CALGARY, ALBERTA--(Marketwired - Oct. 29, 2013) - Edge Resources Inc. (TSX VENTURE:EDE)(AIM:EDG) ("Edge" or the "Company"), is pleased to provide another production update on its vertical Eye Hill East well and, as a result, the intention to commence a further drilling program. In addition, the Company has renewed its credit facilities (the "Credit Facilities") with National Bank of Canada. The Company also announces the resignation of Vishnu Reddy from the Board.
Production Update:
As previously reported, production from the vertical well in Eye Hill East ("Asset East") had increased from 60 to 90 and then to over 100 barrels of oil per day ("bopd") with indications that further production increases were possible, as the well was producing at restricted rates.
Production from this well last month averaged greater than 130 bopd with peak production of over 150 bopd, still while under restricted rates. The water-to-oil ratio is very low for this area and has been steadily decreasing to below 40% today. Additionally, pressure from the well has been steadily increasing - in fact, the well has seen a 300% pressure increase over the last month of production compared to the first month of production, indicating additional deliverability is potentially possible.
Brad Nichol, President and CEO of Edge commented, "We are extremely pleased with these production results, especially in comparison to other pools in the area and particularly given the large number of similar drilling locations remaining on Edge's 100% owned lands. Our operations team has successfully utilized some new techniques designed to generate low water-to-oil ratios and very high production rates, while preserving long-term reservoir integrity." Nichol added, "In the tight capital markets we're experiencing today, projects like the Eye Hill East discovery that typically generate three to four times the initial invested capital with a payback of less than six months, are critical to generating shareholder value. With up to an additional 100 potential wells to drill at Eye Hill, the company anticipates being able to fund future wells by recycling the surplus cash generated by newly drilled wells."
All of the Company's three core assets continue to be cash flow positive; however, the Company is pursuing higher profitability and growth from oil-based prospects, such as Eye Hill, while its natural gas properties are allowed to decline naturally. Following the record results reported in the previous quarter, the Company expects the upcoming financial quarter to show continued improvement, based on high netbacks and increased cash flow.
Banking Facility:
Under the revised loan agreement, National Bank of Canada has agreed to renew its main demand revolving facility at $8 million (previously $12 million). The facility bears interest at the bank's prime rate plus 3.0% per annum (previously prime rate plus 0.75% per annum). The new facility and interest rate reflects the current lending environment in Canada, which has resulted in revisions to Canadian lending models and practices. The Credit Facilities are secured against the assets of the Company. As of today's date, the Company has drawn $7.0 million on the Credit Facility and, reflecting increasing oil production and positive cash flow, the Company expects future usage of the Credit Facility to decrease.
Additionally, the Company has chosen to cancel its $6.5 million Acquisition and Development Line of Credit ("Acquisition Line"), which will result in an immediate cost saving.
Nichol commented, "The Acquisition Line was appealing when it was first offered; however, the practicality of utilizing that type of facility in today's market is just not justified."
Drilling Program:
Based on the exceptional production results in Eye Hill, the Company is planning a winter drilling program, having licensed a number of wells to enable a minimum of two locations to be drilled in Eye Hill prior to the end of the year. With the production results at Eye Hill considerably exceeding the Company's expectations, the Company has planned the next wells in close proximity to the previously drilled wells.
Nichol commented, "Our intent is to minimize typical developmental risks in order to duplicate the results we've seen in Eye Hill to date. Our 3D seismic and the previously-drilled wells lead us to believe that future drilling opportunities in Eye Hill should provide us with similar well results. We currently have up to 100 additional drilling locations in Eye Hill, which provides us with a tremendous runway on which to grow significant shareholder value."
Resignation of Director:
Vishnu Reddy, a director of the Company, has been required to relinquish all corporate directorships as a condition of accepting a new role and opportunity at one of the world's leading banks and financial services institutions in London, England. The Company has enjoyed and benefited from Mr. Reddy's relatively short time as a director at Edge and wishes him all the best in his future endeavors. The Company intends to appoint an additional director as and when a suitable candidate is identified.
For more information, visit the company website: www.edgeres.com
About Edge Resources Inc.
Edge Resources is focused on developing a balanced portfolio of oil and natural gas assets from properties in Alberta and Saskatchewan, Canada. Management has consistently focused on:
- Shallow, conventional programs that typically offer reduced capital, operational and geological risks
- Very high or 100% working interests and fully operated assets
- Pools and horizons with exceptionally high reserves in place
The management team's very high drilling success rate is based on the safe, efficient deployment of capital and a proven ability to efficiently execute in shallow formations, which gives Edge Resources a sustainable, low-cost, competitive advantage.
This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company 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 or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, 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 those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company's registered filings which are available at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.
Trading in the securities of Edge Resources Inc. should be considered highly speculative. 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.