Exall Energy Corporation updates Waterflood status, operations and 3D seismic interpretation

CALGARY, June 11, 2012 /CNW Telbec/ - Exall Energy Corporation ("Exall " or the "Company") (TSX: EE EE.DB) is pleased to announce updates to Waterflood Project status, operations and progress on 3D seismic interpretation.  Exall's public filings can all be found at www.exall.com or www.sedar.com.

Highlights:

• Current production of 1,400 boepd, an 18% percent increase over May average production,
  
  
• Interpretation of the 56 section 3D seismic program in the Mitsue area acquired in the first quarter of 2012 is progressing with initial indications of 20 Tier I, 12 Tier II and 46 Tier III locations identified on nine Gilwood channel trends (a description of Tier criteria is attached in the main body of this press release),
  
  
• Four enhanced recovery applications submitted to the ERCB in 2012 have been approved to date and one new well active, starting injection April 1, 2012,
  
  
• Two additional water injection wells in projects which had previously been approved by the ERCB were given Directive 51 Operational Approval to initiate injection, effective June 6, 2012 with injection commencing immediately thereafter,
  
  
• Production from Exall's closest offsetting producer to the first activated water injection well continues to improve, from 50 boe per day to 175 boe per day in response to water injection over a period of two months,
  
  
• Injection of produced water into the Water Disposal Well drilled and completed by Exall during Q1 has begun on a temporary basis and upon completion of the short tie-in to the battery is expected to reduce trucking and disposal costs by $50,000 per month net to Exall,
  
  
• Field construction of the main power line by ATCO has been completed with installation of distribution system ongoing with substantial savings in rental and fuel costs upon completion, expected to be approximately $100,000 per month net to Exall,
  
  
• Drilling has begun on the first well of the summer-fall program,

3D Seismic Interpretation

Interpretation of the 56 section 3D seismic program in the Mitsue area acquired in the first quarter of 2012 is progressing with initial indications of 20 Tier I, 12 Tier II and 46 Tier III locations identified on nine Gilwood channel trends. The following table is a description of Tier criteria utilized in the identification of these locations:

	Tier I	Tier II	Tier III
Number of Locations	20	12	46
Chance of Success %	75%	50%	25%
Poximity to Production	Less than 1 mile direct offset to production	1-2 mile 'reasonable' extension to production	Greater than 2 miles or not on established trend
Continuity	Seismic 'channel' anomaly contiguous to production	May have breaks in continuity, clarity	May be removed from proven production trends
Seismic Consistency	Consistent thru versions, filters	Consistent thru versions, filters but shows more variability	Inconsistent thru versions, filters
Well Control/Risk Profile	Dev NC & Outpost, infill or stepout wells, low risk	Outpost, de-risked thru drilling Tier I, low to med risk	Outpost and NPW, de-risked thru drilling Tier I & II, med to high risk
Exall Internal Reserves Category	PUD and Probable	Probable to Possible	Possible to Contingent

Waterflood Status

Four enhanced recovery applications submitted to the ERCB in early 2012 have been approved to date and one new water injection well active, starting injection April 1, 2012,

Two additional water injection wells in projects which had previously been approved by the ERCB were given Directive 51 Operational Approval to initiate injection, effective June 6, 2012 with injection commencing immediately thereafter. The Directive 51 Operational Approval is the final step in the ERCB requirements and is necessary prior to initiating injection.

The fourth approval includes the three "Seismic Channel" wells. A permanent road, under construction, is expected to be completed by the end of the month. Drilling of a water source well and conversion of the injection well is expected be completed during Q3, with injection beginning thereafter.

Production from Exall's closest offsetting producer to the first activated water injection well continues to improve in response to water injection, from 50 boe per day to 150 boepd after five weeks, to the current 175 boe per day over a period of two months,

Field Operations

Injection of produced water into the Water Disposal Well drilled and completed by Exall during Q1 has begun on a temporary basis and upon completion of the short tie-in to the battery is expected to reduce trucking and disposal costs by $50,000 per month net to Exall,

Field construction of the main power line by ATCO has been completed with installation and equipping of the wellsite distribution systems ongoing. Upon completion of the power system Exall will terminate rental of six generators currently utilized to generate power for high-output submersible pumps and a rental sales gas compressor. The cost saving of the rentals and associated diesel fuel is expected to be approximately $100,000 per month net to Exall

Drilling has begun on the first well of the summer-fall program. The well, located in the southern pool area, is a re-entry side-track of a well drilled in Q1.The well was drilled horizontally into an zone of clean sand with good gas shows, although apparently poor permeability. The side-track is planned to intersect better quality reservoir in a more central channel location.

About Exall

Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta. Exall Energy is currently developing the new Mitsue area "Marten Mountain" discovery in north-central Alberta.

Exall Energy currently has 62,603,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE.

Reader Advisory

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

Exall Energy Corporation 

Frank S. Rebeyka
Vice Chairman
Tel: [phone]

Roger N. Dueck
President & CEO
Tel: [phone] x 223
[email protected] 

Please visit Exall Energy's website at: www.exall.com

Renmark Financial Communications Inc.
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