Vero Q1 Update
Looks like Vero paid roughly $15M for the March 'tuck-in' acquisition (this compares to the forecast FY08 capex =$50M). For this ~$15M Vero received 9,500 undeveloped acres (which if at $150/acre would alone be valued at ~$1.4M) and I assume some infrastructure and production.
The good news is that production has been boosted; currently at 5900 boe/d, should be 6800 boe/d by end April.... FY08 production target upped by 300 to ~6,500 boe/d.
Given the current AECO > C$8/GJ nat gas prices, I think VRO shareprice could soon reach $10 - $11, but of course, market mood and gas prices are the big variables at play here. Just my opinion.
Good luck all.
Here's the news release:
Vero Energy Inc. announces operation update, and increase in yearly production guidance
Canada NewsWire
CALGARY, April 13 /CNW/ - Vero Energy Inc. (TSX - VRO, "Vero" or the "Company") is pleased to report operating results to date in 2008. During the first quarter, Vero participated in the drilling of 8 (5.4 net) wells with a success rate of 100%, and includes two new pool discoveries. There were 2 (1.6) net horizontal wells which were drilling over quarter end. Currently 7 (4.2 net) wells are tested and awaiting to be brought on-production.
Current production is approximately 5,900 boed (77 % natural gas) based on field estimates. There is approximately 1,000 boed of completed and tested production currently not producing and the Company expects, with imminent tie-ins and the reduction of bottle necks, that approximately 500 boed of production will be brought on by the end of April. In addition, 1 (0.6 net) horizontal well is currently being completed, and an additional, 100% horizontal well is currently drilling and expected to be tied in and producing by mid-May.
During March Vero entered into an agreement to acquire a private company. The "tuck-in" acquisition has many synergies for the Company including: common working interests on over 50% of the purchased production; and the addition of 9,500 net acres of undeveloped land in Vero's core areas of Edson, Whitecourt, and Ricinus. The acquisition is expected to close in April, subject to the receipt of the required approvals and satisfaction of certain customary closing conditions. The acquisition will be paid for by the issuance of approximately 1.84 million Vero shares and the assumption of approximately$1.5 million of net debt.
Vero expects production to be approximately 6,800 boed (79 % natural gas) by the end of April. With the positive, year to date drilling results and anticipated closing of the acquisition, the yearly average production guidance is being increased to 6,300 to 6,700 boed from previously announced guidance of 6,000 to 6,400 boed.
Vero had a full quarter of operations at the Edson (100% owned) gas processing facility that was commissioned late in 2007. The new facility eliminated restrictions on production, reduced third party processing fees, and is showing greater efficiencies in natural gas liquid recoveries. The Company believes the new facility will reduce corporate operating costs between 10 - 15%. 6 (3.4 net) wells were drilled in Edson in the quarter including 2 (1.0 net) horizontals. There were 2 (1.6 net) horizontal wells carried over into the second quarter. Vero plans to drill 5 to 6 (3.0 to 3.6 net) more horizontals prior to the end of the year for a total of 9 to 10 (5.4 to 6.0 net) horizontal wells for 2008.
At Corbett, 2 (2.0 net) wells were drilled in the quarter. The Company has 4 to 5, 100% wells planned to be drilled prior to year end with 2 to 3 of these wells to be exploration focused. The Company now has 11 producing wells at Corbett, including 8 in its Nordegg Pool, and continues to exploit a dominant seismic, land, gathering and facility infrastructure position.
Vero Energy Inc. is a publicly traded Canadian energy company involved in the exploration, development and production of oil, natural gas and liquids in Alberta. The Company's shares trade on TheToronto Stock Exchange under the symbol "VRO". Please visit our website for the latest presentation to be posted on April 16th.