Novus Energy Inc. exceeds its 2011 exit rate production target
January 11 2012 - 7:00AM
PR Newswire (Canada)
/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION
IN THE U.S./ CALGARY, Jan. 11, 2012 /CNW/ - Novus Energy Inc.
("Novus" or the "Company") 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 future growth. HIGHLIGHTS -- 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 going forward. -- 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 area. -- 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 years. -- 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. OTHER MEASUREMENTS 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 boe. 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 exemption therefrom. 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. Novus Energy Inc. CONTACT: NOVUS ENERGY INC. Hugh
G. Ross Ketan Panchmatia Julian DinPresident and CEO Chief
Financial VP Business(403) 218-8895 Officer Development(403)
218-8876 (403) 218-8896
Copyright
Novus Energy Inc. (TSXV:NVS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Novus Energy Inc. (TSXV:NVS)
Historical Stock Chart
From Sep 2023 to Sep 2024