TriOil provided an update of its activities in 2010 and a corporate overview.
2010 Activity
On January 13, 2010, a new management team, led by Russell J. Tripp as President and CEO, completed the recapitalization of One Exploration Inc. The new management implemented a strategy initially focused on Cardium, Sanish, Bakken and Pekisko light oil resource plays in Alberta and Southeast Saskatchewan. Significant land positions have already been assembled at Tableland in Southeast Saskatchewan and at Queenstown and Lochend in Southern Alberta and an active horizontal drilling program is well under way.
Since the recapitalization transaction in mid January, 2010, the Corporation;
- Completed a $25 million bought deal financing and a $2.3 million rights offering.
- Closed a $68 million corporate acquisition of Canext Energy, adding approximately 1,000 boepd (50% oil) and significantly increasing the Corporation's critical mass and growth platform.
- Completed multiple property acquisitions to assemble a significant land position consisting of 54 gross (40.7 net) sections of undeveloped land on the emerging Cardium light oil trend at Lochend in Southern Alberta.
- Changed the Corporation's name to TriOil Resources Ltd., completed a 20 for 1 consolidation on its outstanding Class A shares and began trading on a post-consolidation basis under the symbol "TOL" on the TSX Venture Exchange on April 7, 2010.
- Drilled a total of 6 (1.8 net) horizontal wells targeting Sanish, Bakken B and Pekisko light oil. Four Sanish wells are in various stages of completion, a Bakken B well is awaiting completion, and a Pekisko well is in the process of being equipped for production.
TriOil has successfully executed its business plan thus far, rapidly growing its production, reserves and undeveloped land base over the early part of 2010 to position the Corporation for substantial future increases in production, reserves and shareholder value through exposure in these high quality resource plays.
Corporate Snapshot:
- Current production in excess of 1,400 boe/d, approximately 50% weighted to oil
- Credit facility increased to $25 million
- Current net debt of approximately $5 million(1)
- Approximately 130,000 net acres of undeveloped land
- Proved reserves of 4,732 mboe(2)
- Proved and Probable (P+P) reserves of 8,353 mboe(2)
- Net Present Value discounted at 10% (NPV10) for Proved reserves is $85.8 million(2)
- NPV10 of Proved and Probable reserves is $135.3 million(2)
- Net Asset Value of $6.61 per share - undeveloped land valued at $150/acre(3)
- Net Asset Value of $7.28 per share - Lochend Cardium undeveloped land at cost and the balance of land valued at $150/acre(3)
- 23.6 million diluted shares outstanding(1)
- $115.7 million market capitalization(1)
- Tax pools of approximately $180 million
- Gives effect to the $15 million ($7.5 million cash and 1,312,566 Class A shares) asset acquisition at Lochend, Alberta, expected to close on April 30, 2010 (the "Lochend acquisition").
- Gives effect to the acquisitions completed by the Corporation since the beginning of the year and the Lochend acquisition expected to close on April 30, 2010. Based on Trimble Engineering Associates Ltd. & Sproule Associated Ltd. Dec. 31, 2009 reserve reports and internal management estimates for Coronation, Tableland and Lochend acquisition.
- Net Asset Values are calculated on a fully diluted basis and are based on the above information.
Tableland:
- 60 (20.5 net) sections with Sanish, Bakken and Midale opportunities
- Option to farm in on additional 18.5 sections
- Drilled 5 (1.5 net) wells in the first quarter of 2010
- First horizontal Sanish oil well put on production on April 8, 2010
- 3 additional horizontal Sanish wells in process of being completed
- 3 additional Sanish horizontal wells licensed, ready to be drilled in the second half of 2010
- 1 horizontal Bakken B well awaiting completion
- Significant horizontal drilling inventory targeting Sanish and Bakken light oil reservoirs
Queenstown:
- Farm-in on 27 sections, pay 50% to earn 30%, 3 section earning per well
- Drilled, completed and equipped 1 (0.3 net) Pekisko horizontal oil well for production
- Additional 3 (0.9 net) wells being licensed
Lochend:
- Substantial operated prospective undeveloped land base of 54.4 (40.7 net) sections with Cardium horizontal multi-frac development opportunities
- Analogous to the Cardium "A" sand at Garrington
- Current vertical oil producers confirm productivity
- Operated Cardium horizontal drilling program to commence in the second half of 2010
Sweeney:
- Medium gravity (27 API) operated Charlie Lake oil pool (60% WI)
- Current production of over 500 boe/d net to TriOil
- Modelling EOR scheme to dramatically increase recovery factor
The Corporation's net debt as of April 12, 2010 (the closing of the Canext acquisition) was approximately $5 million (pro forma the Lochend acquisition slated to close April 30, 2010). TriOil's credit facility with National Bank of Canada has been expanded to $25 million.
Summary
Significant progress has been made since the recapitalization transaction in mid January 2010. Through a series of corporate, asset and financial transactions the new management team has positioned TriOil as a high growth, light oil resource focused company with a strong balance sheet, an enhanced production and reserve base and large undeveloped land positions on a portfolio of emerging Cardium, Bakken, Sanish and Pekisko light oil resource plays.
The 2010 horizontal drilling program is primarily focused on light oil resource plays, and we continue to remain opportunistic on additional light oil acquisitions to further increase the oil weighting, critical mass and opportunity base.