Novus Energy Inc. (TSXV:NVS)
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CALGARY, Aug. 26, 2011 /CNW/ --
/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S./
CALGARY, Aug. 26, 2011 /CNW/ - Novus Energy Inc. ("Novus" or the "Company") (TSXV: NVS) announces that it has filed its unaudited condensed
interim financial statements and management's discussion and analysis
("MD&A") as at and for the three and six months ended June 30, 2011.
These may be accessed through the SEDAR website www.sedar.com and at the Company's website www.novusenergy.ca.
Novus is pleased to report that its 2011 Viking oil drilling program
continues to progress on schedule. The Company has now successfully
drilled 39 Viking oil wells in the Dodsland area of Saskatchewan, with
32 of these wells having been completed. Thirty of the wells that have
been completed have been placed on production, with the remainder to
follow. Costs in the greater Dodsland area continue to meet the
Company's budget, with estimated per well costs for drilling and
completions on the Company's first 32 wells averaging approximately
$835,000.
Total estimated field level corporate production as of August 25, 2011
was approximately 2,625 boe/d, with approximately 78% of production
comprised of oil and liquids. Novus expects production will continue
to steadily increase through the balance of the year as additional
wells are drilled and placed on production. The Company expects to
show significant production growth in the second half of the year and
expects to comfortably meet its 2011 exit rate guidance of 3,000 boe/d,
weighted 80% to oil and liquids production, early in the fourth
quarter.
With recent land acquisitions in the Dodsland area, Novus now controls
124.25 net sections of Viking rights, and has identified 601 net
risked, undrilled Viking oil locations.
FINANCIAL HIGHLIGHTS
-- For the three months ended June 30, 2011, Novus' gross revenue
increased 168% to $8.29 million compared to $3.09 million
recorded in the comparative period in 2010. For the six months
ended June 30, 2011, gross revenue was $17.16 million, compared
to $6.08 million in the comparative period of 2010,
representing a 182% increase.
-- Funds flow from operations was $2.94 million in the second
quarter of 2011, versus an outflow of $711 thousand for the
comparative three month period of 2010. For the first half of
2011, funds flow from operations was $6.15 million, compared to
an outflow of $796 thousand recorded in the first half of 2010.
-- Novus' capital program for the three month period ended June
30, 2011, was $18.13 million, versus $20.13 million spent in
the comparative period of 2010. Novus' capital program for the
first six months of the year was $30.38 million, compared to
$26.06 million spent in the first six months of 2010. These
figures are exclusive of the non-cash transactions and business
combinations, which occurred in 2010.
-- Subsequent to quarter end, the Company increased its credit
facilities to $60 million, consisting of a $50 million
revolving operating demand loan and a $10 million
acquisition/development demand loan. The Company's borrowing
capacity has increased substantially from the $28 million of
credit facilities which were available to it at the beginning
of 2011.
-- At June 30, 2011, the Company had net debt of $23.85 million.
-- The Company currently has outstanding 22.64 million
in-the-money warrants expiring March 31, 2012, which, upon
exercise, would result in proceeds of $16.98 million being
realized by the Company.
OPERATIONAL HIGHLIGHTS
-- Average daily production for the second quarter of 2011
increased 70% to 1,318 boe/d compared to 774 boe/d recorded in
the corresponding period in 2010. Average daily production for
the first six months of 2011 was 1,430 boe/d, up 93% from the
742 boe/d recorded in the corresponding period in 2010.
-- Average crude oil and liquids production for the second quarter
of 2011 was up 162% to 844 bbls/d versus 322 bbls/d in the
comparative quarter of 2010. Natural gas production averaged
2,841 mcf/d for the second quarter of 2011, a 5% increase from
2,717 mcf/d in the comparative period of 2010.
-- Average crude oil and liquids production for the first six
months of 2011 was up 215% to 940 bbls/d versus 298 bbls/d in
the comparative period of 2010. Natural gas production
averaged 2,940 mcf/d, a 10% increase from 2,669 mcf/d in the
comparative period of 2010.
-- Current production is approximately 2,625 boe/d, weighted 78%
towards oil and liquids.
-- During the second quarter of 2011, Novus participated in the
drilling of 19 wells (19.0 net), 14 of which were Viking
horizontal oil wells in the greater Dodsland area. Fifteen
wells (15.0 net) were completed, with six of them onstream by
June 30, 2011.
-- Novus now controls 124.25 net sections in its Dodsland Viking
core area, and has a multi-year risked drilling inventory of
601 net Viking horizontal oil wells.
-- Novus acquired a 100% working interest in approximately 55 net
sections of land with rights in the oil bearing Birdbear
formation of southwestern Saskatchewan. This acquisition
complements the 24 net sections of land Novus currently owns
targeting this formation. These lands are located in the
immediate vicinity of the Company's Dodsland Viking lands and
provide the Company with an exciting opportunity to target
another prolific, emerging oil resource play, while maintaining
operational synergies. The Company will likely be dedicating
some of this year's capital expenditure program towards the
shooting of 3D seismic and the potential drilling of a number
of Birdbear locations.
-- The upgrades at Novus' owned and operated facilities at
Whiteside and Avon Hills have now been completed. Gas
production from the Whiteside area is currently being conserved
with a number of additional pipelines being surveyed to handle
new solution gas volumes from our current drilling program.
In the first half of 2011, Novus drilled 17 net horizontal Viking oil
wells. Completion operations were hampered by wet weather, and
production from the wells was not tied in until the end of the second
quarter and early in the third quarter of the year. With completion
operations delayed, the Company's Viking oil drilling program did not
materially contribute to production levels in the second quarter of
2011. Production for the second quarter of 2011 was also impacted by
prolonged third party plant maintenance at Wembley which resulted in
production from the area being shut-in for nearly six weeks of the
quarter. Prior to, and subsequent to being shut-in, the Wembley
property was producing approximately 180 boe/d.
Novus is pleased with the performance of the wells and the stable nature
of the production to date from its current drilling program. The
Company has drilled wells in its Flaxcombe, Whiteside, Kerrobert,
Forgan, Plato, Plenty and Dodsland regions that are expected to meet or
exceed internal type curve forecasts of 48 bbls/d of initial oil
production. The Company now has several wells with at least 60 days of
production history, and these wells are now averaging 64 bbls/d of oil
per well. Results from the Flaxcombe sub area in the Dodsland region
have been extremely encouraging. The Company has determined that these
previously undrilled lands are characterized by two distinct cycles in
the Viking formation. The Company has now drilled horizontal wells
targeting both the lower and upper cycle. Current production rates
from wells in this area which have been on production for at least 60
days are 80 bbls/d of oil per well. Virgin pressures realized on these
wells have been up to 7,600 KPa which are amongst the highest pressures
the Company has recorded in any of its Viking wells drilled thus far.
Novus has mapped over ten sections of its lands where both cycles are
present and expects this area to add at least 80 drilling locations to
its existing drilling inventory of 601 net Viking oil locations.
Reserves and production growth will also increase as development of the
two distinct Viking cycles progresses. Production from the recently
drilled wells has far exceeded expectations, and is supportive of the
longer term potential the Company believes the area exhibits.
Based upon the production rates, recoverable reserves, and drilling and
completion costs in the Dodsland area the Company has experienced to
date, Novus plans on maintaining an aggressive drilling program on its
current acreage, and will continue its efforts to further consolidate
and expand its position within the area through acquisitions. Novus
has been one of the most active operators in the Dodsland area, and
with the success it has enjoyed to date, the Company plans to
continually expand its already significant position in the area. Novus
is also excited to commence drilling operations shortly on its first
horizontal Viking light oil well in Alberta. Based upon success, the
Company would pursue numerous other locations in the area throughout
2012.
Novus will be operating approximately 98% of the capital expenditures it
incurs in 2011, which gives the Company significant flexibility on the
timing and scale of its capital program. Novus is well positioned
financially, and as operator of the vast majority of its capital
program, the Company has the flexibility to accelerate its drilling
with continued success.
A summary of financial and operational results for the three and six
month periods ended June 30, 2011, along with the comparative periods,
are outlined in the following table:
Three months ended June Six months ended June
30 30
2011 2010 2011 2010
Financial
(000s, except per
share amounts)
Revenue 8,286 3,088 17,157 6,075
Funds flow from 2,938 (711) 6,146 (796)
(used in) operations
per share - 0.02 - 0.04 (0.01)
basic and
diluted
Net loss 760 4,498 2,092 6,335
per share - - 0.03 0.01 0.04
basic and
diluted
Capital 18,130 20,131 30,382 26,063
expenditures, net
Net debt 23,849 22,882 23,849 22,882
Weighted average 170,018 153,288 169,138 141,102
shares outstanding
Three months ended June Six months ended June
30 30
Operational 2011 2010 2011 2010
Production
Oil & liquids 844 322 940 298
(bbls/d)
Gas (mcf/d) 2,841 2,717 2,940 2,669
Oil equivalent 1,318 774 1,430 742
(boe/d)
Sales price per
unit
Oil & liquids 94.36 68.14 88.38 69.74
($/bbl)
Gas ($/mcf) 4.01 4.42 3.97 4.80
Oil equivalent 69.09 43.81 66.27 45.21
($/boe)
INTERNATIONAL FINANCIAL REPORTING STANDARDS
On January 1, 2011, the Company adopted International Financial
Reporting Standards ("IFRS") for financial reporting purposes, using a
transition date of January 1, 2010. The unaudited condensed interim
financial statements as at and for the three and six months ended June
30, 2011, have been prepared in accordance with IFRS. Comparative
information has been restated from the previously published financial
statements which were prepared in accordance with Canadian Generally
Accepted Accounting Principles ("GAAP").
NON-GAAP FINANCIAL MEASUREMENTS
Included in this press release are references to certain financial
measures commonly used in the oil and gas industry, such as funds flow
from (used in) operations, operating netbacks and net debt. These
measures have no standardized meanings, are not defined by IFRS or
Canadian GAAP, and accordingly are referred to as non-GAAP measures.
The Company considers funds flow from (used in) operations to be a key
measure as it demonstrates the Company's ability to generate the cash
necessary to repay debt and to fund future growth through capital
investment. Novus determines funds flow from (used in) operations as
cash provided by (used in) operating activities prior to changes in
non-cash working capital items and decommissioning expenditures. The
determination of the Company's' funds flow from (used in) operations
may not be comparable to the same as reported by other companies.
Operating netbacks are calculated by deducting royalties, field
operations and transportation and marketing expenses from production
revenue. Operating netbacks are used by management to assess operating
results between periods and between peer companies as they provide an
indication of results generated by the Company's principal business
activities before the consideration of how these activities are
financed or how the results are taxed. Novus' reported amounts may not
be comparable to similarly titled measures reported by other
companies. These terms should not be considered an alternative to, or
more meaningful than, cash provided by operating, investing and
financing activities or net income as determined by IFRS or Canadian
GAAP as an indicator of the Company's performance or liquidity.
Net debt is calculated as current assets less all current liabilities,
including the current portion of any bank debt. The Company monitors
net debt as part of its capital structure.
OTHER MEASUREMENTS
Reported production represents Novus' ownership share of sales before
the deduction of royalties. Where amounts are expressed on a barrel of
oil equivalent ("boe") basis, natural gas has been converted at a ratio
of six thousand cubic feet to one boe. This ratio is based on an
energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead. Boe's
may be misleading, particularly if used in isolation. References to
natural gas liquids ("liquids") include condensate, propane, butane and
ethane and one barrel of liquids is considered to be equivalent to one
boe.
Novus Energy Inc. is a well positioned, junior oil and gas company with
a proven management team committed to aggressive, cost-effective growth
of high netback light oil reserves and production. Novus will continue
to grow through a targeted acquisition and consolidation strategy
coupled with development and exploration drilling.
Novus Shares trade on the TSX Venture Exchange under the symbol NVS.
Novus currently has 169.6 million common shares outstanding.
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 release.
This news release will not constitute an offer to sell or the
solicitation of an offer to buy the securities in any jurisdiction.
Such securities have not been registered under the United States
Securities Act of 1933 and may not be offered or sold in the United
States, or to a U.S. person, absent registration, or an applicable
exemption therefrom.
ADVISORY REGARDING FORWARD LOOKING STATEMENTS
Certain disclosures set forth in this press release constitute
forward-looking statements. Any statements contained herein that are
not statements of historical facts may be deemed to be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "believes",
"budget", "continue", "could", "estimate", "expects", "forecast",
"intends", "may", "plan", "predicts", "projects", "should", "will" and
other similar expressions. All estimates and statements that describe
the Company's future, goals, or objectives, including Management's
assessment of future plans and operations, may constitute
forward-looking information under securities laws. Forward-looking
statements involve known and unknown risks and uncertainties which
include, but are not limited to: exploration, development and
production risks; assessments of acquisitions; reserve measurements;
availability of drilling equipment; access restrictions; permits and
licenses; aboriginal claims; title defects; commodity prices; commodity
markets; transportation and marketing of crude oil, liquids and natural
gas; reliance on operators and key personnel; competition; corporate
matters; funding requirements; access to credit and capital markets;
market volatility; cost inflation; foreign exchanges rates; general
economic and industry conditions; environmental risks; Kyoto protocol;
and government regulation and taxation.
Forward-looking statements relate to future events and/or performance
and although considered reasonable by Novus at the time of preparation,
may prove to be incorrect and actual results may differ materially from
those anticipated in the statements made. Novus does not undertake any
obligation to publicly update forward-looking information except as
required by applicable securities law.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/26/c6384.html
table border="0" valign="top" tr td colspan="9" bNOVUS ENER/bbG/bbY/bb /bbIN/bbC./bb /b /td /tr tr td /td /tr tr td Hugh G. Ross /td td /td td /td td /td td Ketan Panchmatia /td td /td td /td td /td td Julian Din /td /tr tr td President and CEO /td td /td td /td td /td td Chief Financial Officer /td td /td td /td td /td td VP Business Development /td /tr tr td (403) 218-8895 /td td /td td /td td /td td (403) 218-8876 /td td /td td /td td /td td (403) 218-8896 /td /tr /table p /p