HOUSTON, April 16, 2013 /PRNewswire/ -- Torchlight Energy Resources, Inc. (OTCBB:TRCH), an independent oil and gas company headquartered in Houston, Texas, released their year-end 2012 oil and gas reserves report, which was prepared by Netherland, Sewell & Associates, Inc. in accordance with the definitions and regulations of the Securities and Exchange Commission.
The reserves report covers only the Marcelina Creek Field located in Wilson County, TX where the Company currently has two producing wells, the Johnson #1-BH producing from the Austin Chalk formation and the Johnson #4 producing from the Buda formation. Torchlight's acreage in the Marcelina Creek Field covers approximately 1,045 acres. Our working interest is 75% in the majority of the field, with a 50% working interest in one tract covering approximately 280 acres.
The summary of reserves by category is presented below:
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Oil Reserves
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Future Net Revenue (M$)
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Gross
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Net
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Present Worth
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Category
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(MBBL)
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(MBBL)
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Total
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at 10%
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Proved Developed Producing
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55.8
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24.8
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$ 1,396.8
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$ 1,169.1
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Proved Undeveloped
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751.0
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392.7
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8,538.2
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2,130.5
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Total Proved
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806.8
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417.5
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$ 9,935.0
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$ 3,299.6
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Probable Undeveloped
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1,875.3
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937.1
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$ 30,985.5
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$ 12,236.6
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The oil reserves shown include crude oil only. Oil volumes are expressed in thousands of barrels (MBBL); a barrel is equivalent to 42 United States gallons. Any natural gas production is assumed to be flared or consumed in field operations.
The Netherland, Sewell & Associates, Inc. report reflects seven proved undeveloped drilling locations targeting the Buda formation and two proved undeveloped locations in the Eagle Ford shale. There have been a number of successful Eagle Ford wells drilled in the immediate area. In addition, the report also includes thirteen probable drilling locations targeting the Austin Chalk and Buda formations and three probable locations in the Eagle Ford shale.
Highlights from Operations
- Increased revenue from oil and gas sales to $1.04 million for 2012 as compared to less than $25,000 reported in 2011.
- Two successful producing wells in its Marcelina Creek Project.
- Had net production of 10,655 barrels of oil for the year as compared to < 300 for 2011.
A complete form 10(K) has been filed with the Securities and Exchange Commission and can be viewed at www.sec.gov.
For 2013 the Company's capital spending plans include capex for the following programs:
- Two horizontal Buda wells at Marcelina Creek
- Three development wells in Q3 2013 in the Finney Project located in central Kansas, no cost to the Company.
- Acquisition of possible opportunities in Kansas and Oklahoma
- Acquisition of leases in Texas and Oklahoma
The company goals for 2013 with the capital development plan is to drill 6 to 8 new wells.
This capital program is based on the ability of the Company to successfully complete its current fundraising project.
Management Comments
Mr. Thomas Lapinski, Chairman and CEO said, "We are very pleased with the overall results of our first third party reserves report. It confirms our view of the potential of the field and validates the reason we made the Marcelina Creek a cornerstone project for the Company." Mr. Lapinski went on to say; "We are very excited about is the substantial opportunity that Marcelina Creek offers for near-term growth in revenues through the drill-bit. With seven proved undeveloped drilling locations in the Austin Chalk and Buda and an additional thirteen probable drilling locations in these zones, we have ample room to grow through a relatively low-risk drilling program in the Austin Chalk and Buda. The reserves assigned to the Eagle Ford demonstrate that our acreage is located in a favorable area of the formation. While our initial focus will be on developing the Austin Chalk and Buda locations, we will explore options to develop the Eagle Ford reserves through joint ventures or farm-in agreements with other companies already active in the area."
Mr. Lapinski went on to say, "We feel 2012 was a turnkey year for Torchlight Energy, the two successful wells at Marcelina Creek established production, proved up the value of the acreage, created a revenue stream, a reserve base and a platform from which to grow the Company in coming years. We look forward to delivering significant increases in all the pertinent categories through both a drilling program and continuing to buy into other development programs throughout the mid-continent region as per our business strategy."
Non-GAAP Disclosure
Note that the present value of future revenues discounted at 10% is a common non-GAAP measurement in the oil and gas industry. The related disclosure under generally accepted accounting principles is the Standardized Measure of Oil and Gas Quantities ("Standardized Measure"), which is presented in the audited financial statements of the company. The primary difference between these two measurements is that the Standardized Measure ($2,909,000) includes the effects of future income taxes in the calculation, whereas the 10% present worth presented above for total proved reserves ($3,299,600) does not.
You can view more information on the company's website at www.torchlightenergy.com.
ABOUT TORCHLIGHT ENERGY
Torchlight Energy Resources, Inc. is an oil and gas company headquartered in Houston, Texas. It has a primary emphasis on oil and is focused on building a reserve base through lower risk working interest drilling programs in domestic, onshore fields.
FORWARD LOOKING STATEMENTS
The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Such forward-looking statements involve known and unknown risks and uncertainties, including risks associated with our ability to obtain additional capital in the future to fund our planned expansion, the demand for oil and natural gas, general economic factors, competition in general and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. The company is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
SOURCE Torchlight Energy Resources, Inc.