CALGARY, March 5, 2012 /CNW/ - Vero Energy Inc. ("Vero" or the "Company") (TSX: VRO) today announces results of its independent reserves evaluation effective December 31, 2011 (the "Sproule Report") as prepared by Sproule Associates Limited in accordance with the requirements prescribed by National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities.
The reserves information contained in this press release relates solely to the remaining assets of the Corporation (the "Retained Assets") following the previously announced property disposition by the Corporation which was completed on January 31, 2012. While the Sproule Report includes reserves associated with Vero's properties disposed of as of January 31, 2012, such reserves information is no longer considered material for the Corporation and, accordingly, has not been included in this press release.
COMPANY GROSS WORKING INTEREST OIL AND GAS RESERVES AND NET PRESENT VALUES OF RETAINED ASSETS
The following table provides summary information presented in the Sproule Report. Sproule has evaluated 100% of Vero's crude oil, NGL and natural gas reserves. Detailed reserve information for all the Company's reserves for December 31, 2011 will be presented in the Company's upcoming Statement of Reserves Data and Other Oil and Gas Information section of the Company's Annual Information Form scheduled to be filed on SEDAR on or before March 31, 2012.
|Retained Assets Gross and Net Oil and Gas Reserves|
|Based on Forecast Price and Costs|
| Natural gas
|Natural gas|| Barrels of oil
|Total Proved & Probable||5,024||4,216||682||457||19,876||17,872||9,019||7,651|
|(1)||In the case of BOEs, using BOEs derived by converting gas to oil equivalent in the ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf:1 bbl)|
|(2)||Total values may not add due to rounding|
|(3)||Company Gross reserves consists of Vero's working interest (operated and non-operated) share before deduction of royalties payable and without including royalties receivable by the Company|
|(4)||Net reserves means Vero's working interest (operated and non-operated) share after the deduction of royalty obligations, plus Vero's royalty interest reserves|
|Retained Assets Net Present Values of Future Net Revenue (Before Tax)|
|Based on Forecast Prices and Costs|
|Total proved and probable||331,046||211,422||151,765|
|(1)||Total values may not add due to rounding|
|(2)||Forecast pricing used is based on an average of the published price forecasts of four engineering firms effective December 31, 2011 (AJM, Sproule, McDaniel and GLJ)|
|(3)||The estimated future net present values are stated before deducting future estimated abandonment and site restoration costs but are reduced for future abandonment and disconnection costs and estimated capital required for development of future undrilled locations associated with the reserves|
|(4)||It should not be assumed that the net present values of future net revenues estimated by Sproule represent fair market value of the reserves. There is no assurance that the forecast price and cost assumptions will be attained and variances could be material.|
2011 RESERVE HIGHLIGHTS OF RETAINED ASSETS
In 2011 the Company only drilled 19 (13.9 net) Cardium horizontal wells resulting in an increase to proved plus probable reserves by 38% and proved reserves by 32% over the estimated reserves at year end 2010. Of the wells drilled in 2011 9 (6.2 net) had no previous reserves booked. The reserve life index of the Retained Assets is 15.3 years on a proved plus probable basis on estimated fourth quarter production of 1,620 boed. Reserve replacement is 550% on a proved plus probable basis and 300% on a proven basis based on estimated yearly production from the Retained Assets. Future capital on a proved plus probable basis is $87.7 million which equates to 4,661 mboes of undeveloped reserves on 25.5 net horizontal Cardium oil wells. The Company has current land holdings of 120,645 (net 77,652) acres. The undeveloped land has been evaluated by an independent qualified land evaluator, attributing a value of $28.9 million effective December 31, 2011.
2012 OPERATIONS UPDATE
The Company has drilled 5 (4.7 net) horizontal Cardium wells to date and has brought on production 4 (2.8 net) wells. Production at the end of February based on field estimates was approximately 2,200 boed (67 % liquids). The Company is currently on target to drill 8 (6.8 net) horizontal Cardium wells in the quarter and anticipates having all wells producing by the end of March or early April depending on timing of spring break up. The number of wells expected to be drilled by quarter end that had no reserves booked at year end 2011 would be 5 (3.9 net). Vero continues to be extremely pleased with recent wells and early indications are that they are continuing to meet or exceed our expectations. The Company plans to release a quarter operational update once operations are completed on the aforementioned wells.
Vero Energy Inc. is a Calgary based oil and natural gas exploration and development company. Vero's common shares trade on The Toronto Stock Exchange under the symbol "VRO".
This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities in any jurisdiction. The common shares of Vero will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States, or to a U.S. person, absent registration or applicable exemption therefrom.
Forward Looking Statements: Certain information regarding the Company in this news release including management's assessment of future plans and operations, the recognition of significant additional reserves, reserve estimates and estimated value of reserves, production estimates, reserve life index and reserve replacement, drilling inventory and wells to be drilled, timing of drilling and tie-in of wells, productive capacity of new wells, estimated value of undeveloped land, future oil and natural gas prices, future liquidity and financial capacity, future results from operations and operating metrics, and prospectivity of our Cardium inventory 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, incorrect assessment of land values, 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. Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. 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. In addition to other factors and assumptions which may be identified in this document and other documents filed by the Company, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the Company's ability to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility construction and expansion; the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the Company's ability to successfully market its oil and natural gas products.
Readers are cautioned that the foregoing list of factors is not exhaustive. The recovery and reserve estimates provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. In relation to the disclosure of estimates for the Retained Assets, such estimates may not reflect the same confidence level as estimates of reserves for all of Vero's properties evaluated in the Sproule Report due to the effects of aggregation. 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.
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.
For further information:
Doug Bartole, President & CEO, at (403) 218-2063
Gerry Gilewicz, Vice-President Finance & CFO, at (403) 693-3170
Scott Koyich, Investor Relations, (403) 215-5979