJM attributed reserves52.743.3Number of existing wells and future horizontal well locations to which AJM attributed proved plus probable reserves(1)134111.4Average ultimate recoverable volumes estimated by AJM per existing horizontal well (Bcfe)4.1Average proved plus probable reserves attributed by AJM per future full-length horizontal well location (Bcfe)4.1Average number of net existing horizontal wells and future horizontal well locations per net section to which reserves were attributed by AJM2.57Includes both full-length and half-length horizontal wells.There are now approximately 25 net sections to which AJM has assigned reserves in respect of both the Basal Doig/Upper Montney and the Middle/Lower Montney stratigraphic plays.Birchcliff believes that at June 30, 2011 it had at least 1,900 net potential future Montney/Doig horizontal natural gas well locations on its 494 net sections of land assuming 4 horizontal wells per stratigraphic play per section. These potential locations are comprised of 255.4 net future horizontal well locations to which proved plus probable reserves have been assigned in the AJM Evaluation and 1,644.6 net future horizontal well locations to which no proved plus probable reserves have been assigned by AJM. Updated Montney/Doig Resource AssessmentBirchcliff is pleased to announce the results of an updated resource assessment dated September 30, 2011 that was recently completed by AJM Deloitte ("AJM") with an effective date of June 30, 2011. This resource assessment was prepared in accordance with National Instrument 51-101 and the Canadian Oil and Gas Evaluation Handbook ("COGEH") and includes the lands held by Birchcliff at June 30, 2011 that have potential for the Montney/Doig Natural Gas Resource Play in the Peace River Arch area of Alberta (the "AJM Resource Assessment"). All resource data disclosed herein is extracted from the AJM Resource Assessment and reflects only Birchcliff's working interest share of resources for its lands in the area covered by the AJM Resource Assessment (the "Study Area").AJM is a qualified reserves evaluator and had previously estimated Birchcliff's proved and proved plus probable reserves at June 30, 2011 in a report dated September 23, 2011 (the "AJM Evaluation").The AJM Resource Assessment relates only to Birchcliff's Montney/Doig Natural Gas Resource Play and does not include Birchcliff's Worsley Light Oil Resource Play or any of Birchcliff's other properties.Highlights of AJM Resource AssessmentA best estimate of Total Petroleum Initially-In-Place ("PIIP") of 42.0 Tcfe.A best estimate of recoverable Contingent Resources of 2.6 Tcfe which is in addition to the proved plus probable reservesof 1.1 Tcfe assigned in the AJM Evaluation to lands within the Study Area.These Contingent Resources are of similar technical quality as the proved plus probable reserves attributed by the AJM Evaluation to lands within the Study Area, but are not included in the proved plus probable reserves because they are subject to contingencies that primarily relate to the forecast timing of development of such Contingent Resources.A best estimate of total Discovered Petroleum Initially-In-Place of 7.7 Tcfe.A best estimate of Undiscovered Petroleum Initially-In-Place of 34.3 Tcfe which includes a best estimate of recoverable Prospective Resources of 16.5 Tcfe.The AJM Resource Assessment covers 494 net sections of the land on the Montney/Doig Natural Gas Resource Play held by Birchcliff at June 30, 2011 which was comprised of:304 gross (278 net) sections of land which include Montney rights which are prospective for the Middle/Lower Montney play; and246 gross (216 net) sections of land which include Doig rights which are prospective for the Basal Doig/Upper Montney play.The resource estimates contained in the AJM Resource Assessment demonstrate that Birchcliff's lands on the Montney/Doig Natural Gas Resource Play have significant value and future development potential far beyond the proved plus probable reserves that have been assigned to those lands in the AJM Evaluation.Background to Montney/Doig Resource AssessmentBirchcliff holds significant high working interest acreage in large contiguous blocks on the Montney/Doig Natural Gas Resource Play in the Peace River Arch area of Alberta. Birchcliff's lands are proximal to its 100% owned Pouce Coupe South Gas Plant and to third party gathering and processing infrastructure.AJM was commissioned to estimate, as at June 30, 2011, the total petroleum initially-in-place ("PIIP") and contingent and prospective resources in the Study Area for the Doig Phosphate, Basal Doig, and Montney formations in the greater Pouce Coupe, Elmworth and Bezanson areas of the Peace River Arch region of Alberta. AJM utilized probabilistic methods to generate high, best, and low estimates of these volumes. The Study Area included 304 gross (278 net) sections of land which include Montney rights and 246 gross (216 net) sections of land which include Doig rights in an area ranging from Townships 69 to 81, Ranges 2 to 14W6. The Study Area is bounded in a northwest – southeast direction by the Montney/Doig Deep Basin Edges.Results from the AJM Resource Assessment are presented in the following table for Birchcliff's working interest share of the gross volumes. Proved and proved plus probable and proved plus probable plus possible reserves determined by the AJM Evaluation are included in this table for completeness, however reserves were not the focus of the AJM Resource Assessment.Summary of Birchcliff Reserves and Resources on Birchcliff Lands(1)Resource Class Working Interest BcfeLow Estimate CaseBest Estimate CaseHigh Estimate CaseDiscoveredCumulative Production (2)50.550.550.5Remaining Reserves (2)(3)575.81,120.91,913.8Surface Loss/Shrinkage38.470.6117.8Total Commercial664.71,242.02,082.1Contingent Resources2,462.72,597.83,347.4Unrecoverable (4)3,962.23,851.74,478.1Total Sub-Commercial6,424.86,449.67,825.4Total Discovered PIIP7,089.57,691.59,907.5UndiscoveredProspective Resources12,380.416,452.221,544.9Unrecoverable (4)16,955.917,805.217,111.3Total Undiscovered PIIP29,336.334,257.438,656.2Total Petroleum Initially In Place (PIIP)36,425.841,948.948,563.7Notes:All volumes at June 30, 2011. All Reserves and Resources are Gross volumes which are equal to Birchcliff's working interest share before deduction of royalties and without including any royalties held by Birchcliff.Sales gas and related natural gas liquids.Includes reserves assigned to both vertical and horizontal Montney/Doig wells. The best estimate reflects the estimate of proved plus probable reserves contained in the AJM Evaluation. The low estimate reflects the estimate of proved reserves contained in the AJM Evaluation. The high estimate reflects the estimate of proved plus probable plus possible reserves contained in the AJM Evaluation.Unrecoverable includes surface loss/shrinkage on volumes of Contingent Resources and Prospective Resources. The unrecoverable portion of Undiscovered PIIP is those quantities determined not to be recoverable by future development projects. A portion of these resources may become recoverable in the future as commercial circumstances change or technological developments occur, but the remaining portion may never be recovered due to physical and/or chemical constraints of the reservoir rock and the fluid within it.Worsley Light Oil Resource Play Reserve DetailsBirchcliff is pleased to report that the Worsley Light Oil Pool continues to prove itself as a top quality asset. Both the original oil in place and the estimated recoverable reserves for the pool continue to grow. As of June 30, 2011, AJM estimated reserves for the Worsley Light Oil Pool to be 30.2 mmboe proved plus probable, 6.5 mmboe proveddeveloped producing and 18.4 mmboe proved. History of Reserves Estimated for Worsley Light Oil Pool (mmboe)June 30 2011,Dec 31 2010,Dec 31 2009,Dec 31 2008,Dec 31 2007,July 1 2007,Proved Developed Producing6.56.86.06.46.05.1Proved Reserves18.418.818.317.515.011.3Proved plus Probable Reserves22.214.171.1244.621.215.1New Resource PlaysIn Birchcliff's focus area of the Peace River Arch, numerous industry competitors have announced significant developments on a number of different resource plays. Throughout 2010 and continuing through 2011 there have been significant lands posted and acquired by industry in the Peace River Arch area and numerous new wells have been drilled and completed by competitors targeting these new resource plays. Birchcliff continues to spend significant time analyzing and evaluating various new resource plays in the Peace River Arch. Birchcliff now holds the following lands that are prospective for the developing resource plays noted.Nordegg Resource Play721 (615.1 net) sections Banff/Exshaw ResourcePlay 665 (652.0 net) sections Duvernay Resource Play196 (194.9 net) sections As is consistent with our corporate strategy, the majority of this land is in large contiguous blocks at 100% working interest. Some of these lands are also prospective for the Montney/Doig Natural Gas Resource Play or the Worsley Light Oil Resource Play. We are early in the development of these new resource plays; however, based on the high level of industry activity and our internal technical evaluation, we are optimistic about their potential ultimate value.BC LNG Export Co-Operative and Douglas Channel Energy Partnership ProjectBirchcliff has recently become one of the Founding Members in the BC LNG Export Co-Operative which is involved in the development of a small scale LNG export project in Kitimat, British Columbia (the "Project") with a planned start-up by early 2014. As a Founding Member of the Co-Operative, Birchcliff will be entitled to bid to supply feed gas for the project on such terms as Birchcliff considers appropriate at the relevant time. Birchcliff has not undertaken and does not expect to undertake any financial obligations in respect of the Project, other than pursuant to gas supply contracts that may be entered into. The first phase of this Project is expected to need approximately 95 mmcf/day of feed gas and the volumes that may be supplied by Birchcliff will depend on whether Birchcliff's gas supply bids are sufficiently competitive to be accepted.OutlookBirchcliff believes that a public sales process is the appropriate course of action to attract a reasonable offer to purchase its shares. It is an open process that provides our staff, shareholders and stakeholders with full transparency.Birchcliff is enjoying record production, our reserve growth is exceptional and our current drilling programs provide further optimism that we can continue to meet our development goals. We have the unwavering support of Mr Schulich, our largest shareholder. Birchcliff is well capitalized and has an excellent relationship with our Banking Syndicate. The Birchcliff executive team is a close knit group of professionals whose interests are aligned with our shareholders. Birchcliff's staff, our most important asset, is a motivated, highly trained group of professionals who strive to be the best in the industry.In short, if Birchcliff receives a reasonable bid, the resulting sale will create value for our shareholders. In the event the sale process is not successful, we are very well positioned to execute our business plan with exceptional enthusiasm and a very large and stable asset base.Definitions of Oil and Gas Resources and ReservesUncertainty Ranges are described by the Canadian Oil and Gas Evaluation Handbook as low, best, and high estimates for reserves and resources as follows:Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are classified according to the degree of certainty associated with the estimates: Proved Reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.Probable Reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.Possible Reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.Resources encompasses all petroleum quantities that originally existed on or within the earth's crust in naturally occurring accumulations, including Discovered and Undiscovered (recoverable and unrecoverable) plus quantities already produced. "Total resources" is equivalent to "total Petroleum Initially-In-Place". Resources are classified in the following categories:Total Petroleum Initially-In-Place ("PIIP") is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered.Discovered Petroleum Initially-In-Place is 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 discovered petroleum initially in place includes production, reserves, and contingent resources; the remainder is unrecoverable. Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development but which are not currently considered to be commercially recoverable due to one or more contingencies. Undiscovered Petroleum Initially-In-Place is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially in place is referred to as "prospective resources" and the remainder as "unrecoverable."Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Unrecoverable is that portion of Discovered and Undiscovered PIIP quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks. Production is the cumulative quantity of petroleum that has been recovered at a given date.AdvisoriesUnaudited Numbers: The Corporation's annual audit of its 2011 financial statements is not yet complete and accordingly all 2011 financial amounts referred to in this Press Release are management's best estimates, which have not yet been audited.Boe Conversions:The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per barrel of oil equivalent ("boe") amounts have been calculated using a conversion rate of six thousand cubic feet (6 mcf) of natural gas to one barrel of oil equivalent (1 bbl) ("6:1"). A boe conversion ratio of 6:1 is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.Tcfe or Bcfe Conversions: Trillions of cubic feet of gas equivalent ("Tcfe") and billions of cubic feet of gas equivalent ("Bcfe") may be misleading, particularly if used in isolation. A Tcfe or Bcfe conversion is based on a conversion rate of six thousand cubic feet (6 mcf) of natural gas to one barrel of oil equivalent (1 bbl) ("6:1") A Tcfe or Bcfe conversion ratio of 6:1 is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Reserves For A Portion Of Properties: Reserves disclosure contained in this Press Release relates to a portion of the Corporation's properties. Accordingly, the estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation.Possible Reserves: Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities of possible reserves actually recovered will be equal or exceed the sum of proved plus probable plus possible reserves. Discovered Resources: With respect to the discovered resources (including contingent resources) described in this Press Release, there is no certainty that it will be commercially viable to produce any portion of the resources.Undiscovered Resources: With respect to the undiscovered resources described in this Press Release (including prospective resources), there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.Forward Looking Information: This Press Release contains forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking information relates to future events or future performance and is based upon the Corporation's current internal expectations, estimates, projections, assumptions and beliefs. All information other than historical fact is forward-looking information. Information relating to "reserves" or "resources" is forward-looking as it involves the implied assessment, based on certain estimates and assumptions, that the reserves and resources exist in the quantities estimated and that they will be commercially viable to produce in the future. Words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words that convey certain events or conditions "may" or "will" occur are intended to identify forward-looking information. In particular, this Press Release contains forward-looking information relating to a public sale of the Corporation, estimates of recoverable reserves and resource volumes, intentions to drill and complete future wells; planned production increases; and an estimate of potential Montney/Doig horizontal well locations. The forward-looking information is based upon assumptions as to future commodity prices, currency exchange rates, inflation rates, well production rates, well drainage areas, success rates for future drilling and availability of labour and services. With respect to a sale process, a key assumption is that a reasonable price will be negotiated with a potential buyer. With respect to estimates of reserves and resource volumes, a key assumption is the validity of the data used by AJM Deloitte in their independent reserves evaluation and resource assessment. With respect to estimates of numbers of future wells to be drilled a key assumption is that geological and other technical interpretations performed by the Corporation's technical staff, which indicate that commercially economic reserves can be recovered from the Corporation's lands as a result of drilling such future wells, are valid.Undue reliance should not be placed on forward-looking information, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Although the Corporation believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated. Forward-looking information necessarily involves both known and unknown risks associated with oil and gas exploration, production, transportation and marketing such as uncertainty of geological and technical data, imprecision of reserves and resources estimates, operational risks, environmental risks, loss of market demand, general economic conditions affecting ability to access sufficient capital, changes in governmental regulation of the oil and gas industry and competition from others for scarce resources. The foregoing list of risk factors is not exhaustive. Additional information on these and other risk factors that could affect operations or financial results are included in the Corporation's most recent Annual Information Form and in other reports filed with Canadian securities regulatory authorities. Forward-looking information is based on estimates and opinions of management at the time the information is presented. The Corporation is not under any duty to update the forward-looking information after the date of this Press Release to conform such information to actual results or to changes in the Corporation's plans or expectations, except as otherwise required by applicable securities laws.Birchcliff is a publicly traded company that trades on the TSX Exchange under the symbol "BIR".This press release is not for distribution to United States Newswire Services or for dissemination in the United States.FOR FURTHER INFORMATION PLEASE CONTACT: Jeff TonkenBirchcliff Energy Ltd.President and CEO(403) 261-6401(403) 261-6424 (FAX)ORJim SurbeyBirchcliff Energy Ltd.Vice President, Corporate Development(403) 261-6401(403) 261-6424 (FAX)The TSX Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.