CALGARY, April 10, 2012 /CNW/ - Vero Energy Inc. (TSX - VRO, "Vero" or the "Company") is pleased to report its successful drilling program and operating results for the first quarter of 2012. During the quarter, the Company drilled 8 (6.9 net) Cardium horizontal wells with a 100% drilling success rate. The Company continues to delineate its significant land base through step out drilling that resulted in 3 (1.9 net) wells that were new pool discoveries and 5 (3.9 net) wells which had no reserves booked at the 2011 year end independent reserve evaluation. All but one (0.4 net non-operated) well have been completed and are currently on production.
Cardium Production and Recent Improved Well Results
Vero's team has now drilled 46 horizontal wells in the Cardium light oil play and has been one of the most active drillers since late 2009. The team has participated in and led many of the changes in drilling, completions and operations within the play over this time frame. These changes and continuing practice of optimizing are ongoing and recent results have been stronger making the play continually more attractive. Vero's results from the first quarter drilling program are exceeding internal production type curve estimates and average bookings relative to Vero's 2011 year end independent reserves evaluation. The following table shows average daily production rates from recent Vero wells:
| Initial Rate
| Bbls Oil per
| Number of
|30 Day Average||272||6|
|60 Day Average||235||4|
|90 Day Average||214||3|
Visit the Vero website at www.veroenergy.ca for the latest presentation depicting more details on these results.
Estimated field production for the month of March averaged 2,550 boed with overall oil and liquid's weightings increasing to approximately 70 percent from prior estimates of 67 percent. This represents an increase in production from the Cardium assets of 42 percent from the beginning of January. The final 2 (1.8 net) operated wells were placed on production within the past week giving current field estimated production of 2,650 boed (70% oil and liquids). Vero successfully wrapped up its planned first quarter drilling program before the onset of spring breakup and currently has no drilling rigs in operation. Current plans are to drill 2 (1.0 net) horizontal Cardium wells in the latter part of the second quarter.
The Company made a small Cardium acquisition in the quarter of partnered lands and production. The acquisition cost was $5.9 mm for approximately 120 boed (70% oil and liquids) of low decline production. The acquisition included 1,610 net acres of land and added 8 (3.7 net) Cardium horizontal locations of which 6 (3.2 net) have no current reserve bookings in Vero's 2011 year end reserves evaluation. This acquisition is consistent with the Company's strategy of drill bit growth coupled with accretive acquisitions which add drilling inventory of light oil locations. Vero currently has a multi-year drilling inventory of 220 locations identified with over 80% of these locations not currently booked in the 2011 year end reserve evaluation.
Increase in Production Guidance and Bank Facility
With first quarter results the Company is increasing its yearly average production guidance from 2,300 - 2,500 (67% oil and liquids) to 2,500 - 2,700 boed (70% oil and liquids). Exit production guidance has been increased from 2,800 - 3,100 boed (67% oil and liquids) to 3,000 - 3,300 (70% oil and liquids). This increased production forecast comes with no change to the current exploration and development capital program of $62.5 million.
Vero is also pleased to announce that as a result of the drilling successes in the first quarter the Company's credit facility with the Canadian Imperial Bank of Commerce will be increased from $45 million to $65 million, subject to final documentation. The increased credit facility puts the Company in a solid financial position that we anticipate will allow us to show 65% production growth year over year on the retained Cardium assets. Vero will have excellent financial flexibility to execute its strategy, take advantage of opportunities that present themselves and be prepared for changes that may occur in the current fiscal environment.
Vero Energy Inc. is a publicly traded Canadian energy company involved in the exploration, development and production of oil, natural gas and liquids in Alberta. The Company's shares trade on The Toronto Stock Exchange under the symbol "VRO". Vero's latest presentation will be available on the Company's website on or about April 10, 2012.
Forward Looking Statements: Certain information regarding the Company in this news release including management's assessment of future plans and operations, current production estimates, forecast production estimates including 2012 average and exit rates, initial production rates, drilling inventory and wells to be drilled, timing of drilling and tie-in of wells, productive capacity of new wells, potential prospectivity of our Cardium lands, future commodity mix, forecasts in production growth, capital expenditures and the timing thereof and finalization of the Company's increased credit facility may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, the timing and length of plant turnarounds and the impact of such turnarounds and the timing thereof, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, the Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or, if any of them do so, what benefits the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com, and the Company's website www.veroenergy.ca). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Initial Production Rates: Initial production rates disclosed herein may not necessarily be indicative of long term performance or of ultimate recovery.
BOE Disclosure: Disclosure provided herein in respect of barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 BBL is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of 6:1, utilizing a 6:1 conversion basis may be misleading as an indication of value.
This press release is reproduced on Vero's website at www.veroenergy.ca. Also for the latest presentation and other information about Vero Energy Inc., please visit the website at (www.veroenergy.ca).
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
For further information:
If anyone requires additional information, please contact:
Doug Bartole, President & CEO, at (403) 218-2063
Gerry Gilewicz, Vice-President Finance & Chief Financial Officer at (403) 693-3170
Scott Koyich, Investor Relations, (403) 619-2200