Enhanced Oil Resources Announces Third Quarter Improved Operating Performance and Provides Operations Update for the Third Quarter of 2013
HOUSTON, Nov. 26, 2013 /PRNewswire/ - Enhanced Oil Resources Inc. (TSXV: EOR) (OTCQX: EORIF) ("EOR" or the "Company") is pleased to report its operating and financial results for the three and nine months ended September 30, 2013 (all amounts in US dollars).
- Revenue of $3.1 million up 25% over 2012 with 99% generated from crude oil sales. This compares to $2.5 million for the same period last year. The increase in revenue was primarily due to higher sales volume coupled with higher oil prices;
- The sales volume and average oil prices for the quarter were 38,907 barrels of oil equivalent (boe) and $101.13 /boe, respectively. Sales volume and average oil prices were 37,497 boe and $82.84 /boe for the same period in 2012, respectively;
- Production costs per boe decreased 35% under 2012 to $23.87, including production taxes of $8.37 /boe. Production costs and taxes per boe for the same period in 2012 were $36.54 and $6.81, respectively;
- Workover expenses decreased 93% under 2012 to $5.08 /boe. Workover expenses per boe for the same period in 2012 were $75.92boe. The decrease was primarily due to the cessation of the sub-pump recovery activities on the Crossroads #303 well. The hole was sidetracked during the 4Q of 2012;
- Operating netback was $54.12 /boe compared to $(44.17) /boe for the same period in 2012;
- The net comprehensive loss for the quarter was $0.3 million compared to a $3.2 million loss for the same period in 2012. The decrease in loss was primarily due to higher sales volume, higher oil prices, and lower workover expenses partially offset by higher G&A expenses;
- EBITDA of $0.6 million, the highest in Company history.
For the nine months ended September 30, 2013, the Company reported:
- Revenue of $8.0 million, up 16% over 2012 with 99% generated from crude oil sales. This compares to $6.9 million for the same period last year. The increase in revenue was primarily due to higher sales volume coupled with higher oil prices;
- Year-to-date sales volumes and average oil prices were 111,979 boe and $90.09 /boe, respectively. Sales volumes and average oil prices for the same period in 2012 were 101,408 boe and $85.72 /boe, respectively;
- Production costs per boe decreased 11% under 2012 to $26.02, including production taxes of $7.42 /boe. Production costs and taxes per boe for the same period in 2012 were $22.13 and $7.10, respectively;
- Year-to-date operating netback was $42.77 /boe compared to $11.55 /boe in 2012;
- The net comprehensive loss for the nine month period was $1.6 million ($0.01 per share) compared to $4.3 million ($0.03 per share) for the same period in 2012. The decrease in loss was primarily due to higher sales volume, higher oil prices, and lower workover expenses partially offset by higher G&A expenses;
- EBITDA of $0.8 million, the highest in Company history.
Oil production during October has averaged 390 barrels of oil per day (bopd) while September production averaged 422 bopd. At the Company's Crossroads field, oil production has averaged 260 bopd during October and 280 bopd during September. At the Milnesand field, oil production for October and September has averaged approximately 78 and 79 bopd, respectively, similar to averages from last quarter. After 15 months of oil production from the MSU #141 and #522 horizontal wells, production continues at approximately 17 bopd per well, consistent with last month's rates.
Crossroads production averaged approximately 260 bopd during October, a decrease of approximately 20 bopd over September levels. We currently have approximately 80 bopd shut in at the Crossroads field due to down hole failures at the #102 (30 bopd) and most recently at the #202 well (50 bopd). In addition, approximately 120 mcf gas (20 boepd) is shut in due to a mechanical failure and fire that occurred in September 2013 at the Saunders Gas Processing Plant, upstream from our field. We have been told that the gas facility will be back on line before the end of the year. A workover program to repair the #102 and #202 wells is expected to commence during December. As previously reported, the Crossroads #106 well was successfully converted to a second water injector well in early August and is currently taking water at a rate of approximately 4,000 bwpd. Total water handling at Crossroads has averaged in excess of 11,000 bwpd since the #106 well was brought online.
After approximately fifteen months of production from the MSU #141 and #522 horizontal wells, we continue to see consistent production rates of approximately 17-18 bopd per well; within our pre-drill expectations and considerably higher than the original vertical wells drilled to develop the field over forty years ago.
The Company has recently been granted a further six-month Agreed Compliance Order (ACO) from the State of New Mexico for the period December 2013 to May 2014. With this ACO in place the Company can now move forward with the horizontal drilling program announced earlier this year, pending rig availability and finalizing of funding. We expect to be on the ground preparing well locations within the next few weeks. The initial drilling program anticipates at least 2 wells being drilled and stimulated prior to the yearly no drill period of March to June. The first well to be drilled is expected to be the #525 well, located due south of the recently drilled #522 well and will have a targeted horizontal length of approximately 4,000 ft.
The Company intends to re-enter the Morgan Federal A #6 well during late December and conduct a modern fracture stimulation of the San Andres interval. The operation will be targeting improved production by opening up additional area outside that produced to date. This will be the first modern day frac conducted in the field, and if successful, will lead to several more wells being worked over during next year.
Commenting on the results, Barry Lasker, President and Chief Executive Officer said: "Our Q3 numbers show the continuation of the improvement seen in the first and second quarters as we continue executing the plan to improve our production and field wide operations. We have increased production in 2013 by 10% to over 112,000 boe (410 boe/d; 98% crude oil) for the nine months ended September 30, which represents the highest sales rate in company history. With the recent approval of the ACO for the Milnesand and Crossroads fields we are now in a position to begin the much anticipated lateral drilling program at Milnesand and two workovers at the Crossroads field. A rig is being contracted with an expected start-up date in December 2013. We anticipate initiating the program on the Crossroads #202 well before moving off to begin the two well horizontal program at Milnesand."
About Enhanced Oil Resources Inc.
Enhanced Oil Resources Inc. (TSX.V: EOR; OTCQX: EORIF) trades in Canada on the TSX Venture Exchange under the symbol "EOR" and is quoted in the United States on OTCQX under the symbol "EORIF". Enhanced Oil Resources Inc. is an early-stage company, with a principal goal of increasing crude oil and natural gas production through enhanced oil recovery ("EOR") and infill drilling projects it is initiating in the Permian Basin.
Certain statements contained herein are "forward-looking statements" and "forward-looking information" under applicable securities laws, including statements regarding beliefs, plans, expectations or intentions regarding the future relating to Enhanced Oil Resources Inc.'s operations, business prospects, expansion plans and strategies.
Forward-looking information typically contains statements with words such as "intends", "anticipate", "estimate", "expect", "potential", "could", "plan", "continue", "scheduled" or similar words suggesting future outcomes. Readers are cautioned not to place undue reliance on forward-looking statements because it is possible that expectations, predictions, forecasts, projections and other forms of forward-looking information will not be achieved. Forward-looking statements are based on the opinion and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Although Enhanced Oil Resources believes that the expectations reflected in such forward-looking statements are reasonable, Enhanced Oil Resources can give no assurance that such expectations will prove to be correct, that our workover operations at Crossroads will be resolved, that the lateral wells will be drilled as expected or result in commercial production or that current oil production will continue or increase as expected or indicated. Readers should refer to Enhanced Oil Resources' current filings, which are available at www.sedar.com, for a detailed discussion of these factors, risks and uncertainties. The forward-looking statements or information contained in this news release are made as of the date hereof and Enhanced Oil Resources undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable laws or regulatory policies.
Certain financial measures, namely Netback and EBITDA, are not prescribed and do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures by other companies. A netback is a per barrel (or mcf) computation determined by deducting royalties, production expenses, transportation and selling expenses from the oil or gas sales price to measure the average net cash received from the barrels or mcf sold. EBITDA refers to income (loss) before interest, income taxes, depletion, depreciation, amortization and accretion and is often referred to as "cash flow from operations".
ON BEHALF OF THE BOARD OF DIRECTORS
Barry D Lasker, CEO
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
SOURCE Enhanced Oil Resources Inc.