Invicta Energy reports 485% increase in reserves in 2011 & operations update
CALGARY, March 12, 2012 /CNW/ - Invicta Energy Corp ("Invicta" or the "Company") (TSXV:VCA) is pleased to announce the results of its independent reserve evaluation prepared by Fekete Associates Inc. ("Fekete") in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and dated effective December 31, 2011, evaluating the Company's crude oil, natural gas liquids and natural gas reserves (the "Report"). The Report is primarily based on 13 gross (8.5 net) producing light oil wells at Kindersley, Saskatchewan, 50 gross (27.5 net) proved undeveloped Kindersley locations and 14 gross (7.7 net) Kindersley probable locations. In January 2012 Invicta drilled 5 gross (2.75 net) of the proved undeveloped locations.
Reserve Highlights - December 31, 2011 as compared to December 31, 2010:
- Proved Reserves - 411% increase to 1,935 mboe
- PV10 before tax of $44.4 million (529% increase)
- Reserve life index of 12.4 years (1)
- Finding costs(2)(3) of $21.62/boe (19% reduction)
- Recycle ratio(4) of 2.34 (56% increase)
- Reserve replacement(5) of 3,041%
- Net asset value(6) of
.61 per share based on NPV@10% (100% increase)
- Proved plus Probable Reserves - 485% increase to 2,545 mboe
- PV10 before tax of $59.2 million (582% increase)
- Reserve life index of 16.4 years (1)
- Finding costs(2)(3) of $19.64/boe (16% reduction)
- Recycle ratio(4) of 2.61 (52% increase)
- Reserve replacement(5) of 4,089%
- Net asset value(6) of
.79 per share based on NPV@10% (128% increase) - Company interest proved plus probable reserves are comprised of 61% light oil and 39% associated gas
- 176% increase in proved plus probable reserve per share growth
- Land holdings of 41,900 net undeveloped acres at December 31, 2011
| (1) | Calculated using Invicta's forecasted 2012 average production rate of 426 boepd. |
| (2) | Based on 2012 estimated capital expenditures of $11.2 million. |
| (3) | Based on $23.6 million change in proven future development costs and $31.2 million change in proven plus probable future development costs. |
| (4) | Based on Invicta's forecasted operating netback of $52.65/boe |
| (5) | Based on estimated 2011 production of 53,000 boe |
| (6) | Assumes $4.0 million of undeveloped land and seismic value, $3.1 million of estimated net debt @ Dec 31, 2011 and 75.5 million basic outstanding shares. |
| | |
Reserves
The following tables provide summary information presented in the Report effective December 31, 2011. The Report evaluated the oil, NGL and natural gas reserves attributable to the Company's crude oil, natural gas liquids and natural gas reserves effective December 31, 2011. Detailed reserve information will be presented in the Statement of Reserves Data and Other Oil and Gas Information section of the Company's Annual Information Form scheduled to be filed on SEDAR on or before March 31, 2011. Also due to rounding, certain columns may not add exactly.
The net present value of future net revenue attributable to reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures and well abandonment costs for only those wells assigned reserves by Fekete. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to reserves estimated by Fekete represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of oil, NGL and natural gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein.
The Report is based on certain factual data supplied by the Company and the Company's opinion of reasonable practice in the industry. The extent and character of ownership and all factual data pertaining to petroleum properties and contracts (except for certain information residing in the public domain) were supplied by the Company to Fekete. Fekete accepted this data as presented and neither title searches nor field inspections were conducted.
Summary of Oil and Gas Reserves - Forecast Prices and Costs
| | | |
| | Company Interest Reserves Before Royalty | Company Interest Reserves After Royalty |
| | Light and
Medium
Crude Oil |
Heavy
Oil | Natural
Gas
Liquids |
Natural
Gas | | Light and
Medium
Crude Oil |
Heavy
Oil |
Natural Gas
Liquids |
Natural
Gas | |
| | Mbbls | Mbbls | Mbbls | MMcf | Mboe | Mbbls | Mbbls | Mbbls | MMcf | Mboe |
| | | | | | | | | | | |
| Proved | | | | | | | | | | |
| | Developed Producing | 196.7 | - | 0.6 | 800 | 330.6 | 190.9 | - | 0.4 | 774 | 320.3 |
| | Developed Non-Producing | - | - | - | - | - | - | - | - | - | - |
| | Undeveloped | 962.5 | - | - | 3850 | 1604.2 | 945.7 | - | - | 3349 | 1503.9 |
| Total Proved | 1159.2 | - | 0.6 | 4650 | 1934.8 | 1136.6 | - | 0.4 | 4123 | 1824.2 |
| Probable | 387.7 | - | 0.2 | 1336 | 610.6 | 380.6 | - | 0.2 | 1209 | 582.3 |
| Total Proved plus Probable | 1546.9 | - | 0.8 | 5986 | 2545.4 | 1517.2 | - | 0.6 | 5332 | 2406.5 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Net Present Value of Future Net Revenue - Forecast Prices and Costs Before Future Income Tax
| | |
| | Before Future Income Tax Expenses and Discounted at |
| | 0% | 5% | 10% |
| | (M$) | (M$) | (M$) |
| Proved | | | |
| Developed Producing | 14826.6 | 12862.8 | 11398.2 |
| Developed Non-Producing | - | - | - |
| Undeveloped | 55700.0 | 42430.1 | 32968.5 |
| Total Proved | 70526.6 | 55292.9 | 44366.7 |
| Probable | 26859.6 | 19609.6 | 14829.7 |
| Total Proved plus Probable | 97386.2 | 74902.5 | 59196.4 |
| | | | |
Operations Update
Invicta is pleased to announce the results of its winter drilling program at Kindersley. Invicta drilled 7 gross (3.8 net) horizontal Viking wells. All 7 wells have been completed with multi-stage fracs and placed on production in addition to being flowlined into existing infrastructure. Peak production from the best well flowed 140 bopd (gross oil only) on a restricted choke and averaged 95 bopd during the first 30 days. Management is pleased with the performance of the remaining wells as they fall within the typical Viking oil production profiles for the area and Invicta's economic type curve. Since drilling its first wells in 2010 Invicta has only drilled 18 of its 190 location inventory and has significantly de-risked the uncertainty in horizontal oil wells on its property. Total corporate production is currently 350-380 boepd (75% oil). A rig has been secured for the drilling of up to 6 wells immediately following spring break-up in the Kindersley area.
Based on production history to date on the new wells drilled, ATB Financial increased the Company's credit facility from $6 million to $8.5 million. The Company expects further increases in the credit facility based on the Report. The annual review was scheduled for May 2012 however the Company has requested ATB Financial to begin their review.
The Company has posted an updated corporate presentation to its website.
About the Company
Invicta is a Calgary based, emerging junior oil and gas company exploring and developing light oil opportunities in Saskatchewan and Alberta. The Company's current focus is the development of its Viking resource play in Kindersley, Saskatchewan.
Cautionary Statements:
This press release contains certain forward looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Invicta. Undue reliance should not be placed on these forward looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.
In the interest of providing Invicta shareholders and potential investors with information regarding Invicta, including management's assessment of future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward looking statements are based on Invicta's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By its nature, such forward looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Invicta believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements.
In particular, this press release may contain forward looking statements pertaining to the following:
- the performance characteristics of Invicta's oil and natural gas properties;
- oil and natural gas production levels;
- capital expenditure programs;
- the quantity of Invicta's oil and natural gas reserves and anticipated future cash flows from such reserves;
- projections of commodity prices and costs;
- supply and demand for oil and natural gas;
- expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and
- treatment under governmental regulatory regimes.
Invicta's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:
- volatility in market prices for oil and natural gas;
- liabilities inherent in oil and natural gas operations;
- uncertainties associated with estimating oil and natural gas reserves;
- competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;
- incorrect assessments of the value of acquisitions and exploration and development programs;
- geological, technical, drilling and processing problems;
- fluctuations in foreign exchange or interest rates and stock market volatility;
- failure to realize the anticipated benefits of acquisitions;
- general business and market conditions; and
- changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.
These factors should not be construed as exhaustive. Unless required by law, Invicta does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.
Estimated values contained in this press release do not represent fair market value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this Press release.