Rio Vista Energy Partners Provides Operational Update and Provides Company Overview in Regulatory Filing
March 31 2008 - 7:41AM
Business Wire
Rio Vista Energy Partners L.P. (NASDAQ: RVEP), an energy services
master limited partnership focused on the development of oil and
gas properties in Oklahoma and the terminalling and transportation
of bulk chemical and petroleum products in Virginia, today
announced that it has filed a presentation regarding the Company�s
recent acquisitions and business operations in a regulatory filing
made with the Securities and Exchange Commission on Form 8-K. Rio
Vista intends to make this presentation available on its website in
the near future (www.riovistaenergy.com). In addition, the Company
today provided an interim operations update. Management Comments
Ian Bothwell, Rio Vista�s Acting Chief Executive Officer said,
�Good progress is being made in both the development of the
recently acquired oil and gas assets in Oklahoma and the expansion
of new contracts and growth opportunities in our terminalling and
transportation business in Virginia. A number of projects on our
Oklahoma assets are well under way, including infrastructure
improvements and additions, existing well tie-ins, workovers and
new drilling. A large drilling program is currently being organized
for 2008 to continue to develop both the shallow Booch sand and the
Hartshorne Coal. We are anticipating a significant increase in our
production from these assets as a result of this activity. In
addition, we have been actively pursuing new contracts and growth
opportunities for our Virginia operations and continue to be
excited about the revenue growth anticipated from this activity. We
continue to evaluate new assets for acquisition and look forward to
success in this area much like we experienced in 2007.� Operations
Update Oklahoma A pipeline was laid to tie an existing well, the
Groseclose 2V-17 (100% Working Interest), adding 100 mcfd of gross
production. A pipeline was laid in the Brooken Field to bypass an
existing pipeline thereby reducing back pressure on the area.
Additionally, this new interconnection has decreased Rio Vista�s
transportation cost in the Brooken Field. Rio Vista Operating LLC
has taken over operations of the Oklahoma producing properties.
Concorde Resources has recently drilled a successful coal bed
methane well (Chaffin 1-26) on joint acreage with Rio Vista
(Working Interest 25%). The well has been completed and is
currently testing. The Belt 2V-24 (Working Interest 34%) has been
deepened and logged in the Savannah Sand. The well has been frac
stimulated and tested. The gas pipeline interconnection will be
completed during April 2008. The Cannon 1-31 (deep test in the
Crouch Field) has been drilled and cased. Openhole logs confirm the
existence of multiple productive zones. Completion of this well
began in March. The Donna 1 (vertical Hartshorne Coal in the
Brooken Field) has been drilled and cased. The completion of this
well will begin in early April 2008. Rio Vista will have an 80%
Working Interest in this well. The Tom 1 (vertical Hartshorne Coal
in the Brooken Field) has been drilled and cased. The well has also
been perforated and is currently being tested. Rio Vista will have
an 80% Working Interest in this well. The ACE #2-36 (horizontal
Hartshorne Coal in the Canadian Field) will spud in early April.
Rio Vista has a 51% Working Interest in this well. Regional
Recently contracted with an existing customer for additional
terminalling and transportation. The contract term is for 5 years
and is expected to provide increases in both terminalling and
hauling revenues. Recently contracted with other customers for
transportation services. Contracts range from 1 year to 2 years and
are renewable thereafter. Contracts are expected to provide
increases in both terminalling and hauling revenues. Recently
registered with the US Government Central Contractor data base with
status as a small business contractor and vendor capable of storing
and hauling bulk chemical and petroleum products. Such registration
allows Regional to bid for government contracts within the
Department of Defense and the Defense Energy Support Center and any
other applicable agency. Regional�s operations are strategically
located near many significant military facilities (army and navy).
Regional expects that this registration will provide opportunities
for significant additional revenues. Since ownership of Regional,
Regional�s plant and hauling operations have been operating more
efficiently, with increased driver utilization during the forth
quarter of 2007. Regional�s current �Safestat� number is 14.6 which
is considerably lower than the average of Regional�s competitors of
approximately 35.3. �Safestat� is a numerical grading system that
is administered by the US Department of Transportation. It
considers factors such as roadside DOT inspections, traffic
citations, etc. and is relied upon by insurance companies, state
police, DOT, competitors, and potential customers in grading
Regional. About Rio Vista Energy Partners L.P. Rio Vista is a
master limited partnership focused primarily on acquiring and
developing oil and gas exploration, production and transportation
assets. Through its subsidiaries, Rio Vista currently owns certain
leasehold interests of oil and gas producing properties and
associated pipeline gathering systems in East Central Oklahoma. Rio
Vista is also engaged in liquid bulk storage, transloading and
transportation of chemicals and petroleum products through its
assets and operations in Hopewell, Virginia. Rio Vista seeks to
grow primarily through the acquisition of qualified oil and gas
assets. Penn Octane Corporation (OTCBB: POCC) owns 75% of Rio Vista
GP LLC, the general partner of Rio Vista. Forward-Looking
Statements Certain of the statements in this news release are
forward-looking statements, including statements regarding the
operation status of Rio Vista�s oil and gas properties, including
future production of oil and gas from Rio Vista�s properties in
East Central Oklahoma and the liquid bulk storage, transloading and
transportation of bulk chemicals and petroleum business in
Hopewell, Virginia. Although these statements reflect Rio Vista's
beliefs, they are subject to uncertainties and risks that could
cause actual results to differ materially from expectations. The
acquisition of the properties in East Central Oklahoma may not
prove successful and has substantially increased Rio Vista�s and
its subsidiaries� indebtedness and contingent liabilities, and may
present integration difficulties. Continuation and expansion of
production may require unforeseen capital investment. Future
production may be lower than anticipated, and actual natural gas
reserves may prove lower than estimated. If Rio Vista does not
receive sufficient revenues from the use of its assets, Rio Vista
would suffer material adverse consequences to its business,
resulting in reduced cash available for distributions. Rio Vista�s
credit facility with TCW prohibits distributions by Rio Vista�s
Oklahoma subsidiaries during the first 12 months of the credit
facility and limits those distributions to 75% of defined available
cash flow thereafter. As a result, Rio Vista may not have
sufficient available cash to pay minimum quarterly distributions.
In addition, Rio Vista may not distribute sufficient cash to meet
the tax obligations of unitholders associated with the ownership of
common units. If Rio Vista does not have sufficient capital
resources for acquisitions or opportunities for expansion, Rio
Vista�s growth will be limited. Rio Vista may be unable to complete
future acquisitions of qualified oil and gas assets or other
transactions and, even if completed, acquisitions may not prove
successful. Additional information regarding risks affecting Rio
Vista's business may be found in Rio Vista's most recent reports on
Form 8-K, Form 10-Q and Form 10-K and its registration statement on
Form S-3 filed with the Securities and Exchange Commission on
February 13, 2008, and in Penn Octane Corporation�s most recent
reports on Form 8-K, Form 10 Q and Form 10-K filed with the
Securities and Exchange Commission.
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