Victory Energy Announces Significant Commercial Flows At Pinetop
Largest Single Flowing Oil Well in Company History
AUSTIN, Texas, Sept. 6, 2012 /PRNewswire/ -- Victory Energy Corporation (OTCQB: VYEY), through its partnership with Aurora Energy Partners, today announced that the Company has successfully completed the first of nine planned development wells at its recently announced 3D seismic-supported Pinetop prospect, located in Lea County, New Mexico.
The objective zone was drill stem tested with initial gross flow rates of over 400 barrels of oil per day and unmetered flow of 300 Mcf of natural gas per day. The well is now flowing oil to tanks at a rate of approximately 7,680 barrels of oil and 16,890 MCF of natural gas per month. Gas is currently being vented until a pipeline to sales connection is made. The Company expects the first well to be on production for at least three months before a decision is made to drill up to eight additional gross development wells on the held acreage.
Pre-drill gross recoverable reserve potential per well was estimated at 350,000 BOE to 450,000 BOE, with total recoverable reserve potential of 3,150,000 BOE to 4,050,000 BOE (9 wells). Based on these assumptions, total recoverable reserve potential to the Company's 2.344% net revenue interest could be 73,836 BOE to 94,932 BOE. In the coming months, Victory will commission a third party reserve analysis on this property which will contain more specific reserve estimates.
Kenny Hill , Victory Energy's CEO, stated, "During the first six months of 2012, the Company acquired four new prospects totaling 2,196 gross acres with the potential to add over 477,066 barrels of oil equivalent to the Company's future reserves and production. The Pinetop prospect was the first of these acquisitions to go into production. This is a great first step in the development of these resources."
Victory acquired a 4% Before Payout (BPO) working interest at a 3.125% net revenue interest, and a 3% After Payout (APO) working interest at a 2.344% net revenue interest in the initial well, with the company's interest in subsequent wells being its APO working interest. Total drilling and completion costs to the Company's interest are expected to be approximately $140,000 through the first well and $112,000 for each additional well. The Company paid a one-time acquisition fee of $53,307 for its proportional interest in the prospect.
Please note that cash revenue tends to trail initial production by 60-90 days due to gathering line connectivity or other logistical and commercial matters to deal with.
Please note that Victory Energy intends to use its website, www.vyey.com, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Such disclosures will be included on the Victory Energy website in the "Investor Relations" section. Accordingly, investors should monitor such portions of the Victory Energy website in addition to following press releases, SEC filings and public conference calls and webcasts.
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About Victory Energy Corporation
Victory Energy Corporation is engaged in the exploration, acquisition, development, and production of domestic oil and gas properties. The Company now leverages both internal capabilities and strategic industry relationships to acquire working interest positions in low-to-moderate risk oil and gas prospects. Current assets are held in partnership with Aurora Energy Partners, in which Victory has a 50% ownership interest and is the managing partner.
Future investment will focus primarily on oil or liquid-rich gas projects within longer-life reservoirs that offer lower F&D costs / BOE.
The Company had nine wells on production entering FY 2011 and seventeen on production at the end of the calendar year. Acreage held as of March 2012 provides a potential pipeline of 31 additional gross wells that could be drilled. The capital budget for 2012 includes 15 of those 31 wells. The Company also has line of sight to incremental projects beyond current acreage.
The Company's current producing oil and gas assets are located in the United States. Download the investor fact sheet for current summary of projects and activity. Victory Energy is current with its SEC filings and is a full reporting Company. The Company is traded under the ticker symbol VYEY on the OTCQB tier, operated by OTC Markets Group.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
There are forward-looking statements contained in this news release. They use such words as "intend," "will," "may," "expect," "believe," "plan," or other similar terminology. These statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results to be materially different than those expressed or implied in such statements. These factors include, but are not limited to: risks associated with the implementation of the Company's strategic growth plan; legislation and government regulation including the ability to obtain satisfactory regulatory approvals; conditions beyond the Company's control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company's customer base or acts of war or terrorism; availability and cost of materials and labor; demand for natural gas; cost and availability of capital; competition; the Company's overall marketing, operational and financial performance; economic and political conditions; the continued service of the Company's executive officer; adverse developments in and increased or unforeseen legal costs related to the Company's litigation; the success of the Company's strategic partnerships and joint venture relationships; the Company's ability to pay certain debts; adoption of new, or changes in, accounting policies and practices; adverse court rulings; results of other litigation in which the Company is involved; and other factors discussed from time to time in the Company's news releases, public statements and/or filings with the Securities and Exchange Commission. Forward-looking information is provided by Victory Energy Corporation pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. In addition, the Company disclaims any intent or obligation to update these forward-looking statements.
Victory Energy Corporation
Kenny Hill, CEO
Mark Biggers, CFO
Dennard Rupp Gray & Lascar, LLC
Ken Dennard / Ben Burnham
SOURCE Victory Energy Corporation
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