Update ImpressiveVERO ENERGY INC. HAS 100% THIRD QUARTER DRILLING SUCCESS, PROVIDES OPERATIONS AND PRODUCTION UPDATE
CALGARY, Sept. 27/CNW/ - Vero Energy Inc. (TSX - VRO, "Vero" or the "Company") ispleased to report drilling and operating results for the third quarterof 2010. During the quarter, Vero participated in the drilling of 8 (6.9net) horizontal wells and 1 (0.36 net) vertical well with a drillingsuccess rate of 100%. Horizontal drilling activities consisted of 6Cardium oil, 1 Bluesky gas and 1 Wilrich gas well while the verticalwell targeted Second White Specs oil. The Company is currently producing8,800 boed (75% natural gas) based on field estimates. In addition, theCompany has over 1,600 boed of additional production restricted and/orawaiting tie-in, as well as another 4 (2.9 net) wells waiting oncompletion.
Vero had an active quarter evaluating the Cardium light oil play,with a total of 6 (5.1 net) horizontal oil wells drilled. Four (3.6 net)of the 6 wells have been completed and brought on production, two inthe middle of August and two in the last week of September. The two mostrecent wells have had some of the highest initial production rates todate at over 600 boed (12% gas) and 450 boed (26% gas) after recovery ofload fluid. Vero expects the remaining two wells will be completedshortly and producing by the end of October. The Company currently hasapproximately 1,700 boed (18% natural gas) producing out of the tightCardium sands. Vero has also taken steps to reduce costs on this play,reducing drilling costs on the most recent well by approximately 30%.
Through Vero's own exploration efforts and through recent industryactivity, the Company has identified significant opportunities in theWilrich sands. A total of 3 (2.8 net) wells have been drilled in thisplay to date. Of these, 2 (2 net) have been completed currentlycontributing 555 boed (88% natural gas). The Company has 119 gross (84net) undeveloped sections with Wilrich potential. It is estimated thatthere are at least 80 locations and that with further delineation theCompany could increase this to over 160 locations on 3 - 4 wells persection spacing.
The Viking play is another liquids-rich gas play that the Companywill pursue with horizontal wells on its land base of 65 gross (45 net)undeveloped sections. This play is currently developed with verticalwells that targeted high permeability conglomerates. Similar to thePembina Cardium pool, there is a halo of tighter sands around theinitial development. These gas wells yield a high liquids rate of 45bbls/mmcf, with over 52% condensate, a product which typically sells at apremium to light oil. The Viking should provide the Company withanother solid economic, liquids-rich gas play and we look forward to theresults of our first well in Q1 of 2011.
In the fourth quarter, Vero currently expects to drill approximately 8gross (5.2 net) horizontal wells with approximately 4-5 wells targetingCardium light oil. Gas well drilling will consist of a Rock Creek,Notikewin, Bluesky and/or Wilrich. The program has been high graded totarget high impact, high return, liquids-rich plays that the Companybelieves are as economic as any natural gas play in North America. At a natural gas sales price of $4.00/mcf, Vero's corporate average in the deep basin plays is $5.70/mcfequivalent as a result of the high liquids rich content and the premiumreceived for the high heat content in the natural gas.
The quarter was very difficult operationally due to the unprecedentedwet weather in Alberta. The Company estimates that the equivalent of120 rig operating days were lost to delays in moving drilling rigs andcompleting wells. All nine wells were drilled by September 20th,only two of which were brought on production by this time. Another 90equivalent days of downtime delays occurred on producing assets due tothe inability to get service rigs to locations, move fluid, and slowedresponse to both third party and operated production issues. Veromaintains its current guidance for 2010 production to average between8,500 - 9,000 boed (78% natural gas), and exit guidance of 9,800 -10,300 boed (70-74% natural gas). This will equate to 22-30% increase inproduction and a 20-21% increase in production per share year overyear. The Company forecasts that it will average 10,300 - 10,800 boed in2011, representing approximately a 20% increase over 2010 averageproduction. With the new plays in the Edson core and the new core inNorth East British Columbia, the Company has identified a scalable andrepeatable drilling inventory of over 390 horizontal locations that cangrow dramatically in multiple horizons.
Vero Energy Inc. is a publicly traded Canadian energy companyinvolved in the exploration, development and production of oil, naturalgas and liquids in Alberta. The Company's shares trade on The Toronto Stock Exchange under the symbol "VRO". Vero's latest presentation will be available on our website on September 27, 2010.
READER ADVISORY
Forward Looking Statements: Certain information regarding the Companyin this news release including management's assessment of future plansand operations, production estimates, initial production rates, drillinginventory, number of potential drilling locations and wells to bedrilled, timing of drilling and tie-in of wells, productive capacity ofnew wells, potential prospectivity of our Cardium, Viking and Wilrichlands, future commodity mix, 2010 and 2011 production forecasts mayconstitute forward-looking statements under applicable securities lawsand necessarily involve risks including, without limitation, risksassociated with oil and gas exploration, development, exploitation,production, marketing and transportation, loss of markets, volatility ofcommodity prices, currency fluctuations, imprecision of reserveestimates, environmental risks, competition from other producers,inability to retain drilling rigs and other services, the timing andlength of plant turnarounds and the impact of such turnarounds and thetiming thereof, delays resulting from or inability to obtain requiredregulatory approvals and ability to access sufficient capital frominternal and external sources. As a consequence, the Company's actualresults, performance or achievements could differ materially from thoseexpressed in, or implied by, these forward-looking statements and,accordingly no assurance can be given that any events anticipated by theforward-looking statements will transpire or occur, or, if any of themdo so, what benefits the Company will derive therefrom. Readers arecautioned that the foregoing list of factors is not exhaustive.Additional information on these and other factors that could effect theCompany's operations and financial results are included in reports onfile with Canadian securities regulatory authorities and may be accessedthrough the SEDAR website (www.sedar.com), and the Company's website (www.veroenergy.ca).Furthermore, the forward-looking statements contained in this newsrelease are made as at the date of this news release and the Companydoes not undertake any obligation to update publicly or to revise any ofthe included forward-looking statements, whether as a result of newinformation, future events or otherwise, except as may be required byapplicable securities laws.
BOE Disclosure: Disclosure provided herein in respect of barrels ofoil equivalent (BOE) may be misleading, particularly if used inisolation. A BOE conversion ratio of 6 Mcf: 1 BBL is based on an energyequivalency conversion method primarily applicable at the burner tip anddoes not represent a value equivalency at the wellhead.
This press release is reproduced on Vero's website at www.veroenergy.ca. Also for the latest presentation and other information about Vero Energy Inc., please visit the website (www.veroenergy.ca).
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
%SEDAR: 00022902E
For further information: Doug Bartole, President & CEO, at (403)218-2063; Gerry Gilewicz, Vice-President Finance & Chief FinancialOfficer at (403) 693-3170; Scott Koyich, Investor Relations, (403)714-5979
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