CALGARY, March 21, 2012 /CNW Telbec/ - Exall Energy Corporation ("Exall ") (TSX: EE) is pleased to announce its financial and operating results for the three months and fiscal year ended December 31, 2011; and that it has filed its Annual Information Form which contains reserves data and other oil and gas information required by Section 2.1 of NI 51-101. Exall's annual filings can all be found at www.exall.com or www.sedar.com.
Exall's 2011 operational success has resulted in Exall currently producing approximately 1,602 boe per day with 500 boe per day shut-in, waiting on the retirement of New Oil Well Production Period ("NOWPP") over production or waiting for amended water flood application approvals.
Highlights of Fiscal 2011 include:
- A 38 percent increase in the fourth quarter 2011 production average to 1,383 boe per day from the fourth quarter 2010 production average of 999 boe per day,
- A 25 percent increase in the Fiscal 2011 production average to 1,094 boe per day from the fiscal 2010 production average of 877 boe per day,
- Spud 13 gross (9.07 net) wells with eight gross (5.64 net) wells being placed on production and two gross (1.40 net) wells in various stages of completion, and one gross (0.72 net) service well,
- Spud two gross (1.32 net) wells were drilling through year end,
- Achieved 3D Seismic drilling success,
- Completed upgrades at the Marten Mountain pipeline and battery facility alleviating certain gas constraints, and
- Acquired 175,040 gross (128,582 net) acres of undeveloped land in Mitsue, Alberta.
|HIGHLIGHTS|| Three months ended
| Year ended
|Funds from operations||6,274,366||3,023,121||104||18,651,955||11,263,782||65|
|Basic per share||0.10||0.08||67||0.30||0.22||36|
|Diluted per share||0.10||0.05||100||0.29||0.19||53|
|Net income (loss)||2,270,881||1,042,732||118||6,959,560||4,177,165||67|
|Basic per share||0.04||0.02||100||0.11||0.08||38|
|Diluted per share||0.04||0.02||100||0.11||0.07||57|
|Capital expenditures, net||14,783,979||7,733,509||91||49,648,954||21,687,987||129|
|HIGHLIGHTS|| Three months ended
| Year ended
|Crude oil (bbl)||1,218||852||43||949||747||27|
|Natural gas liquids (bbl)||19||15||27||21||12||75|
|Natural gas (mcf)||873||792||10||749||703||7|
|Total daily production (boe @ 6:1)||1,383||999||38||1,094||877||25|
|Netback per boe (6:1) ($)||53.85||42.56||26||52.14||39.29||33|
Results of Operations
Oil and gas exploration and development expenditures were $14,783,979 for the fourth quarter of 2011 and $49,648,954 for the fiscal year ended December 31, 2011. During the fourth quarter of 2011 the Company participated in the drilling of 4.0 gross wells (2.89 net) in the Marten Mountain / Mitsue area, and spud an additional 2.0 gross wells (1.32 net) which were drilling through year end. During fiscal 2011 the Company drilled 12.0 gross well (8.47 net) in the Marten Mountain / Mitsue area, again with an additional 2.0 gross wells (1.32 net) which were drilling through year end.
The Company has acquired 175,040 gross (128,582 net) acres of undeveloped land in the Mitsue area, during the fiscal year ended December 31, 2011. As at December 31, 2011, the Company had 188,360 acres (137,298 acres net) of undeveloped land in Canada.
Production for 2011 of 1,094 boe per day represents a 25% increase over 2010. Funds from operations for the year of $18.6 million or $0.30 per share were primarily the result of the increased production, increased commodity prices received during the year (Exall's prices received were up 23% during 2011 averaging $85.53 per boe compared to $69.78 per boe in 2010), decreased royalty prices paid during the year (Exall's royalties paid were down 5% during 2011 averaging $22.84 per boe compared to $23.98 per boe in 2010), and increased operating cost paid during the year (Exall's operating costs were up 62% during 2011 averaging $10.55 per boe compared to $6.51 per boe in 2010).
| Three months ended
| Year ended
|Netback per boe (6:1) $||2011||2010|| %
|Operating netbacks ($/boe)||53.85||42.56||26||52.14||39.29||33|
Net income, as a result, for 2011 was $6,959,560 or $0.11 per share compared to a net income for 2010 of $4,177,165 or $0.08 per share.
Exall's average daily production for the fourth quarter of 2011 increased 38 percent to 1,383 barrels of oil per day ("boe/d") from 999 boe/d in the fourth quarter of 2010. As at December 31, 2011 Exall's net exit production rate and productive capacity were as outlined below:
Please click here to see the Overview Production table: http://files.newswire.ca/357/EE-03212012-EN.pdf
Low reservoir pressure in the eastern extent of the South Marten Mountain waterflood project resulted in reduced production from four wells. An application was submitted for an amended waterflood scheme which included the addition of three producing wells to the scheme and conversion of one well to water injection. Exall has received approval by the ERCB for the amended waterflood scheme and is currently drilling the water source well for the scheme. Water injection in the eastern extent of the South Marten Mountain waterflood project will commence immediately after the water source well is tied in. Once pressure has been re-established, production from the three wells included in the amended application should net Exall approximately 400 BOEPD.
Exall has focused its capital through 2011 in development of the Marten Mountain Prospect area located in the Mitsue area of North-Central Alberta. Twenty wells have been drilled to date offsetting the 2007 and 2008 discovery wells drilled by Exall. Thirteen wells have been completed and put on stream through the Company-owned pipeline and battery facilities. One has subsequently been converted into an injector well, with four other drilled wells being utilized as either water source or water injection wells for enhanced recovery schemes. Three wells are shut in awaiting amended water flood applications. Two wells were drilling through December 31, 2011 and completion operations are underway on the remaining two wells.
In December 2010 Exall tested light oil from the Wabamun Formation in a well drilled on the northern extension of the Gilwood play. The test encouraged further drilling and testing of the zone, which appears to be present and hydrocarbon-bearing over a large area updip of current drilling activity.
As a result of encouraging, test results in the Wabamun and an indication of successful definition of Gilwood channels on the 3D seismic program acquired in February 2011, the Company engaged in an expansive land acquisition program. Exall now controls an interest in 296 sections of undeveloped land in the greater Mitsue area, acquired at a fraction of the average cost of land acquisition in Alberta during 2011.
The wells drilled during 2011 have established continued multi-zone sand development in the southern area with continued success of offset drilling. The ability to continue development of this key property year round has allowed Exall to accelerate development plans in the Marten Mountain area.
A seismic test well, located on a channel anomaly identified on the 2011 3D program, reached the Gilwood A Sand in December 2011. This exciting new discovery confirmed the success of seismic mapping in the pursuit of Gilwood channels in the up dip areas of the Mitsue field. An expanded seismic program covering 86 square miles was committed to as a result of the drilling success. The results have also identified a new A Sand trend which the Company will continue to exploit with the assistance of the expanded 3D seismic program currently under way.
Exall has continued to expand battery facilities in order to facilitate increased production rates including additional gas handling and treating facilities needed to remove water cycled through the formation during water-flooding. The Company's wells are currently constrained by limits to water injection and the lack of response in wells at the extreme south-east end of the established production trends. An application to provide additional water injection for the Company's south waterflood scheme was approved by the ERCB during 2011 as well as an expansion to that scheme intended to augment water injection volumes in that area of the pool. Two additional applications have been submitted to bring new wells into existing schemes, which will allow the wells included to produce at unrestricted rates.
Continuation of the 5 percent cap on royalties for the first year or 50-70,000 barrels of production as a permanent program has given Exall addition cash flow of net $1.5 to $2.0 million early in the life of each successful well. With the continued drilling success Exall has managed to finance activities through cash flow, increased debt and additional financings. After the first 50-70,000 barrels produced new oil wells are subject to a maximum royalty of 40 percent.
On March 8, 2012, Exall announced that its bought deal offering, press released March 7, 2012, of 7.75% convertible unsecured subordinated debentures maturing March 31, 2017 (the "Debentures"), had been increased by $10 million, to $20 million. The offering was underwritten by a syndicate of underwriters co-led by Stonecap Securities Inc. and Emerging Equities Inc. and including Acumen Capital Finance Partners Limited, Dundee Securities Ltd. and Raymond James Ltd. Exall also granted the underwriters an over-allotment option to purchase up to an additional $3 million of Debentures on the same terms, exercisable in whole or in part for a period of 30 days following closing. If the over-allotment option is exercised in full, the total gross proceeds to Exall from the sale of Debentures will be approximately $23 million.
Exall is a light oil-weighted company with high operating margins. Starting from a modest production base of light oil and gas, the Company built a solid production base and will continue to focus on organic growth through exploitation and expansion of its existing oil producing properties.
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, and Texas. Exall Energy is currently developing the new Mitsue area "Marten Mountain" discovery in north-central Alberta.
Exall Energy currently has 62,328,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE.
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, 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 law.
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.
PDF with caption: "Overview Production Table". PDF available at: http://stream1.newswire.ca/media/2012/03/21/20120321_C6164_DOC_EN_11351.pdf
For further information:
Exall Energy Corporation
Frank S. Rebeyka