Reef Resources Ltd. Provides Update of Ontario Operations and Progress
Monday, Feb 20, 2012
Reef Resources Ltd. (TSX VENTURE:REE) ("Reef" or the "Company") reports that substantial further progress has been made on a number of field activities associated with the ongoing development of the Ausable Gas Recycling and Enhanced Oil Recovery (EOR) project.

The recent cold weather in Ontario has improved conditions for completing the pipeline between the existing South Airport gas well and the Ausable process facility. Once the pipeline welding is completed the required road bores will be conducted.

The reversal of the Union Gas meter, which will allow the Company to purchase natural gas for re- injection in the Ausable reef, is tentatively scheduled for February 27th. Piping modifications at the facility will commence once the gas flow is reversed. This will allow initiation of the gas re-injection scheme. Additionally, gas and gas liquids from South Airport will also be used for re-injection once the pipeline is completed and commissioned.

The workover program for installation of a production packer in Ausable #1 well is being initiated to coincide with the planned meter reversal. This will isolate the top set of three perforations and will allow for planned gas reinjection into the uppermost section of the Ausable reef.

A larger inlet separator has been sourced in Alberta and following minor upgrades will be shipped to Ontario. The larger separator is designed to handle higher oil, water and natural gas volumes associated with the venturi pumping system. Facility upgrades associated with the larger separator will accommodate production from all the Ausable and Airport wells.

The new high pressure surface venturi pump skid design is completed and the Company is currently sourcing qualified fabricators for skid packaging. The new pump package will accommodate all current and future planned wells.

After commissioning trials on the Ausable #5 venturi pump, a downhole valve requires replacement. A service rig is required in order to retrieve and re-run the down hole assembly and it is hoped this work can be undertaken in the next 10 days. Oil production from Ausable #5 and Ausable #1 is being hampered by the formation of waxes at the pump inlet level approximately 560 metres below surface. This is due to abnormally low reservoir temperatures and further hampered by low ambient temperatures. A gas-fired line heater will be installed to heat high pressure water to service the venturi pumps on all wells. This will increase pump inlet temperatures at the bottom of the well which in turn will mitigate any wax build up at the venturi pump and in the tubulars

The North Airport well is proceeding as planned and is currently at 194 metres. Cementing of the surface casing is anticipated within the next 10 days.

Arnie Hansen, Reef President commented: "All the components for initiating the EOR program are coming together and we can now look forward to realizing the production benefits once all the current projects are commissioned and on stream. The Company is hopeful that with the EOR scheme fully implemented it can hit its target of 200 boed by mid-year and exit 2012 with net production of up to 500 boed."

Source: Reef Resources

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