Iteration Energy Ltd. (ITX) Announces 2009 Finding and Development Costs of
$14.42/boe Proved and $15.00/boe Proved Plus Probable

CALGARY, Feb. 2 /CNW/ - Iteration Energy Ltd. (TSX:ITX) is pleased to provide details of the independent engineering evaluations by GLJ Petroleum Consultants Ltd. and McDaniel & Associates Consultants Ltd., collectively the "Reserve Reports"), which evaluated all of Iteration's corporate reserves effective December 31, 2009 and were prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101").

The reserve information set forth in this press release is based on the Reserve Reports and is a summary of information to be included in the Statement of Reserves and Other Oil and Gas Information of Iteration for the year ended December 31, 2009, which will be prepared in accordance with NI 51-101 and will be included in Iteration's annual information form for the year ended December 31, 2009, a copy of which will be filed on SEDAR (www.sedar.com) and on Iteration's website (www.iterationenergy.com).

In 2009 Iteration reduced capital spending and sold non-core gas assets to strengthen its balance sheet. Iteration's main focus for drilling in 2009 was to explore for and to develop light oil reserves. In the analysis of corporate finding and development costs, capital is based on estimated 2009 capital of $62 million after Alberta drilling credit, and $21 million net of dispositions. 2009 production is estimated as 15,950 boed. Iteration's 2009 audited financial statements are currently expected to be released on or about March 18, 2010.

Highlights of the 2009 Reserve Reports are as follows:

    
    -   Total proved ("TP") reserves of 33.3 million boe(1) and proved plus
        probable ("P+P") reserves of 50.9 million boe.
    -   Proved Finding & Development ( "F&D") costs of $14.42/boe (45%
        light/medium oil) after revisions and including changes in future
        capital
    -   Proved plus probable F&D costs of $15.00/boe (71% light/medium oil)
        after revisions and including changes in future capital.
    -   Year over year improvement in reserve life index(2) of the total
        proved reserves to 6.8 years (from 6.0 years) and of the proved plus
        probable reserves to 10.4 years (from 8.7 years).
    -   2009 net disposition metrics: total proved reserves sold for
        $17.97/boe (91% gas and NGLs), and proved plus probable reserves sold
        for $12.75/boe (91% gas and NGLs).
    -   An increase in oil and liquids content of the reserves to 32% of the
        proved developed producing ("PDP"), 37% of the total proved and 36%
        of the proved plus probable.
    -   Before tax NPV(10)(3)of the total proved reserves is $678 million and
        NPV(10) of the proved plus probable reserves is $947 million, which
        is equivalent to $3.21/share total proved and $4.49/share proved plus
        probable, for the reserves values alone.
    Note:

    (1) "Boe" means barrel of oil equivalent on the basis of 1 boe to 6,000
        cubic feet of natural gas. Boes may be misleading, particularly if
        used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic
        feet of natural gas is based on an energy equivalency conversion
        method primarily applicable at the burner tip and does not represent
        a value equivalency at the wellhead.

    (2) Based on the preceding year Q4 average production rate. 2009
        estimated at 13350 boed.

    (3) NPV(10) means the net present value discounted at 10%. Calculations
        are before tax and based on forecast prices and costs as at
        January 1, 2010 by McDaniel and Associates Consultants Ltd. The price
        forecast can be viewed on their website at www.mcdan.com. This price
        forecast was applied both the McDaniel and to the GLJ evaluations.
        Before tax NPV(10) is the net present value of the reserves only and
        does not include any consideration for debt or for the value of the
        company's 780,000 acres of undeveloped land.
    

Finding, Development and Acquisition Costs

The reserves and capital used in the computation of Finding, Development and Acquisition costs are summarized in the following table.

    
    -------------------------------------------------------------------------
                                                            Proved       P+P
                                                Forecast   reserve   Reserve
    2009 Finding & Development Costs ("F&D")       Total      addi-     Addi-
     and Finding, Development & Net              Capital     tions     tions
     Acquisition ("FD&A") Costs             ($ thousands)   (mmboe)   (mmboe)
    -------------------------------------------------------------------------
    F&D exploration and development program
     before revisions                             62,000     1.998     3.649
    -------------------------------------------------------------------------
    F&D exploration and development program
     after revisions (a)                          62,000     2.113     2.485
    -------------------------------------------------------------------------
    Change in proved future development
     capital (b)                                 (31,529)        -         -
    -------------------------------------------------------------------------
    Change in proved plus probable future
     development capital (c)                     (24,720)        -         -
    -------------------------------------------------------------------------
    Proved F&D including change in future
     development capital (d) = (a+b)              30,472     2.113         -
    -------------------------------------------------------------------------
    Proved plus probable F&D including
     change in future development
     capital (e) = (a+c)                          37,281         -     2.485
    -------------------------------------------------------------------------
    Net acquisition activity (f)                 (41,000)   (2.281)   (3.215)
    -------------------------------------------------------------------------
    Total Proved 2009 FD&A costs including
     future development capital (d+f)            (10,529)   (0.168)        -
    -------------------------------------------------------------------------
    Total P+P 2009 FD&A costs including
     future development capital (e+f)             (3,720)        -    (0.730)
    -------------------------------------------------------------------------
    

Exploration and Development capital in 2009 is estimated to be $62 million. The net change in future development capital required is a reduction of $31.529 million for total proved reserves and a reduction of $24.720 million for the proved plus probable reserves. The most significant items which contributed to these changes were:

    
    -   the Alberta drilling credit as it applies to the proved and probable
        undeveloped reserves planned for development in 2010 and Q1 2011;

    -   the execution in 2009 of the drilling and waterflood development
        program at Manyberries to convert proved and probable undeveloped
        reserves to proved developed producing status;

    -   the reduction in future capital associated with dispositions.
    

The total proved reserve additions after revisions of 2.113 million boe (45% light/medium oil) were made at a capital cost, after changes in future capital, of $30.472 million, or $14.42/boe. The proved plus probable reserve additions after revisions of 2.485 million boe (71% light/medium oil) were made at a capital cost, after changes in future capital, of $37.281 million, or $15.00/boe.

Net 2009 dispositions were comprised of total proved reserves of 2.281 million boe (91% gas and NGLs) and proved plus probable reserves of 3.215 million boe (91% gas and NGLs), which sold for $41 million. This equates to $17.97/boe total proved and $12.75/boe proved plus probable.

In summarizing overall Finding, Development and Acquisition costs to Iteration, the corporate additions did not exceed the dispositions in 2009, yielding an overall net reduction in total proved reserves of 0.168 million boe, for net proceeds of $10.529 million. This was equivalent to Iteration selling these total proved reserves at metrics of $62.61/boe. The net reduction in proved plus probable reserves was 0.730 million boe associated with net proceeds of $3.720 million, equivalent to Iteration selling these reserves for metrics of $5.10/boe.

Total future capital associated with corporate total proved reserves effective December 31, 2009 is $60.7 million, and associated with proved plus probable reserves is $102.1 million.

Reserves

The following tables set forth the changes in Iterations reserves from December 31, 2008 to December 31, 2009.

    
                                                                    % Change
                                                                        Year
                                                December  December      over
                                                31, 2009  31, 2008      Year
                                                --------- ---------
    Proved producing reserves (mboe)              24,163    29,950      -19%
    Total proved reserves (mboe)                  33,328    39,318      -15%
    Proved plus probable reserves (mboe)          50,896    57,447      -11%



      Iteration Gross Reserves December 31, 2009 Reconciliation Table (mBOE)

                                                                          Im-
                                                             Infill   proved
                        Opening     Revi-     Dis-   Exten-   Drill-    Reco-
                        Balance    sions   covery    sions      ing     very
                        -------  -------  -------  -------  -------  -------
    PDP                  29,950      893        0      896        0      104
    PNP                   3,383     (207)       0      445        0        0
    PUD                   5,984     (570)     152       38      219      144
    TP                   39,318      115      152    1,378      219      248
    PA                   18,130   (1,280)     121      826      392      313
    P+P                  57,447   (1,164)     273    2,204      611      561


                          Acqui-   Dispo-  Produc- Closing
                         sition   sition     tion  Balance
                        -------  -------  -------  -------
    PDP                       4   (1,862)  (5,822)  24,163
    PNP                       0     (179)       0    3,441
    PUD                       0     (244)       0    5,724
    TP                        4   (2,286)  (5,822)  33,328
    PA                        1     (935)       0   17,568
    P+P                       6   (3,221)  (5,822)  50,896
    

These changes in reserves are accounted for as follows:

The changes in PDP reserves were:

    
        technical revisions +3%; additions +3%; dispositions -6%; and
        production -19%, for a net year over year change of -19%.
    

The changes in total proved reserves were:

    
        technical revisions +0%; additions +5%; dispositions -6%; production
        -15%, for a net year over year change of -15%.
    

The changes in proved plus probable reserves were:

    
        technical revisions -2%; additions +6%; dispositions; -6%;
        production -10%, for to a net year over year change of -11%.
    

Although reserves are lower in 2009, light/medium oil increased by 5% year over year on a proved plus probable basis.

    
                          Summary of Gross Reserves
                       SUMMARY OF OIL AND GAS RESERVES

                           as of December 31, 2009

                          FORECAST PRICES AND COSTS

    -------------------------------------------------------------------------
                                               RESERVES
                        -----------------------------------------------------
                           LIGHT AND                             NATURAL
                           MEDIUM OIL         HEAVY OIL            GAS
                        -----------------------------------------------------
                        Gross(1)  Net(2)   Gross     Net     Gross     Net
    RESERVES CATEGORY    (mbbl)   (mbbl)   (mbbl)   (mbbl)   (mmcf)   (mmcf)
                         ------   ------   ------   ------   ------   ------

    Proved
      Developed
       Producing          5,589    4,588      453      425   98,380   80,665
      Developed
       Non-Producing        406      323       55       48   16,393   13,289
      Undeveloped         3,580    2,837        0        0   11,586    9,395
                        -----------------------------------------------------
    Total Proved          9,576    7,748      508      473  126,359  103,349
    Probable              4,735    3,682      332      298   68,013   54,753
                        -----------------------------------------------------
    Total Proved Plus
     Probable            14,311   11,430      840      771  194,372  158,102
                        -----------------------------------------------------


    ------------------------------------------------------
                                      RESERVES
                        ----------------------------------
                          NATURAL GAS
                            LIQUIDS             TOTAL
                        ----------------------------------
                         Gross     Net      Gross    Net
    RESERVES CATEGORY    (mbbl)   (mbbl)   (MBoe)   (MBoe)
                         ------   ------   ------   ------

    Proved
      Developed
       Producing          1,724    1,197   24,163   19,654
      Developed
       Non-Producing        249      173    3,441    2,759
      Undeveloped           212      151    5,724    4,554
                        ----------------------------------
    Total Proved          2,185    1,522   33,328   26,967
    Probable              1,165      817   17,568   13,923
                        ----------------------------------
    Total Proved Plus
     Probable             3,350    2,339   50,896   40,890
                        ----------------------------------
    Note:

    (1) Gross reserves are company working interest excluding royalty
        interest
    (2) Net reserves are company working interest including royalty interest
        and net of all royalties.



                     Net Present Value of Future Revenue
                             Before Income Taxes
                           As at December 31, 2009
                           Discounted at (%/year)
                         (forecast prices and costs)

             SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE

                           as at December 31, 2009

                          FORECAST PRICES AND COSTS

                      BEFORE INCOME TAXES DISCOUNTED AT

    COMBINED                                    (%/year)
                          0          5        10       15      20  Unit Value
    Reserves Category   (M$)       (M$)      (M$)     (M$)    (M$) ($/Boe)(1)
                     --------------------------------------------------------
    Proved
      Developed
       Producing       733,919    589,792  495,762  429,669  380,709  25.22
      Developed
       Non-Producing    83,351     66,630   55,067   46,673   40,339  19.96
      Undeveloped      224,448    165,605  126,680   99,610   79,993  27.82
    Total Proved     1,041,719    822,027  677,509  575,952  501,040  25.12
    Probable           613,573    384,338  269,010  201,834  158,663  19.32
    Total Proved
     Plus Probable   1,655,291  1,206,366  946,519  777,786  659,704  23.15
    Note:

    (1) Unit values are before income taxes, per Boe, discounted at 10%,
        based on the Corporation's net present values divided by net
        reserves.
    

Iteration

Iteration is an Alberta based corporation engaged in the business of exploring for and developing oil and natural gas reserves in Western Canada and acquiring natural resource properties. Iteration's common shares are listed on the Toronto Stock Exchange under the symbol "ITX".

Advisory Regarding Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning reserves, production, and prices. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described exist in the quantities predicted or estimated and can profitably be produced in the future. Forward-looking statements and information are based on Iteration's current beliefs as well as assumptions made by and information currently available to Iteration concerning anticipated financial performance, business prospects, strategies and regulatory developments. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general, such as operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures, the uncertainty of reserve estimates, the uncertainty of estimates and projections relating to reserves, production, costs and expenses, health, safety and environmental risks, commodity price and exchange rate fluctuations, marketing and transportation, loss of markets, environmental risks, competition, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, ability to access sufficient capital from internal and external sources, failure to obtain required regulatory and other approvals, and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect Iteration's, operations or financial results are included in Iteration's Annual Information Form for the year ended December 31, 2008 filed with applicable securities regulatory authorities and available on the SEDAR website (www.sedar.com) and on Iteration's website (www.iterationenergy.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Iteration undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

SOURCE ITERATION ENERGY LTD.

For further information: For further information: please see the Company website at www.iterationenergy.com or contact: Brian L. Illing, President and Chief Executive Officer, Tel: (403) 290-4867; Jane Mactaggart, Vice President Exploitation, Tel: (403) 290-4865

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ITERATION ENERGY LTD.

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