Exhibit 99.1
PYR Energy Corporation
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NEWS RELEASE
November 22, 2006
PYR ENERGY REPORTS INCREASED RESERVES AND PROVIDES OPERATIONAL UPDATE FOR
FISCAL YEAR AUGUST 31, 2006
DENVER - PYR Energy Corporation (AMEX:PYR) today announced an update on recent
Company operations and year end reserves for its fiscal year ended August 31,
2006, during which it recorded increased production, reserves and total proved
reserves. The Company's net production for fiscal 2006 increased by 65% to 1.27
Bcfe compared with 765.7 MMcfe for fiscal 2005. Additionally, 2006 production
received an average price of $8.15 per Mcfe, compared with an average price
realization of $7.96 per Mcfe in 2005. As of August 31, 2006, net production was
approximately 3.5 MMcfe per day compared to 2.1 MMcfe per day as of August 31,
2005. The production increase of approximately 500.0 MMcfe is attributed to
production from the new wells drilled and completed during fiscal 2006,
particularly the Scharff wells in Oklahoma, the Lackey Gas Unit #2 well in Texas
and the #1-30 Duck Federal well in Wyoming and additional production received
from the purchased interest in the Hansford producing wells in Texas. Current
net production is approximately 5.1 MMcfe per day with no hedges in place.
August 31, 2006 estimates of total proved reserves were 9.5 Bcfe, which
represents a 34% increase compared with August 31, 2005 estimates of 7.1 Bcfe.
This increase resulted principally from the addition of estimated proved
reserves from new proved developed producing and proved undeveloped additions
related to development in the expanded Yegua trend of south Texas and completion
of the #1-30 Duck Federal well in Uinta County Wyoming. As of August 31, 2006,
proved developed producing reserves are estimated at 4.4 Bcfe, proved developed
non-producing reserves are estimated at 1.4 Bcfe and proved undeveloped reserves
are estimated at 3.6 Bcfe. Using current market product prices in effect at the
end of each fiscal year and a discount rate of 10% as prescribed by SEC
regulation, our total discounted future after-tax net cash flows were estimated
to be approximately $28.7 million and $28.8 million for total proved reserves
for the years ended August 31, 2006 and 2005, respectively. Reserve additions in
fiscal 2006 were offset by a decrease of 53% in gas prices from August 31, 2005.
Market prices for natural gas and oil were $11.74 per Mcf of gas and $66.95 per
Bbl of oil at August 31, 2005 and $5.49 per Mcf of gas and $67.12 per Bbl of oil
at August 31, 2006.
..
OPERATIONAL UPDATE ROCKY MOUNTAINS
Mallard Project. At our Mallard project in Uinta County, Wyoming, three and
one-half inch tubing has been successfully installed inside of the seven-inch
casing of the well-bore for the # 1-30 Duck Federal well. As a result of
difficulty in removing a retrievable mechanical plug, along with the shut-down
for the actual tubing operation, the well was off-line from August through
mid-November 2006, and production was down sharply. Thirty days prior to the
tubing installation, production averaged 4.0 MMcf per day of gas, 61 barrels of
associated condensate, and 325 barrels of water. Since mid-November 2006, when
the well was recently brought back on-line, it has produced on average
approximately 5.0 MMcf per day of gas, 75 barrels of condensate and 371 barrels
of water using a 16/64th choke. Production is expected to improve as the well
continues to clean-up and stabilize. The 23 square miles of 3-D seismic that the
Company is participating in to define future drilling locations has been
completed. The Company is participating with a 28.75% working interest in the
#1-30 Duck Federal well and 3-D seismic. The Company believes there are
additional proved undeveloped (PUD) locations to drill within its acreage
position. The #1-30 Duck Federal represents a development well within the
Whitney Canyon-Carter Creek Field complex. Of the more than 2.1 TCF that has
been produced to date from this Field, over 80% of the production is from the
Mission Canyon formation, which is the primary producing formation for the #1-30
Duck Federal.
In addition, PYR and the other working interest owners have begun the process to
re-enter and sidetrack the now-abandoned UPRC 25-1 well, located approximately
2400' north of the Duck Federal. PYR believes economic reserves can be found
within the porosity zones, accessible via a sidetrack. The Company expects to be
drilling this well before the end of December 2006.
TEXAS AND GULF COAST:
Nome Field. The Sun Fee GU #1-ST well, which produces from the upper Yegua, and
was initiated in late May 2004, and beginning in early June 2004, averaged
approximately 19.3 MMcfe per day. The well continues to produce at an average
rate of 11.0 MMcfe/day. At the end of October 2006, the well had cumulative
production of approximately 11.7 Bcfe. We and the other working interest
partners control approximately 4,200 of gross leasehold acres in the project.
Wells drilled in this prospect are subject to a 50% net profits interest
agreement, reducing to 25% after the payout of the net profit interest to Venus
Exploration Trust. We are currently in litigation with the operator of the Sun
Fee Well, Samson Lone Star L.P, concerning, among other matters, Samson's
pooling of certain lands into the production unit and the corresponding
reduction in our working interest.
At the Nome Field, in Jefferson County, Texas, the Nome-Long #1 well has reached
total depth of 15,800 feet. Based on log analysis, the Company believes that the
well has found significant pay in the upper Yegua (EY-3) sandstone at a measured
depth of 14,200 feet. Multiple wireline tests indicate formation pressure
averaging approximately 12,700 psi in this zone. Additional pay was logged in
shallower Yegua zones. The operator has commenced completion operations and we
anticipate that subsequent testing of the indicated pay zone will take place by
the end of December 2006. PYR is participating with an 8.33% working interest.
Wells drilled in this prospect are subject to the Venus Trust's initial net
profits interest of 50%.
Madison Prospect. At the Madison project in the northern part of the
Constitution Field, located in Jefferson County, Texas, the Maness Gas Unit #1
well, which had recently undergone an extensive and complicated workover during
the 2006 summer to replace production tubing damaged by corrosion and scaling,
is flowing at approximately 1.9 MMcfe per day to sales at this time. The well
continues to build pressure and volume, and we expect the well to continue to
improve. At the time of shut-in for the workover, the Maness GU#1 had cumulative
production of 2.6 Bcfe and was averaging gross production of approximately 3.9
MMcfe/day. The Company is participating with a 12.5% working interest. This well
is subject to the Venus Trust's initial net profits interest of 50%.
Also in the Madison Prospect, the Wall #1 well, a PUD location offsetting the
Maness GU#1 well, has reached total depth and completion operations are in
progress. The Company believes the well will be flowing to sales in the next
several weeks. Pending results from this test, the Company anticipates that
additional PUD locations should be drilled in the summer of 2007. PYR is
participating for a 17.5% working interest in this development well. Wells
drilled in this prospect are subject to the Venus Trust's initial net profits of
50%.
Tortuga Grande Prospect. At the Tortuga project in Smith County, Texas, the
Chisum #1 well was completed last year in the lower Rodessa section and is
currently producing at approximately 820 Mcfe per day. Rodessa production,
within 3 miles to the north and northeast of the Chisum location, has yielded
cumulative production ranging up to 6.4 Bcfe per well. Additional drilling
locations to fully exploit the Rodessa potential in the project area have been
identified, subject to the 3D seismic survey. The Company owns a 28.57% working
interest in the Chisum well and surrounding acreage. The Company and the
operator also control approximately 9,800 acres of leasehold in the project.
Wells drilled in this prospect are subject to the Venus Trust's net profits
interest.
West Westbury Prospect. This prospect, located in Jefferson County, Texas,
targets Yegua sand reservoirs. The prospect, based on 3D seismic amplitude, is
located approximately 1.5 miles to the southwest of an analog well that was
completed in October of 2004 and in which PYR does not have an interest. This
analog well, located in the same fault block but subject to different seismic
attributes, had cumulative production of 21.9 Bcfe through April 2006 and is
currently producing 35.0 MMcf of gas and 1700 barrels of condensate per day.
Recently, a second well in which PYR does not have an interest, the Paggi
Broussard #2, was drilled and is producing 28.0 MMcfd and 1500 barrels of
condensate per day. The Paggi Broussard #2 also is in the same fault block with
different seismic attributes than PYR's acreage. PYR owns 100% of the prospect,
which consists of approximately 388 acres, and is currently marketing its
interest in this exploration prospect to industry partners.
Wilburton Field. In the Wilburton field located in Latimer County, Oklahoma, the
Scharff #7-1 was completed and is producing approximately 16.0 MMcfe per day.
The Scharff #8-1 was recently completed after the Scharff #7-1 and is producing
approximately 13.0 MMcfe per day. The Scharff #6-1 and #5-1 continue to produce
at 6.0 MMcfe and 25.0 MMcfe per day respectively. PYR owns a 2.42% working
interest in each of the Scharff # 5-1, 6-1, 7-1, and 8-1 wells.
Hansford Project. Located in Hansford County of the Texas Panhandle, the
Hansford project is a development project at the southern end of the Houghton
Embayment. As of August 31, 2006, the Company's estimated proved reserves in the
Hansford project are approximately 2.5 BCF, of which 65% are classified as PUD.
PYR owns 100% working interest on the majority of the acreage, which includes
three producing wells and two PUD locations. The Lackey GU #2 completed earlier
this year is currently producing between 200 and 300 Mcf per day. The Lackey GU
#1, which underwent a work over is currently producing between 200 and 300 Mcf
per day. Future drilling opportunities are currently being evaluated.
Commenting on the year-end results, Ken Berry, President and Chief Executive
Officer of the Company, stated, "We are extremely pleased with our progress
during fiscal 2006, which resulted in increased daily production and reserves.
We continue to expand on our exploration discoveries in Texas and Wyoming and
the Company is very excited about the potential impact of its Mallard project,
especially as we near the drilling of the UPRC 25-1 re-entry well. We anticipate
that our current drilling portfolio of development and exploration wells will
drive our growth into 2007 as we continue to look for niche acquisitions and
consider strategic alternatives. "
Increase (Decrease)
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Production Data: 2006 2005 Amount Percent
---- ---- ------ -------
Natural gas (Mcf) 915,973 392,067 523,906 134%
Oil (Bbls) 53,049 61,948 (8,899) (14%)
Natural gas liquids (Bbls) 5,267 336 4,931 1468%
Combined volumes (Mcfe) 1,265,869 765,771 500,098 65%
Daily combined volumes (Mcfe/d) 3,468 2,098 1,370 65%
Average Prices:
Natural gas (per Mcf) $7.32 $7.54 $(0.22) (3%)
Oil (per Bbl) 63.55 50.04 13.51 27%
Natural gas liquids (per Bbl) 34.83 29.53 5.30 18%
Combined (per Mcfe) 8.15 7.96 0.19 2%
As of August 31,
2005 2006
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Estimated Net Proved Reserves :
Natural gas (MMcf) 3,668 5,740
Oil & NGLs (MBbls) 566 628
Total (MMcfe) 7,064 9,508
Percent proved developed 61.8% 61.7%
Standardized Measure (in thousands) $28,752 $28,685
Denver based PYR Energy is an independent oil and gas company primarily engaged
in the exploration, development, and production of natural gas and crude oil. At
the current time, PYR's activities are focused in select areas of the Rocky
Mountain region, Texas, and the Gulf Coast. Additional information about PYR
Energy Corporation can be accessed via the Company's web site at
www.pyrenergy.com.
# # #
This release contains forward-looking statements regarding PYR Energy
Corporation's future plans and expected performance based on assumptions the
Company believes to be reasonable. A number of risks and uncertainties could
cause actual results to differ materially from these statements, including,
without limitation, the success rate of exploration efforts and the timeliness
of development activities, fluctuations in oil and gas prices, and other risk
factors described from time to time in the Company's reports filed with the SEC.
In addition, the Company operates in an industry sector where securities values
are highly volatile and may be influenced by economic and other factors beyond
the Company's control. This press release includes the opinions of PYR Energy
and does not necessarily include the views of any other person or entity. This
release may not have been reviewed or approved by the operator and/ or
participants in any of the projects discussed.
Contact:
Ken Berry, President & CEO
Tucker Franciscus, Vice President
1675 Broadway, Suite 2450
Denver, CO 80202
303.825.3748
Fax: 303.825.3768