INVICTA ENERGY CORP. REPORTS 2010 YEAR-END RESERVES AND PROVIDES OPERATIONS UPDATE

CALGARY, Feb. 17 /CNW/ - Invicta Energy Corp ("Invicta" or the "Company") (TSXV: VCA) is pleased to provide shareholders with an update in respect of its operations and report on the Company's 2010 year-end reserves.

Invicta began operations in February 2010.  The Company is focused on the development and exploitation of its light oil Viking resource lands located along the Viking trend from Kindersley, Saskatchewan to Redwater, Alberta. 

As at December 31, 2010, Invicta's accomplishments are as follows:

Operations

  • Successfully drilled three Viking horizontal wells at Kindersley, Saskatchewan earning six sections of a seven section farm-in.  Total costs, including tie-in of the associated gas production, was $3.4 million.  The seventh section has been optioned and is expected to be drilled in the fourth quarter of 2011.
  • Acquired 2 sections of Crown land (55% WI) at Kindersley, Saskatchewan.
  • Commenced production from the three Kindersley, Saskatchewan wells in mid-October.  The three wells achieved an aggregate exit production of approximately 150 boe/d and netbacks of $45/boe. 
  • Established over 80 drilling locations at Kindersley.
  • Acquired over 37 net sections of land at  Redwater, Alberta.
  • Signed a farm-in on 8 sections of Viking light oil prospective land in Central, Alberta.
  • Spudded two vertical earning wells on the Central, Alberta farm-in in late December (these wells are not included in the December 31, 2010 Reserve Report).  These wells were completed in January 2011 and production testing has commenced.
  • Established an undeveloped land base as at December 31, 2010, of 25,736 net acres.

Financial

  • Raised an aggregate of $4.6 million in two equity financings through the issuance of 27.7 million common shares.
  • Completed a reverse takeover of Royal Acquisition Corp. on November 10, 2010.  Royal was a Capital Pool Company listed on the TSX Venture Exchange with approximately $1.0 million of net assets, comprised of primarily cash.  The business combination with Invicta constituted Royal's "Qualifying Transaction" for the purposes of the rules of the TSX Venture Exchange.
  • Commenced trading on the TSX Venture Exchange under the symbol "VCA" on November 29, 2010.
  • Secured a $2.5 million credit facility in mid-December to strengthen the Company's financial position.  This financing, along with cash flow from operations, will be used to fund the first and second quarter capital program.

December 31, 2010 Reserve Report

Certain financial estimates have been made herein to facilitate discussion of the Company's 2010 capital program.  Readers are advised that these financial estimates are subject to the disclosure to be contained in the audited financial statements of Invicta for the year ended December 31, 2010 and management's discussion and analysis related thereto and Invicta's Annual Information Form for the year-ended December 31, 2010. 

The Company is pleased to report its initial independent reserves evaluation as a result of successfully drilling three Viking horizontal wells at Kindersley, Saskatchewan.  The independent reserves evaluation (the "Report") has been completed by Fekete Associates Inc. ("Fekete"), with an effective date of December 31, 2010, pursuant to National Instrument 51-101 - Standards for Disclosure for Oil and Gas Activities of the Canadian Securities Administrators ("NI 51-101").  Highlights of the Report are summarized below:

  • Added 156 Mboe of Proved Developed Producing reserves
  • Added 379 Mboe of  total Proved Reserves
  • Added 435 Mboe of Proven plus Probable Reserves
  • Reserve Life Index of 13.0 years on a Proven basis and 15.0 years on a Proven plus Probable basis
  • Achieved Proven finding costs of $25.05/boe and Proven plus Probable finding costs of $21.81/boe.   (The calculation was based on capital expenditures of $4.0 million plus future development costs of $5.5 million)
  • Achieved a recycle ratio of 1.8x - Proven and 2.1x - Proven plus probable

NI 51-101 Reserves Disclosure

Invicta has a Reserve Committee comprised of independent board members, which reviews the qualifications and appointment of the independent reserve evaluators.  The Committee also reviews the processes and technical data used to determine the reserves booked.

The Company will file its Annual Information Form prior to April 25, 2011, which will include Invicta's reserves data and other oil and gas information for the year ended December 31, 2010 as mandated by NI 51-101.

The Report was prepared by Fekete utilizing the methodology and definitions as set out under NI 51-101.  The reserves presented herein include the total Company's working interest reserves before deduction of royalties and exclude royalty interest reserves as at December 31, 2010.

Table 1 NI 51-101
Summary of Oil and Gas Reserves
As of December 31, 2010
Forecast Prices and Costs

  Gross Reserves   Net Reserves
  Light and
Medium
Crude Oil
  Heavy
Crude
  Natural
Gas
Liquids
  Natural
Gas
  Light and
Medium
Crude Oil
  Heavy
Crude
  Natural
Gas
Liquids
  Natural
Gas
  Mbbls   Mbbls   Mbbls   Mmcf   Mbbls   Mbbls   Mbbls   Mmcf
Proved                              
Developed Producing 55.8   -   -   601   53.0   -   -   507
Developed Non-Producing -   -   -   -   -   -   -   -
Undeveloped 148.5   -   -   446   146.3   -   -   416
Total Proved 204.3   -   -   1,047   199.3   -   -   923
Probable 32.0   -   -   146   31.5   -   -   134
Total Proved plus Probable 236.3   -   -   1,193   230.8   -   -   1,057

Table 2 NI 51-101
Summary of Net Present Values of Future Net Revenue
As of December 31, 2010
Forecast Prices and Costs

  Before Future Income Tax Expenses and Discounted at   Unit Value
Before Income
Tax Discounted
at
  0%   5%   10%   15%   20%   10%/year
  (M$)   (M$)   (M$)   (M$)   (M$)   ($/boe)
Proved                      
Developed Producing 5,373.5   4,722.6   4,224.6   3,834   3,520.9   27.08
Developed Non-Producing -   -   -   -   -   -
Undeveloped 5,034.9   3,772.1   2,829.9   2,108.8   1,544.3   12.69
Total Proved 10,408.4   8,494.7   7,054.5   5,942.8   5,065.2   18.61
Probable 2,783.4   2,077.2   1,621.2   1,313.8   1,098.3   28.95
Total Proved plus Probable 13,191.8   10,571.9   8,675.7   7,256.6   6,163.5   19.94


 
After Future Income Tax Expenses and Discounted at

 

0%
 
5%
 
10%
 
15%
 
20%

 

(M$)
 
(M$)
 
(M$)
 
(M$)
 
(M$)

Proved

 
 
 
 
 
 
 
 
 
Developed Producing 4,776.9   4,199.9   3,757.6   3,410.0   3,131.0
Developed Non‑Producing -   -   -   -   -
Undeveloped 3,619.6   2,550.8   1,753.5   1,144.4   668.8
Total Proved 8,396.5   6,750.7   5,511.1   4,554.4   3,799.8
Probable 2,054   1,529.3   1,190.6   962.7   803.2
Total Proved plus Probable 10,450.5   8,280.0   6,701.7   5,517.1   4,603.0

Table 3 NI 51-101
Total Future Net Revenue Undiscounted
As of December 31, 2010
Forecast Prices and Costs

  Revenue   Royalties   Operating
Costs
  Development
Costs
  Abandonment
and
Reclamation
Costs
  Future Net
Revenue
Before Income
Taxes
  Income
Taxes
  Future Net
Revenue
After Income
Taxes
  (M$)   (M$)   (M$)   (M$)   (M$)   (M$)   (M$)   (M$)
                               
Total Proved Reserves 24,483   1,015   7,275   5,490   295   10,408   2,012   8,396
Total Proved plus Probable 28,681   1,128   8,565   5,490   307   13,192   2,741   10,450

Table 4 NI 51-101
Net Present Value of Future Net Revenue
As of December 31, 2010
Forecast Prices and Costs

  Future Net Revenue
Before Income Taxes and
(Discounted at 10%/Year)
  Unit Value Before
Income Taxes
(Discounted at 10%/Year)
  (M$)   ($/boe)
Proved      
  Light and Medium Crude Oil
(including solution gas and associated by-products)
7,055   18.62
  Heavy Crude Oil
(including solution gas and associated by-products)
-   -
  Natural Gas
(including associated by-products)
-   -
Proved plus Probable      
  Light and Medium Crude Oil
(including solution gas and associated by-products)
8,676   19.95
  Heavy Crude Oil
(including solution gas and associated by-products)
-   -
  Natural Gas
(including associated by-products)
-   -

Table 5 NI 51-101
Summary of Pricing and Inflation Rate Assumptions
As of December 31, 2010
Forecast Prices and Costs

  CRUDE OIL   NATURAL GAS   NATURAL GAS LIQUIDS      
Year   WTI
Crude Oil
  Edmonton
Par Price
400 API
Crude Oil
  Cromer
Medium
29.30 API
Crude Oil
  Alberta
AECO Gas
Price
  Edmonton
Propane
FOB Field
Gate
  Edmonton
Butane
FOB
Field Gate
  Inflation   US/CAN
Exchange
Rate
    ($US/Bbl)   ($Cdn/Bbl)   ($Cdn/Bbl)   ($Cdn/mmbtu)   ($Cdn/Bbl)   ($Cdn/Bbl)   (%)   ($US/Cdn) 
    (1)   (2)   (3)                    
Forecast                                 
2011   88.00   87.50   81.50   4.15    48.10   65.60   2.00   0.98
2012   90.00   89.50   81.50   4.65    50.12   67.15   2.00   0.98
2013   92.50   92.10   83.10   5.40    52.50   69.10   2.00   0.98
2014   95.00   94.65   84.65   5.90    54.90   71.00   2.00   0.98
2015   97.00   96.70   85.70   6.45    57.05   72.50   2.00   0.98
                                  
Thereafter   Rate of 2%            

Notes:

(1)     West Texas Intermediate at Cushing Oklahoma 40 degrees API, 0.4% sulphur.
(2)     Edmonton Light Sweet 40 degrees API, 0.3% sulphur.
(3)     Comer Medium (29.3◦ degrees API Heavy stream).

Release of 2010 Financials and Annual Information Form

Invicta intends to file its financial results for the year ended December 31, 2010 including the audited financial statements and related management's discussion and analysis, prior to April 25, 2011. 

In addition, the Company will file its Annual Information Form, which will include Invicta's reserves data and other oil and gas information for the year ended December 31, 2010, as mandated by NI 51-101, prior to April 25, 2011. These filings will be available in their entirety at www.sedar.com or by contacting the Company directly on or after April 25, 2011.

 

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

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Invicta Energy Corp.

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