WINNIPEG, Nov. 28 /CNW/ - Nordic Oil and Gas Ltd. ("Nordic" or "the Company") today reported financial results from operations for its third quarter and nine months ended September 30, 2009. All amounts referenced herein are in Canadian dollars.
Revenue from oil, natural gas and Coal Bed Methane ("CBM") sales for the nine-month period (including liquids and transport revenue and interest revenue) totalled $1,013,103 up 5% from the $962,418 reported for same period in 2008. The increase for the period was due to a rise in oil and gas revenue to $987,649 as compared to $870,128 a year ago. The revenue increase is due to the fact the Company now has eight oil wells on production in Lloydminster, compared to just three at this time last year.
Cash, short term investments, accounts receivable, deposits and deferred costs for the first nine months of the year totalled $1,142,438, down over the $3,046,553 at the end of September, 2008 and down when compared to the year-end total of $3,255,500.
Total assets as at September 30, 2009 were $13,463,968 down slightly from the $14,107,265 as at September 30, 2008 and from the 2008 year end total of $14,113,291.
General and administrative expenses for the first nine months of 2009 totalled $243,365, a substantial improvement from the $414,099 reported for the same period in 2008. Total expenses for the period (excluding production costs) were $1,030,594 also substantially better when compared to $1,438,895 for the first nine months of 2008. Total production costs plus expenses were $2,018,109 for the nine months, on par with the $2,028,930 reported for the same period in 2008.
When taking into consideration future income tax recovery, the Company recorded a net loss of $787,403 for the first nine months of 2009, versus the $581,525 loss reported during the same period a year ago.
Third Quarter Results
Revenue for the three-month period ended September 30, 2009 totalled $385,882 down approximately $52,000 over the Q3 2008 total of $437,693 and down from the 2009 Q2 total of $616,795. The decrease this quarter was due mainly to a significant change in interest revenue, which decreased from $29,412 last year to $2,418 this year.
General and administrative expenses for the three months under review totalled $101,243, down substantially from the $196,019 in the same period in 2008. Overall expenses for the third quarter under review totalled $348,772 a strong improvement from the $509,371 reported in Q3 2008. Total production costs plus expenses were $727,036 for the three months, down from the $783,171 reported for the same period in 2008.
For the quarter, the Company recorded a net loss of $277,111, as opposed to the $277,215 loss reported in Q2 2009 and the $309,392 net loss reported in Q3 2008.
Average daily gas production volume for the three months ended September 30, 2009 was 4.35 10(3)m(3)/day (160.59 GigaJoules/day), as opposed to 7.36 10(3)M(3)/day (264.28 GJ/day) during the second quarter of 2009. The Company received $2.77/GJ as an average gas price during the third quarter of 2009 compared to $3.47/GJ for the second quarter of this year and $7.22/GJ for the third quarter a year ago.
Average daily heavy oil production volume for the three months ended September 30, 2009 was 62.63 Barrels of Oil per day (BOPD), compared to 53.57 BOPD during Q2 of this year. The Company received $48.33 as an average price per barrel during Q3, up from the $33.28 received during Q2.
Quarterly Corporate Review
In early July, the Company announced its intentions to undertake a new non-brokered private placement offering for up to 10,000,000 units at a price of $0.125 per Unit for gross proceeds of $1,250,000 to various subscribers. Each Unit was to consist of one Class A common share of the Company issued as a "Flow-Through share" within the meaning of the Income Tax Act (Canada) and one-half of one Class A common share purchase Warrant. Each whole Warrant would entitle the holder thereof to purchase one regular Class A common share of the Company at a price of $0.13 for a period of one year from the date of issuance. In mid-August the Company announced the first closing of this private placement offering of flow-through units, issuing 6,388,500 units at a price of $0.125 per Unit for gross proceeds of $798,562.50 to various subscribers. This was followed at the end of August with the second closing, when the Company issued a further 1,758,000 flow-through units at a price of $0.125 per Unit for gross proceeds of $219,750 to various subscribers.
In late July, in conjunction with its Joint Venture partner, Western Warner Oils Ltd., Nordic announced that it had entered into a strategic development agreement with a major international oil company whereby Nordic has the opportunity to earn an interest in this company's land in Preeceville, Saskatchewan. The ensuing exploration work on the lands will result in this company having the option to participate on a 50-50 go forward basis with Nordic, or allow Nordic to retain a 100% interest in the land with the other company earning a Gross Overriding Royalty. This company owns approximately 153,600 acres of land in Preeceville situated a few miles southeast of the Nordic lands.
Also at this time, the Company stated that survey work had commenced on a five-well drilling program on the Nordic land in Preeceville, noting that "with new drilling technology available to us, we will be successful in unlocking the enormous reserves of natural gas that the consultants have confirmed is in the region."
In September, Nordic announced that it had completed drilling a new heavy oil well on its Lloydminster property. The well was TD'd ('Total Depth drilled') in the General Petroleum (GP) zone, and the logs have indicated that the Company has pay in both the Sparky and GP zones. In late September, the Company announced its intention to undertake a private placement offering of up to $3,000,000 principal amount of 3 year 10% secured convertible redeemable debentures. The Debentures will have a term of three years and shall bear interest at a rate of 10% per annum, and may be converted at the option of the Debenture holders into Class A common shares of the Corporation at a price of $0.15 per share at any time after the issuance of the Debentures. The Debentures shall also be redeemable at the option of the Corporation at a price equal to 105% of the face value of the Debentures plus all accrued and unpaid interest thereon, subject to the right of the holders of Debentures to convert such Debentures to Common Shares prior to the date of redemption. In early November, the Company announced the first closing of this private placement offering by issuing $497,000 principal amount of Debentures.
Also in late September, the Company announced that its new 16-6-50-2 W4 heavy oil well in Lloydminster was on production, and that the well was producing from the General Petroleum zone, the first Nordic well to produce from this zone.
Subsequent to the end of the third quarter, on October 1, the Company announced, in conjunction with its joint venture partner, Western Warner Oils Ltd. that it had acquired the Petroleum and Natural Gas (P & NG) rights on one-half section of its land in Drumheller, Alberta. The rights are from the surface to the base of the Belly River zone. This is an important step for the Company in the process to develop its Drumheller property, as it enables it to move forward on the Underground Coal Gasification (UCG) project that was announced in July of this year.
Also in October the Company received an updated Reserves and Engineering Report from an independent petroleum engineering company, crediting Nordic with a substantial increase in its Proved + Probable Reserves at Lloydminster. Total Proved + Probable Reserves of heavy oil as at October 1, 2009, have increased to 888 MSTB*, compared to 805 MSTB at the beginning of 2009 and 540 MSTB in the prior year. This is broken down as follows:
- Total Proved Reserves: 447 MSTB (compared to 395 MSTB as at
January 1, 2009)
- Total Probable Reserves: 440 MSTB (compared to 410 MSTB as at
January 1, 2009)
As a result, the revised Reserves and Engineering Report also states that the Net Present Value of Nordic's estimated future net revenue based on forecast prices and costs before income taxes at 10% has risen nearly 25% since the start of the year to $17.473 million.
About Nordic Oil and Gas Ltd.
Nordic Oil and Gas Ltd. is a junior oil and gas company engaged in the exploration and development of oil, natural gas and Coal Bed Methane in Alberta and Saskatchewan. The Corporation is listed on the TSX Venture Exchange and trades under the symbol NOG.
This news release contains certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical fact, that address events or developments that the Corporation expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include market prices, exploration and drilling success, continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Corporation's management on the date the statements are made. The Corporation undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.
* The term BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
The TSX Venture Exchange has not reviewed nor accepts responsibility for
the adequacy or accuracy of the contents of this News Release.
SOURCE Nordic Oil & Gas Ltd.
For further information: For further information: Don Bain, Corporate Secretary, Nordic Oil and Gas Ltd., Tel. (204) 943-1810, Fax. (204) 943-1829, E-mail: email@example.com, www.nordicoilandgas.com