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CALGARY, Jan. 11, 2012 /CNW/ - Novus Energy Inc. ("Novus" or the
"Company") (TSXV: NVS) is pleased to report that it has significantly
increased its light oil production during 2011 and has exceeded its
corporate exit rate production target of 3,000 boe/d. With an active
and successful drilling program in the second half of the year, the
Company has been able to more than double production volumes from the
second quarter of 2011. Novus' strategic direction remains unchanged,
with the Company competitively positioned in the repeatable, low risk,
highly economic Viking resource play in West Central Saskatchewan.
This light oil resource play constitutes the core of the Company's
development program and will remain an integral piece in driving its
Estimated field level production for the month of December 2011 averaged
approximately 3,150 boe/d with approximately 80% of these volumes
comprised of oil and liquids. This represents a 46% increase from
third quarter 2011 production volumes of 2,159 boe/d.
Field level Viking production from the Dodsland area is estimated to be
approximately 2,500 boe/d. Novus is pleased with the volume increases
it has achieved in its Dodsland Viking light oil assets from its highly
successful 2011 drilling program and believes the area will provide the
Company with predictable and sustainable organic growth opportunities
During 2011 Novus achieved a 100% success rate on its Dodsland area
Viking oil drilling campaign. Novus operated the drilling of 52 wells
throughout the year, all using horizontal multi stage frac technology;
five of these wells were drilled in the fourth quarter.
Results from the Company's Flaxcombe lands in the Dodsland area continue
to materially exceed expectations. In 2011 Novus drilled 16 wells in
the area, with all now having in excess of 30 days of production
history. Average estimated per well oil production levels at 30 days
are in excess of 74 bbls/d and do not include associated gas production
volumes. Thirteen of these wells have been producing in excess of 60
days, and average estimated per well oil production levels for these
wells at 60 days is 65 bbls/d not including associated gas volumes.
Eight of these wells have in excess of 90 days of production history,
and average estimated per well oil production levels for these wells at
90 days is 58 bbls/d not including associated gas volumes.
While the Company is pleased with the results it has achieved throughout
the greater Dodsland area, the Flaxcombe region has emerged as an area
which has exhibited consistent and reliable outperformance. In
addition to delivering higher initial production rates, the region is
exhibiting lower than typical decline rates.
In the Flaxcombe region, Novus has identified two distinct Viking cycles
which have been mapped over at least 10 contiguous sections. These 10
sections have the potential to add 80 future drilling locations for the
Company through the development of both cycles at 8 well per section
spacing. Based on the Company's success in the area and industry
downspacing trends, Novus believes that it may be able to develop each
cycle independently at 16 well per section spacing, which would provide
the potential for drilling up to 320 wells in the Flaxcombe area.
Well costs in the greater Dodsland area continued to decrease in 2011,
with costs for drilling and completions averaging approximately $835
thousand, and tie in costs averaging $95 thousand, resulting in
onstream costs averaging $930 thousand per well.
In 2011, the Company evolved into a large scale development phase of its
Viking resource. With 33 wells drilled in 2010 and 52 wells drilled in
2011, Novus is now one of the most active drillers in the industry in
the Viking play.
Novus currently has 108 wells licensed for drilling in the Dodsland
Upgrades at Novus' owned and operated facilities at Whiteside and Avon
Hills were completed in the fourth quarter and increased fluid handling
capacities at each facility. An exclusive agreement was signed with a
third party to take the Company's wet solution gas in Whiteside and
will significantly reduce operating costs. Construction of a sales gas
line and emulsion line from the Whiteside facility to the meter station
was completed which enabled an additional five wells to be placed
onstream conserving gas prior to year end.
During the first quarter of 2012 Novus will upgrade its core facility at
Whiteside to handle the increased volumes that will result from the
Company's drilling program which will be commencing in early February.
Plans include the installation of an emulsion line running from the
main facility to the Flaxcombe field. A total of twenty-two wells in
the southern portion of the area will be tied in conserving gas through
a large satellite before flowing down the emulsion line to the
Company's facility. These facility upgrades will reduce downtime and
virtually eliminate trucking expenditures and will significantly reduce
future operating costs. These upgrades will allow Novus to tie in all
new wells to be drilled in the Flaxcombe area throughout 2012 and will
provide for further reductions in regional operating costs.
Novus now controls 127.75 net sections of Viking rights, and has a
risked drilling inventory of 622 net, undrilled Viking oil locations
based on 8 well per section spacing and the development of only one
cycle on its Flaxcombe lands. This extensive, low risk, high rate of
return inventory will continue to provide the Company with
opportunities to generate strong capital efficiencies for over ten
With highly economic operating netbacks from its Viking oil assets, the
Company is generating strong funds flow which will provide it with the
ability to help internally fund an aggressive drilling program in 2012.
Based upon the stable production rates, significant recoverable
reserves, and the lower drilling and completion costs in the Dodsland
area the Company has experienced to date, Novus plans on maintaining an
aggressive drilling program on its current acreage throughout 2012, and
will continue its efforts to further consolidate and expand its
position within the area through acquisitions. With a strong technical
team and continual evolution by industry and the Company in lowering
costs and improving production in its Viking light oil play, Novus is
strategically positioned to exhibit strong growth in 2012.
Novus will be releasing its 2012 Capital Budget and production guidance
at the end of January, 2012.
NON-GAAP FINANCIAL MEASUREMENTS
Included in this press release are references to certain financial
measures commonly used in the oil and gas industry, such as funds flow
and operating netbacks. These measures have no standardized meanings,
are not defined by International Financial Reporting Standards ("IFRS")
or Canadian Generally Accepted Accounting Standards ("GAAP"), and
accordingly are referred to as non-GAAP measures.
The Company considers funds flow to be a key measure as it demonstrates
the Company's ability to generate the cash necessary to repay debt and
to fund future growth through capital investment. Novus determines
funds flow as cash provided by (used in) operating activities prior to
changes in non-cash working capital items and decommissioning
expenditures. The determination of the Company's funds flow may not be
comparable to the same as reported by other companies.
Operating netbacks are calculated by deducting royalties, field
operations and transportation and marketing expenses from production
revenue. Operating netbacks are used by management to assess operating
results between periods and between peer companies as they provide an
indication of results generated by the Company's principal business
activities before the consideration of how these activities are
financed or how the results are taxed. Novus' reported amounts may not
be comparable to similarly titled measures reported by other
companies. These terms should not be considered an alternative to, or
more meaningful than, cash provided by operating, investing and
financing activities or net income as determined by IFRS or Canadian
GAAP as an indicator of the Company's performance or liquidity.
Reported production represents Novus' ownership share of sales before
the deduction of royalties. Where amounts are expressed on a barrel of
oil equivalent ("boe") basis, natural gas has been converted at a ratio
of six thousand cubic feet to one boe. This ratio is based on an
energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead. Boe's
may be misleading, particularly if used in isolation. References to
natural gas liquids ("liquids") include condensate, propane, butane and
ethane and one barrel of liquids is considered to be equivalent to one
Novus Energy Inc. is a well positioned, junior oil and gas company with
a proven management team committed to aggressive, cost-effective growth
of high netback light oil reserves and production. Novus will continue
to grow through a targeted acquisition and consolidation strategy
coupled with development and exploration drilling. Novus' current
financial position will allow for the exploitation of its drilling
inventory and expansion of the Company's opportunity suite through
internally generated prospects and strategic light oil acquisitions.
Novus Shares trade on the TSX Venture Exchange under the symbol NVS.
Novus currently has 169.0 million common shares outstanding.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
This news release will not constitute an offer to sell or the
solicitation of an offer to buy the securities in any jurisdiction.
Such securities have not been registered under the United States
Securities Act of 1933 and may not be offered or sold in the United
States, or to a U.S. person, absent registration, or an applicable
ADVISORY REGARDING FORWARD LOOKING STATEMENTS
Certain disclosures set forth in this press release constitute
forward-looking statements. Any statements contained herein that are
not statements of historical facts may be deemed to be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "believes",
"budget", "continue", "could", "estimate", "expects", "forecast",
"intends", "may", "plan", "predicts", "projects", "should", "will" and
other similar expressions. All estimates and statements that describe
the Company's future, goals, or objectives, including Management's
assessment of future plans and operations, may constitute
forward-looking information under securities laws. Forward-looking
statements involve known and unknown risks and uncertainties which
include, but are not limited to: exploration, development and
production risks; assessments of acquisitions; reserve measurements;
availability of drilling equipment; access restrictions; permits and
licenses; aboriginal claims; title defects; commodity prices; commodity
markets; transportation and marketing of crude oil, liquids and natural
gas; reliance on operators and key personnel; competition; corporate
matters; funding requirements; access to credit and capital markets;
market volatility; cost inflation; foreign exchange rates; general
economic and industry conditions; environmental risks; Kyoto protocol;
and government regulation and taxation.
Forward-looking statements relate to future events and/or performance
and although considered reasonable by Novus at the time of preparation,
may prove to be incorrect and actual results may differ materially from
those anticipated in the statements made. Novus does not undertake any
obligation to publicly update forward-looking information except as
required by applicable securities law.
SOURCE Novus Energy Inc.
For further information:
| NOVUS ENERGY INC. || || || || || || || || || || || || |
| || || || || || || || || || || || || |
| Hugh G. Ross |
President and CEO
| || || || || || Ketan Panchmatia |
Chief Financial Officer
| || || || || || Julian Din |
VP Business Development