Reserves and Operational Update (1510P)

TIDMRSOX

RNS Number : 1510P

Resaca Exploitation Inc

29 September 2011

 
 for IMMEDIATE release   29 SEPTEMBER 2011 
 

Resaca Exploitation, Inc.

("Resaca" or "the Company")

Reserves and Operational Update

Resaca (AIM: RSOX), the oil and natural gas production, exploitation, and development company focused on the Permian Basin in the USA, is pleased to announce an updated reserve study as of 30 June 2011 for the Company's oil and gas properties and to provide an update on the Company's production.

Reserves Update

As of 30 June 2011, Resaca's proved and probable ("2P") reserves were 27.5 million barrels ("MMbbls") of oil and 14.5 billion cubic feet ("Bcf") of natural gas, for a total of 29.9 million barrels of oil equivalent ("MMboe"). This represents 0.2 MMboe increase in Resaca's 2P reserves since 30 June 2010 after realization of 0.2 MMboe of production during the fiscal year ended 30 June 2011. The Company's proved reserves represented 49% of the 2P reserves as of 30 June 2011. Additionally, Resaca's possible reserves were 5.4 MMbbls of oil and 3.3 Bcf of natural gas as of 30 June 2011 for total proved, probable and possible ("3P") reserves of 32.9 MMbbls of oil and 17.8 Bcf of natural gas (35.8 MMboe). Resaca's 3P reserves increased 0.009 MMboe since 30 June 2010. All reserves are calculated on a net revenue interest basis (working interest volumes, less royalties).

Resaca's proved developed producing ("PDP") reserves as of 30 June 2011 were 2.8 MMbbls of oil and 2.5 Bcf of natural gas, for a for a total of 3.2 MMboe. This represents a 0.5 MMboe increase in PDP reserves since 30 June 2010 after realization of 0.2 MMboe of production during the fiscal year ended 30 June 2011. This represents a 20 percent increase in PDP reserves, after consideration of fiscal year production. The increase in PDP reserves is primarily attributable to the capital expenditure program initiated by the Company in February 2011 on the Company's Cooper Jal Unit, the Jordan San Andres Unit, and the Edwards Grayburg Unit.

Resaca commissioned Haas Petroleum Engineering Services, Inc. ("Haas") to prepare a reserve report for its primary and secondary recovery (water injection) reserves and Williamson Petroleum Consultants, Inc. ("Williamson") to prepare a reserve report considering only those additional reserves which could be recovered through tertiary recovery (CO(2) injection). Together, these reports provide a complete analysis of Resaca's reserves. Details of the reports are set out in the table below.

 
                                                           NPV @10% 
                                        Natural            Discount 
                               Oil        Gas                 $MM 
                             (MMbbls)    (Bcf)    MMboe    (Pre-Tax) 
                           ----------  --------  ------  ----------- 
 Proved Reserves 
 Haas                            12.6      12.4    14.6       $311.0 
 Williamson                         0         0       0            0 
                           ----------  --------  ------  ----------- 
    Total Proved Reserves        12.6      12.4    14.6       $311.0 
                           ==========  ========  ======  =========== 
 
 Probable Reserves 
 Haas                             2.0       2.1     2.4        $60.5 
 Williamson                      12.9         0    12.9        122.2 
                           ----------  --------  ------  ----------- 
  Total Probable Reserves        14.9       2.1    15.3       $182.7 
                           ==========  ========  ======  =========== 
 
 Total 2P Reserves               27.5      14.5    29.9       $493.7 
                           ==========  ========  ======  =========== 
 
 Possible Reserves 
 Haas                             4.1       3.3     4.6        $93.3 
 Williamson                       1.3         0     1.3         11.6 
                           ----------  --------  ------  ----------- 
  Total Possible Reserves         5.4       3.3     5.9       $104.9 
                           ==========  ========  ======  =========== 
 
 Total 3P Reserves               32.9      17.8    35.8       $598.6 
                           ==========  ========  ======  =========== 
 

The reserve estimates are based on the unweighted average 12-month prices as of 30 June 2011 under the revised SEC rules, calculated as the unweighted arithmetic average of the first-day-of-the-month oil and natural gas prices for each month within the 12-month period ended 30 June 2011 of $90.09 per barrel for oil and $4.21 per MMbtu for natural gas, and are further adjusted by field for quality, transportation fees, and regional price differentials. The reserves are calculated "before tax" and consider the anticipated costs to develop and produce.

The Company's reserves estimates at 30 June 2011 include reserves related to the Grand Clearfork Unit property, which the Company sold on 15 July 2011 and do not reflect reserves associated with the Langlie Jal Unit property, which the Company purchased on 5 August 2011.

Production Update

Resaca's seven-day average daily production as of 27 September 2011 was 747 boe per day.

Commenting on the reserves and production update, J.P. Bryan, Chairman and CEO of Resaca, said:

"We are pleased with the results from the work performed at Copper Jal, Jordan San Andres, and Edwards Grayburg, which are reflected in our reserves as of 30 June 2011. We look forward to further implementing our development plans on these properties.

As evidenced by our recent third party reserve report, we are well positioned with a solid asset base of long-life, oil weighted properties. Based on the PV10 value of our proved reserves alone, Resaca has a net asset value in excess of $12 per share without consideration of the increase in our reserves related to our purchase of the Langlie Jal property, which is significantly higher than our current stock price."

For further information please contact:

 
 Resaca Exploitation, Inc. 
 J.P. Bryan, Chairman and Chief Executive 
  Officer                                             [phone] 
 John J. ("Jay") Lendrum, III, Vice Chairman          [phone] 
 Dennis Hammond, President and Chief 
  Operating Officer                                   [phone] 
 Chris Work, Chief Financial Officer                  [phone] 
 
 Buchanan (Investor Relations)                    [phone] 
 Tim Thompson 
  Helen Chan 
  Ben Romney 
 
 finnCap Limited (Nomad and Broker)             + 44 (0) 20 7600 1658 
 Sarah Wharry, Corporate Finance 
  Victoria Bates, Corporate Broking 
 

About Resaca

Resaca is an independent oil and gas development and production company based in Houston, Texas. Resaca is focused on the acquisition and exploitation of long-life oil and gas properties, utilizing a variety of primary, secondary and tertiary recovery techniques. Resaca's current properties are located in the Permian Basin of West Texas and Southeast New Mexico. Additional information is available at www.resacaexploitation.com.

In accordance with the AIM Rules, the information in this announcement has been reviewed and approved by Dennis Hammond, President. Mr. Hammond has a Bachelor of Science degree in Petroleum Engineering, is a registered professional engineer in the State of Texas, and has over 30 years relevant experience within the sector.

This information is provided by RNS

The company news service from the London Stock Exchange

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