Highlights for the second quarter of 2013, including non-IFRS measures, compared to the corresponding quarter in 2012 are:
- Revenue of $3.2 million. Up 17% from 2012 with 98% of the revenue generated from crude oil. This compares to $2.7 million for the same period last year. The increase in revenue was due to higher production and oil prices;
- EBITDA of $200,000, the highest in Company history;
- Operating netback of $41.30 /boe;
- A net comprehensive loss for the quarter ended June 30, 2013 of $0.4 million compared to a $0.5 million loss for the same period last year. The decrease in the loss was due in part to increased oil prices and production, and lower workover expenses.
For the first half of 2013, the Company also reported:
- Revenue of $6.2 million, a net comprehensive loss of $1.3 million ($0.01 per share) for the six month period, compared to $5.6 million and $1.1 million ($0.01 per share) for the same period in 2012, respectively;
- Cash used in operations $3.8 million, with $3.9 million represented by decreases in working capital, including a reduction in accounts payable of $3.3 million after completion of our 2012 drilling program;
- EBITDA of $228,000, the highest in Company history;
- Operating netback of $38.04 /boe.
Production Update
Oil production during August to date has averaged 440 barrels of oil per day (bopd) while July production averaged 404 bopd. At the Company's Crossroads field, oil production has averaged 304 bopd during August and 270 bopd during July. At the Milnesand field, oil production for August to date and July has averaged approximately 84 and 81 bopd, respectively, similar to averages from last quarter. After one year of oil production from the MSU #141 and #522 horizontal wells, production continues at approximately 20 bopd per well, consistent with last month's rates.
Crossroads Update
Crossroads production has averaged approximately 316 bopd over the last two weeks, an increase of approximately 46 bopd over July levels. The Crossroads #106 well was successfully converted to a second water injector well in early August and is currently taking water at a rate of approximately 3,800 bwpd. Total water handling at Crossroads has averaged in excess of 11,000 bwpd since the #106 well was brought online. The Crossroads #105 and #302 wells have been brought back to production and are currently producing approximately 80 bopd.
Milnesand Update
After approximately one year of production from the MSU #141 and #522 horizontal wells, we continue to see consistent production rates of approximately 20 bopd per well; within our pre-drill expectations and considerably higher than the original vertical wells drilled to develop the field over forty years ago.
The advanced petrophysical analysis and engineering studies within the Milnesand field, discussed in our May update, are now complete. Based on production data to date and analogous San Andres wells drilled elsewhere in the basin, the economics of horizontal infill wells at both the Milnesand and Chaveroo fields indicates that each 4,000 foot horizontal well could recover, in a most likely (P50%) case, approximately 180,000 barrels of oil, having a net present value (10%) of $2.8 million and an estimated rate of return in excess of 45%. Based on the results of these economics, we anticipate restarting the horizontal program in the fourth quarter of this year or early 2014.
Chaveroo Update
The results of the recently completed studies at Milnesand and the similarity between the Milnesand and Chaveroo fields have accelerated the implementation of an infill horizontal drilling program across the Chaveroo field, where at least 60 horizontal wells could be drilled. We are currently in discussions with all stakeholders at Chaveroo and have begun preparations for the drilling of two 4,000 foot laterals in and around the Jennifer Chaveroo San Andres Unit. We anticipate drilling these wells from existing well bores thereby accelerating the permitting process with the goal of initiating this program in late 2013 or early 2014.
Commenting on the results, Barry Lasker, President and Chief Executive Officer said: "Our operational execution is improving and together with increases in oil prices and reductions in our workover expenses since 2012, have combined to generate positive changes in our operating results. We have increased production in 2013 by 12% to over 73,000 boe (401 boe/d; 98% crude oil) for the six months ended June 30, which represents the highest sales rate in company history. The work of a newly assembled development team to evaluate and refine our drilling and CO2 development plans have put us in a position to potentially extend our proved and probable reserves in the Milnesand and Chaveroo fields with the additional drilling we expect to commence in the 4th quarter of 2013 and into 2014."
About Enhanced Oil Resources Inc.
Enhanced Oil Resources Inc. (TSX.V: EOR; OTCQX: EORIF) trades in Canada on the TSX Venture Exchange under the symbol "EOR" and is quoted in the United States on OTCQX under the symbol "EORIF". Enhanced Oil Resources Inc. is an early-stage company, with a principal goal of increasing crude oil and natural gas production through enhanced oil recovery ("EOR") and infill drilling projects it is initiating in the Permian Basin.