CALGARY, Sept. 28, 2012 /CNW Telbec/ - Exall Energy Corporation ("Exall"
or the "Company") (TSX: EE) and (TSX: EE.DB) is pleased to announced
that it has signed an agreement to sell its non-operated and non-core
operations in the Jayar, Alberta area. Exall's public filings can all
be found at www.exall.com or www.sedar.com.
Jayar Property production is 72% gas, 16% oil and 12% liquids,
Disposition proceeds equal to $1,800,000,
Cash flow metric is 7.5 times, based on an annualized Jayar 2012 cash
flow of $240,167,
Per flowing barrel metric is $29,508 per boe/d, based on an average 2012
production rate of 61 boe/d (weighted 72% gas),
Proven plus Probable metric is $6.54 per boe, based upon the February
29, 2012 AJM Deloitte Reserve Report estimate of 288,000 boe less 7
months production of 12,924 boe.
Exall has entered into an agreement to sell its 14.5% non-operating
working interest in its Jayar, Alberta property the ("Property") to a
private company (the "Acquirer") effective September 30, 2012. The
Acquirer will pay cash proceeds to Exall of $1,800,000 on closing. In
addition, Exall is also entitled to receive 50% of the proceeds in
excess of $1,800,000 resulting from the sale of the Property by the
Acquirer, in certain circumstances, provided such sale occurs within 24
months of the effective date of the transaction. Warren Coles, Exall's
VP-Finance and CFO, holds a 20% interest in the share capital of the
Acquirer and is also an officer and a director of the Acquirer.
Exall received two other offers to purchase the Property during the
summer 2012 months, all of which were considered by the Company's board
of directors with the Acquirer's offer being deemed to be the most
beneficial to Exall at a board meeting held on September 24, 2012. All
the directors of the Company are independent for purposes of this
The disposition metrics of the transaction are 7.5 times cash flow,
$29,508 per flowing boe/d (61 boe/d (72% gas)) and $6.54 per Proved
plus Probable boe (275,076 Proved plus Probable boe remaining effective
October 01, 2012).
ATB Corporate Financial Services published (August 31, 2012) Gas
Weighted Transaction (>70%) Metrics for Q3 2012 are $23,134 per flowing
boe/d and $5.21 per Proven plus Probable boe.
As a result of the disposition Exall's production mix will be 97% Light
Sweet Crude, and 3% Natural Gas plus Liquids.
Exall will utilize the disposition proceeds of $1,800,000 to continue to
fund its North Marten Mountain development program and evaluate and
prove up the 2012 3D seismic program. This program has seen continued
success most recently with the three wells drilled during the summer of
2012 highlighted as follows:
The first well of the summer-fall program was successfully drilled
horizontally, completed and placed on production at the rate of 275
bopd (198 bopd net) through the Exall gathering and treating
The second well of the summer-fall program was successfully drilled
horizontally, completed and placed on production at a stable rate of
175 bopd (128 bopd net) through the Exall gathering and treating
The third well of the program was successfully drilled, completed as a
slant-hole and production tested. The well produced 500 barrels of
clean oil during the last 24 hours of the test. The well was equipped
and tied in and on production September 26, 2012.
As a result of Mr. Coles' interest in the Acquirer, the transaction was
subject to approval under Part V of the Toronto Stock Exchange ("TSX")
Company Manual. The Company has applied for and received the
conditional acceptance of the transaction and remains subject to
receipt of final acceptance by the TSX.
Production and Waterfloods
As previously announced Exall's average daily production for Q3 is
estimated to be approximately 1,100 boepd, in line with the previous
Four enhanced recovery applications submitted to the ERCB in 2012 have
been approved, three are active and on the fourth, the conversion of a
currently shut in oil well to injection well and drilling of the water
source well is scheduled for October. The enhanced recovery
applications group the approvals into three project areas which the
Company terms the South, Central and North Waterfloods.
The "Central Waterflood Area", which includes the first three wells
drilled in the Marten Mountain area, continues to perform well, having
produced over 820 mboe to date from two producing wells and one water
injector. Two wells were added to the project under the ERCB approval,
including a water injection well and a new oil well which currently is
producing 165 boepd. The project is now producing 350 to 400 BOEPD (275
Low reservoir pressure in the South Waterflood project resulted in
reduced production from four wells. Exall has since received approval
from the ERCB for an amended waterflood scheme. Water injection in the
eastern extent of the South Marten Mountain waterflood project
commenced April 1st, 2012 and early positive indications of re-pressurization and well
response have been tempered by early water breakthrough.
Although the South Waterflood Area had shown positive response and
increased well production, it continues to under-perform. One well has
been identified for a water shutoff procedure which is scheduled for
early October, and a high-water cut well has been shut in to direct
energy to oil-producing areas in the reservoir. Increased production
from the three wells included in the amended application was expected
to net Exall approximately 340 BOEPD, however due to the water
breakthrough and subsequent flood modifications and well workovers,
that expectation has been reduced in the interim to 100 BOEPD, expected
in late Q3. That estimate will be reviewed pending results observed
from the optimization efforts.
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.
As a result of the Waterfloods, Exall currently estimates an average
2012 production rate of approximately 1,150 boe/d after taking into
account the sale of the Property.
Exall Energy currently has 63,413,854 common shares, and $23.0 million
principal amount of convertible unsecured subordinated debentures
outstanding. The Company's common shares and convertible unsecured
subordinated debentures are listed on the Toronto Stock Exchange under
the trading symbols EE and EE.DB, respectively.
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, regulatory
approvals, 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
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.
SOURCE: EXALL ENERGY CORPORATION
For further information:
Exall Energy Corporation
Frank S. Rebeyka
VP - Finance & CFO
Tel: 403-237-7820 x 224
Please visit Exall Energy's website at: www.exall.com
Renmark Financial Communications Inc.
Maurice Dagenais: email@example.com
Nadia Marks : firstname.lastname@example.org
Tel.: (514) 939-3989 or (416) 644-2020