Atikwa Resources Inc. Reports Strong Year-Over-Year Increases in Production and Revenue for 2011
CALGARY, ALBERTA--(Marketwire - May 10, 2012) - Atikwa Resources Inc. ("Atikwa" or the "Company") (TSX VENTURE:ATK) is pleased to provide some of the highlights of its 2011 light oil drilling programs in the Spearfish formation in southern Manitoba and Roncott/Bakken properties in southern Saskatchewan.
Highlights
- In the fourth quarter of the fiscal year ended February 28, 2012 ("F2012") the Company realized net production of 16,400 boe vs. 2,428 boe for the fourth quarter of the prior year. This represents a 575% quarter over quarter increase in production.
- Company production for F2012 was 37,034 boe vs. the previous year of 12,139 boe. This is a 205% year over year increase in production.
- In the fourth quarter of F2012 the Company realized revenue of $1.5 million vs. the fourth quarter of the previous year of $134,000. This represents an increase of 1,009% quarter over quarter.
- Revenue for the current fiscal year was $3.2 million vs. the previous fiscal year of $600,000. This represents an increase of 439% year over year revenue.
- Operating costs on a per boe basis declined 38% in the fourth quarter vs. the prior year's fourth quarter.
- General and Administrative costs declined 90% on a per boe basis in the fourth quarter vs. the prior year's fourth quarter.
- In a year challenged by weather related access issues, Atikwa was able to drill 7 wells in 2011 in our Spearfish play in Manitoba and 1 well in the Roncott area of Saskatchewan. Operational momentum continued into 2012, with the completion of the seven Manitoba wells and the launch of a new program scheduled to begin in June of 2012.
- Atikwa has been on the leading edge of the refinement of completion design in the Pierson area. As one of the first companies in the area to recognize the potential of developing the reservoir as a horizontal candidate, Atikwa's wells have performed significantly better than those of neighboring operators. The Company is currently in negotiations with a number of parties with regard to expanding its land holdings in Manitoba and Saskatchewan targeting light oil to supplement the Company's internal prospecting initiatives through the use of its 2000+ km. proprietary seismic data base across the two Provinces.
- In the Spearfish formation, Atikwa has identified in excess of 35 gross (21 net) undeveloped locations, at a spacing of four wells per quarter section. The Company's spacing assumption of four wells per quarter section may prove to be conservative, as other operators in the area are drilling the Spearfish at up to 6 wells per quarter section. In addition, Atikwa believes that the property could be an excellent candidate for a water flood program.
- Drilling and completion costs of approximately $1.7 million per well in the Spearfish play continued to provide excellent economics in F2012.
- In 2011 the Company negotiated a rolling option on land contiguous to its producing 7-27 well in the Roncott/Bakken area. The Company now has an interest in 6 sections of land in this area and is exploring the possibility of starting a horizontal drill program this summer.
OTHER DEVELOPMENTS DURING F2012
- On February 28, 2012, the Company secured a credit facility of up to $3,000,000 in debt financing. This facility has allowed the Company to continue to move forward with the development of its oil properties.
- Atikwa completed a re-entry well on the Porcupine Hills project and although the Company had operational problems, this play is still very viable from a geological perspective. The Company has had ongoing negotiations with a number of other parties to reduce its exposure to this play through a farm out of all or a portion of its 100% interest in the play.
- Atikwa sold a section of land in the Company's 100% owned Windfall property for $250,000. Strong interest has been shown by other parties with regard to a farm-in on the Company's remaining 7 sections of land in the area.
Outlook for 2012- 2013
Given the strength of crude oil prices and the ongoing advances in technology with regard to horizontal drilling and multi stage fracing, the quest for light oil resources is at an all time high. As one of the first to recognize the potential of the Spearfish play in the Person area of Southern Manitoba, Atikwa was able to establish a significant land position in the center of the play and is well positioned to take advantage of the industry's focus on light oil plays. The Company continues to actively work to expand that position.
The Company's other principal oil property is its Roncott Bakken focused lands. Management remains highly committed to the development of this opportunity. On the heels of a very successful vertical test and a well established production profile over a significant period of time. The Company's 07- 27 well in the Roncott area has maintained a strong production profile over the last two years and management believes these lands have clearly demonstrated the capacity to be horizontally developed as a highly prolific oil field. Although the Roncott pool has established that it has been one of the most prolific vertically produced Bakken pools in Canada and the US over the last 50 years, it has yet to be developed with the benefits of today's horizontal drilling and multi-stage completions.
Given the steady decline in natural gas prices, management has turned all of its operational attention to the development of these two light oil properties. Although Windfall and Porcupine Hills still hold great promise due to the high liquids rich nature of those assets, management feels that the Company is better served by focusing on the development of its established light oil properties.
With that in mind, the Company is now in the planning process of drilling its first horizontal well in the Roncott area targeting Bakken light oil later this summer. Management is excited about the potential of building this play into another significant oil asset for the Company. Concurrently, the Company is planning to continue its ongoing development of its Spearfish production this summer. With the success of these two oil fields the Company will be well positioned to take advantage of the significant demand in the market for established long term light oil properties.
Atikwa is a well positioned junior oil company with a proven management team committed to an aggressive, cost effective growth of near term high netback light oil reserves and production.
This news release contains forward-looking statements relating to the Company's plans, proposed exploration and development activities, our drilling prospect inventory and other aspects of the Company's anticipated future operations, strategies, financial and operating results and business opportunities. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "plan", "intent" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future, or consists of statements regarding estimates of future drilling and completion activities, production, operating costs or other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance. Although the Company believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf: 1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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