Vero Energy Inc T.VRO

Q2 info out

[JohnJBond]

Second Quarter 2012 Highlights

• Generated net earnings of $4.1 million (
  .08 per share) in the quarter.
• Completed the first full quarter under the transformed oil entity. Achieved a quarterly average of over 2,341 boe/d (68% weighting to liquids production) which represents a 68% increase in production of the retained assets over the comparative quarter in 2011.
• Top quartile operating costs of $8.71 per boe and average realized prices of $56.72 per boe contributed to a $38.63 per boe operating netback.
• Achieved funds flow from operations of $6.9 million, equating to
  .14 per share (basic and diluted).
• Company spent $5.5 million drilling 1(0.3 net) wells in the quarter resulting in debt to annualized cash flow of 0.8 times.

Third Quarter 2012 Highlights and Update

• Brought 2 (1.3 net) horizontal wells on production in July.
• Drilled 3 (2.4 net) horizontal wells, with 4 (2.8 net) wells to be brought on in August.
• Estimate 2 (1.4 net) wells left to be drilled and brought on production in the quarter.

In July VRO drilled 2 (1.3 net) horizontal Cardium wells, of which both are operated by Vero, and have been brought on continuous production, the first on July 9^th and the second on July 21^st.  The two wells have been consistent with the Company's recent results.  The first well initially flowed at 736 boe/d (62% liquids) and after 28 days is still producing at 467 boe/d (60% liquids).  The second well is currently producing at 249 boe/d (78% liquids) after two weeks.  The momentum on adding production over the next month is going to be building as 3 (1.8 net) horizontal wells have been fracture completed and are currently at various stages of final completion.  Vero is currently running production equipment and plans to bring these wells on production in the next week.  Another 100% well is scheduled to be completed within the next week and 2 (1.4 net) operated horizontal are anticipated to will be finished drilling in August and be completed shortly thereafter. 

Based on field estimates, Vero averaged over 2,350 (68% liquids) boe/d for the first week in August with a significant number of wells expected to be brought on and added to that production shortly.

Looks like the Q2 doldrums are behind us, and we will can look forward to steady production growth month after month through to next break up in Q2 2013, with steady share price appreciation.

[liquidcool]

Vero Energy earns $4.12-million in Q2

[filefish]

"Looks like the Q2 doldrums are behind us, and we will can look forward to steady production growth month after month through to next break up in Q2 2013, with steady share price appreciation." Agree, as long as they dont overspend and they keep debt to CF below 1.0. The results of the 3 or 4 wells expected to come on stream in the next couple of weeks is very important. Watch the share

[JohnJBond]

The over spending thing is way over done here.  In my view, you can't over spend on low risk oil wells.   Every dollar spent is adding $2-5 in shareholder value.   Production is all important - so yes, the production results of the near term well additions are important...........but in my view, they are low risk wells.............the only question in my mind is do they come on

[filefish]

Yes, I agree that a dollar spent on directly drilling will yield multiple dollars in return. However, bank debt rose from 1mil  to 11mil in Q2 and yet they only spent 5mil on drilling. Therein lies what appears to be a recurring issue with VRO. Maybe I am missing something which you can clear up for all of us. I think the low volume is due to lack of institutional

[JohnJBond]

I'll be happy to clear up what you are missing.   I read through the financial fairly quickly, but if I remember correctly, total debt didn't change from Q1 to Q2.   About $5 million was spent on drilling in Q2, and that was paid out of cash flow gernerated in Q2.    It is a fundamental error to look only at Bank Debt, while ignoring other debt.   Go back and look

[filefish]

Yes, thanks for clarifing. In regards to the Bank line draw, looking closer at the 3/31 and 6/30 balance sheets, they went from a working capital deficit of 22 mil to a deficit of 9 mil , a net reduction of 13 mil. Of this reduction, they moved 10 mil to the bank line so a net + of 3 mil. That's consistant with the cash flow in Q2  minus the 5 mil spent on

[JohnJBond]

The Company looks forward to providing its shareholders with a third quarter operational update in the second half of September.     At that time, VRO should be over 3000 boe/day...........and possibly over 3300 boe.