Edge Resources to start drilling program in Q1
Edge Resources Inc (C:EDE)
Shares Issued 128,802,240
Last Close 1/30/2013 $0.23
Thursday January 31 2013 - Shareholders Letter
Mr. Brad Nichol reports
EDGE PRESIDENT REVIEWS 2012 ACHIEVEMENTS AND PROVIDES CORPORATE UPDATE
Dear shareholders,
In light of our coming drilling program in February and the current volatility and uncertainty in both the equity and natural resources markets, I would like to summarize 2012 and provide a strategic and operational outlook for 2013.
2012 marked a year of major accomplishments and transition for Edge Resources and I am very pleased with the achievements we have made. Amongst these, and perhaps the most significant for shareholders, was the more than doubling of our share price while the natural resources sector, in general, saw significant declines in a challenging market.
Last year we promised to deliver both near and long-term shareholder value from potential acquisitions, and we did just that; in February, 2012 we closed an oil-focused acquisition in Saskatchewan. We initiated the development of that asset, which resulted in the discovery of a significant new oil pool. Then, with the help of a 3D seismic program, we discovered two additional potential pools. We are now undertaking the exciting and enviable duty of further definition and delineation of those new pools with our Q1 2013 drilling program.
Following the February acquisition, we introduced Henderson Global Investors, a CDN$100 billion investment manager, to our shareholder register. This association has provided the Company with a strategic partner to help provide access to capital in a capital-starved junior natural resources sector. As a result, in 2012 the Company secured over $10 million in equity financing, while most juniors could not raise capital necessary to develop their assets.
Shortly after the introduction of Henderson, we added some oil-based operational strength to our team. Monty McNeil joined as our Vice President of Operations. With more than 28 years of experience with some of the industry's biggest and best (Husky and Renaissance Energy, just to name a couple), Monty has extensive oil and gas knowledge that extends from the reservoir to the pipeline. From production optimization to drilling and completions, Monty has been a remarkable addition to our team.
2012 hosted a historical event for Edge, with a year's worth of effort paying off with the first day of trading on the London Stock Exchange's AIM board in July. With a European shareholder base of approximately 50% of Edge's total, the AIM listing provided additional liquidity (nearly doubling our trading volumes) and drastically increased our access to capital in a market that was essentially closed to junior oil and gas issuers. Edge trades under the symbol EDG on the AIM exchange in the UK.
Some of the highlights of the Company's 2012 achievements are summarized below:-- The addition of 19 net (and gross) sections (12,160 acres) of 100% owned, undeveloped land in Primate, Saskatchewan -- The addition of approximately 350 boe/day of production in Primate, Saskatchewan -- NPV10 value increase of 36%, from $46.5 million effective March 2011 to $63.2 million effective March 2012(1) -- Addition of critical team members in engineering and operations -- Discovery of three new oil pools on previously undeveloped land in Primate, Saskatchewan
2013 Outlook:
We are about to embark on a Q1 oil-based drilling program, which we expect to complete before "spring breakup" (the period of time, normally between mid-March and beginning of May when frost is coming out of the ground and heavy equipment cannot travel on county roads). This drilling program will be focused on new targets on our large undeveloped land base, including further delineation of one of our newly discovered oil pools in Saskatchewan. We expect to move a drilling rig to the first location in February.
One of the most exciting developments in 2012 was the discovery of three new Saskatchewan oil pools, through a combination of drilling and 3D seismic. We intend to kick off 2013 by further delineating those pools with a drilling program starting in February. We plan to start unlocking the potential value from these discoveries as we drill more wells and understand more about these new reservoirs.
We are planning to drill a completely new oil horizon in early 2013 with horizontal drilling technologies. With a horizontal well, it is our intent to unlock the potential of known oil reserves in a known reservoir, which is currently untapped in our immediate area. However, this reservoir extends across the bulk of our undeveloped lands and represents considerable potential value if the results are favorable.
Continuing from our organic and acquisitive growth in 2012, we have developed a strategy to build on last year's momentum. We believe the capital scarcity that has plagued the natural resources sector for more than a year has left some assets undercapitalized and/or neglected. The recently-observed short-term bottlenecks with Canadian oil markets has widened the Canadian-to-WTI differentials and stressed some assets and companies even further than before. We believe a strong team with access to growth capital can take full advantage of these events in 2013 and secure great assets at beneficial metrics, and we fully intend to do just that.
To conclude, we believe we are exceptionally well positioned to rise above any challenges 2013 might present. More importantly, we are poised to capitalize on opportunities provided by less robust companies, teams and/or assets. We have a solid asset base to further develop and flourish with. We are proactively and constantly seeking growth opportunities through the drill bit and through acquisition. Our track record demonstrates that we are able to deliver shareholder value and we look forward to the year ahead with confidence and enthusiasm.
Thank you for your continued support.
Brad Nichol, President & Director
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