Invicta Energy Corp. Announces Financial and Operating Results for the Third Quarter Ended September 30, 2011

CALGARY, Nov. 21, 2011 /CNW/ - Invicta Energy Corp. ("Invicta" or the "Company") (TSXV: VCA) is pleased to report its financial and operating results for the three and nine months ended  September 30, 2011. Invicta's interim condensed financial statements and related management's discussion and analysis for three and nine months ended September 30, 2011 have been filed and are available on the SEDAR website at www.sedar.com and may also be obtained on Invicta's website at www.invictaenergy.ca.

HIGHLIGHTS OF THE THIRD QUARTER

  • Completed the drilling of 8 gross ( 4.4 net) well drilling program that the Company started in the second quarter
  • Increased average production to 145 boe/d  (90% light oil) an increase of 180% over the second quarter.
  • Reached a net peak light oil production rate of 260 bopd in the month of September.
  • Production results at Kindersley continue to meet or exceed expected Viking type curves.
  • Engaged the Company's independent reserve evaluators, Fekete Associates Inc., to update reserves as of September 1, 2011.  Proven plus probable reserves increased to 1,059 mboe, a 143% increase from the start of the year and a 235% increase in PV10 value to $29 million.
  • Based on the production adds, Invicta achieved positive funds flow from operations of $458,900 and earnings of $139,927 for the quarter.
  • The credit facility was increased from $3 million to $6 million.
  • Achieved an average field netback for the quarter of $58.53/boe  as oil production represented 90% of the quarterly production.
  • Gross costs to drill, complete, equip and tie-in the Kindersley Viking horizontal wells were on budget at $1.1 million per well.

Three and nine months ended September 30, 2011 and 2010 (unaudited)

                       
    Three months ended   Nine months ended
    September 30,   September 30,
    2011     2010     2011     2010
                       
Operations                      
Drilling                      
  Oil wells (net)   4.0(2.2)         9.0(5.0)    
  Reactivation (net)   0.0(0.0)         1.0(1.0)    
  Total (net)   4.0(2.2)         10.0(6.0)    
                       
Undeveloped land holdings (net acres)   35,852     24,858     35,852     24,858
                       
Average daily production                      
  Crude oil (bbls/d)    129         75    
  Natural gas (mcf/d)   92         237    
  Total equivalent (boe/d)   145         114    
                       
Average product prices                      
  Crude oil (Cdn $/bbl) $ 88.94   $   $ 89.68   $
  Natural gas (Cdn $/mcf)  $ 3.78   $   $ 3.75   $
  Total equivalent (Cdn $/boe) $ 81.88   $   $ 66.46   $
                         
  Royalties (Cdn $/boe) $ 4.66   $   $ 6.26   $
  Production and operating costs (Cdn $/boe) $ 18.69  
 $  
$ 17.89  
$
  Field netback (Cdn $/boe)  (1) $ 58.53   $   $ 42.31   $
                       
Financial                      
                       
Petroleum and natural gas revenue $ 1,008,530   $   $ 2,084,380   $
Funds flow from operations (2) $ 458,900   $ (151,808)   $ 85,395   $ (260,139)
  Per share - basic and diluted $ 0.01   $ (0.01)   $ 0.00   $ (0.05)
Cash flow from operations $ 176,992   $ (341,473)   $ (351,333)   $ (438,680)
  Per share - basic and diluted $ 0.00   $ (0.03)   $ (0.01)   $ (0.09)
Earnings (loss) $ 114,227   $ (210,708)   $ (729,757)   $ (361,021)
  Per share - basic and diluted $ 0.00   $ (0.02)   $ (0.02)   $ (0.07)
Capital expenditures $ 3,334,870   $ 1,864,001   $ 7,006,951   $ 2,488,740
Net debt (3) $ 2,404,474   $ 1,282,947   $ 2,404,474   $ 1,282,947
Shares outstanding (000)    54,662     1,570     54,662     1,570
Weighted average shares Outstanding (4) (000)  
 
 
54,662
 
 
 
 
11,130
 
 
 
 
 
45,985
 
 
 
 
5,073

1      Field netback is a non-IFRS measure and is the net of petroleum and natural gas revenue, royalties, and production and operating expenses.
2      Funds flow from operating activities is a non-IFRS measure that represents loss and comprehensive loss before non-cash items such as depletion, depreciation, and amortization, accretion expense, share-based compensation, and deferred tax. Per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings (loss) per share. Funds flow from operating activities is a key measure as it demonstrates the Company's ability to generate the funds necessary to achieve future growth through capital investment. This table also contains other industry benchmarks and terms, such as working capital (calculated as current assets less current liabilities) and field netback (calculated on a per unit basis as production sales less royalties and production and operating expenses), which are not recognized measures under IFRS. Management believes these are useful supplemental measures of, firstly, the total net position of current assets and current liabilities of the Company and secondly, the profitability relative to commodity prices.  Other entities may calculate these figures differently than Invicta.
3      Net debt is a non-IFRS measure representing the total bank loan, accounts payable and accrued liabilities, less accounts receivable, deposits and prepaid expenses.
4      The conversion factor of 7.089 on the reverse takeover of Royal Acquisition Corp. has been retroactively applied to the prior year comparative calculations of weighted average shares outstanding.

OPERATIONS UPDATE

Kindersley, Saskatchewan

The Company has surveyed 15 gross locations for drilling in preparation for its drilling program over the next six months.  Invicta plans to drill 6 gross (3.75) net wells in the fourth quarter.  The first of these wells will be spud by November 18, 2011.  Subsequent to quarter end the Company added a section and a half of 100% crown acreage to its undeveloped land base. This land acquisition brings the Company's gross drilling inventory to 174 locations all of which are on crown acreage where the crown royalty is only 2.5% on the first 37,500 bbls produced. In conjunction with Invicta's drilling plans into 2012 and beyond, the Company is also completing a 3D seismic program to optimise future drilling results.

Central Alberta

Subsequent to quarter end the Company added 5,060 net acres of undeveloped land in Central, Alberta bringing the total net undeveloped acreage to 38,581. The Company has several areas delineated for exploration for light oil in multi potential zones from the Viking thru the Mannville stratigraphic intervals. The Company has committed to shooting a 2D seismic program in the fourth quarter over one of the prospect areas to delineate the size and trend of the target zone.

Outlook

The Company plans to continue to focus on developing its Kindersley core area and accordingly will dedicate the majority of its capital spending towards this play.  The Company's plan is to drill 6 gross (3.75 net) wells before year end and drill at least 16 Kindersley gross wells in 2012.  Exit production is forecasted to be 350 - 400 boe/d at year end 2011 and 675-725 by year end 2012. The fourth quarter capital program is $5.5 million and the 2012 planned capital program is $12 million.  These programs are expected to be financed with cash flow and increases in credit facilities and will expanded should the Company gain access to additional capital.

About the Company

Invicta is a Calgary based, emerging junior oil and gas company exploring and developing light oil opportunities in Saskatchewan and Alberta.  The Company's current focus is the development of its Viking resource play in Kindersley, Saskatchewan.

Cautionary Statements:

This press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Invicta. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.

In the interest of providing Invicta shareholders and potential investors with information regarding the Company, including management's assessment of Invicta's future plans and operation, certain statements throughout this press release constitute forward looking statements.  All forward-looking statements are based on the Company's beliefs and assumptions based on information available at the time the assumption was made.  The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements.  By its nature, such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements.  Invicta believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon.  These statements speak only as of the date specified in the statements. 

In particular, this press release may contain forward looking statements pertaining to the following:

  • the performance characteristics of the Company's oil and natural gas properties;
  • oil and natural gas production levels;
  • capital expenditure programs;
  • the quantity of the Company's oil and natural gas reserves and anticipated future cash flows from such reserves;
  • projections of commodity prices and costs;
  • supply and demand for oil and natural gas;
  • expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and
  • treatment under governmental regulatory regimes.

The material assumptions in making these forward-looking statements include certain assumptions disclosed in the Company's most recent management's discussion and analysis included in the material available on this press release.

The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:

  • volatility in market prices for oil and natural gas;
  • liabilities inherent in oil and natural gas operations;
  • uncertainties associated with estimating oil and natural gas reserves;
  • competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;
  • incorrect assessments of the value of acquisitions and exploration and development programs;
  • geological, technical, drilling and processing problems;
  • fluctuations in foreign exchange or interest rates and stock market volatility;
  • failure to realize the anticipated benefits of acquisitions;
  • general business and market conditions; and
  • changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.

These factors should not be construed as exhaustive.  Unless required by law, Invicta does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

 

SOURCE Invicta Energy Corp.

For further information:

Gordon Reese        or       Carrie McLauchlin
President & CEO               Vice President, Finance & CFO
gord@invictaenergy.ca             carriem@invictaenergy.ca
(403) 265-8890 ext 1              (403) 265-8890 ext 4

 

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Invicta Energy Corp.

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