THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS.
Bowood Energy Inc. ("Bowood" or the "Company") (TSX VENTURE:BWD) is pleased to
announce its financial and operational results for the year ended December 31,
2010 and an operational update on current activity.
2010 Highlights
-- Increased undeveloped land by 300% from 2009, including the acquisition
of a significant land position in the rapidly emerging Alberta Bakken
Petroleum System fairway ("Alberta Bakken").
-- Increased Total Proved Reserves and Total Proved plus Probable Reserves
over 2009 by 26% and 10%, respectively.
-- The Company is well positioned to execute its 2011 capital program with
$5.6 MM of positive working capital and an unutilized $8.0 MM bank
credit facility at year-end.
-- Increased oil weighting of production to 18% in January 2011 from 1% in
January of 2010.
-- The Company was named one of the top 50 fastest growing companies on the
TSX venture exchange.
In 2010, the Company acquired a significant land position in the Alberta Bakken
play, with a combination of freehold and crown leasing (approximately 30,000
additional acres) and the acquisition of a 60,640 acre lease on the Blood Tribe
Reserve. In order to accelerate exploration of the these lands, we entered into
a farmout and equalization agreement with an industry joint venture partner
Legacy Oil + Gas Inc. ("Partner") whereby the Partner paid approximately $8
million for 50% of Bowood's interest in 52 sections of land, and further
committed to drill up to 16 wells to earn a 50% working interest in the rest of
the Company's Alberta Bakken acreage. With the equalization, Company land
holdings on the Alberta Bakken are approximately 100,000 net acres. Total
undeveloped land at December 31, 2010 was 143,487 gross (125,966 net) acres.
In 2010, Bowood drilled 8 (5.35 net) wells, 5 of which were in the Armada area.
Bowood received Good Production Practice (GPP) approval from the ERCB in the
Armada Basal Quartz Q Pool and drilled two follow up successful development
wells in the same pool. Both wells came on production in January 2011. A third
well resulted in the discovery of a new oil pool at Armada with initial
production of over 180 bpd (63 bpd net). Another Armada well discovered a new
Mannville gas pool with initial production of over 1 MMCF/d (600 mcf/d net). The
8 gross wells drilled, 5.35 net wells resulted in reserve additions of 383 mboe
on a Total Proved basis and 407 mboe on a P+P basis and increased the Company's
reserve life index (RLI) from 5.6 years to 7.9 years.
2011 Operational Update
Production
For the first quarter of 2011, field estimated production averaged 520 boed, 19%
oil and NGLs. The increase in oil production was a result of starting up four
(2.55 net) new wells at Armada in January. This is a 13% increase over Q4 2010
production of 458 boed.
Drilling - Armada Oil Property
The Company licensed two new wells in Q1 2010 at Armada. These wells are
anticipated to spud after spring break.
Drilling - Alberta Bakken
The Partner operated Spring Coulee 15-25-3-23W4 well spudded on March 22, 2011.
The vertical pilot hole has now reached total depth and four cores were
recovered successfully. The pilot hole has now been plugged back and the rig is
drilling in the horizontal leg.
A surface lease has been obtained on the Kipp (Blood) 8- 30-8-23W4 horizontal
location and licensing is underway. The well is anticipated to spud prior to
August 31, 2011.
Financial Highlights
Certain selected financial and operational information for the three months and
year ended December 31, 2010 is set out below and should be read in conjunction
with Bowood's Financial Statements and Management Discussion and Analysis ("MD &
A").
The Company has filed its audited consolidated Financial Statements and related
MD & A for the year ended December 31, 2010 with the Canadian securities
regulatory authorities on SEDAR. In addition, Bowood will file its Annual
Information Form, which includes Bowood's statement of reserves data and other
oil and gas information for the year ended December 31, 2010 as mandated by
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities of
the Canadian Securities Administrators. An electronic copy of these materials
will be available under Bowood's issuer profile on SEDAR at www.sedar.com and on
the Company's website at www.bowoodenergy.ca.
Three Months Year
Ended Ended
December 31, December 31,
Financial highlights 2010 2010
(all amounts in Cdn $ except common share
data)
Petroleum and natural gas revenue 1,095,671 5,247,202
Per share - basic 0.004 0.026
- diluted 0.004 0.026
Funds flow from operations 314,890 898,286
Per share - basic 0.001 0.004
- diluted 0.001 0.004
Net loss (79,242) (2,761,312)
Per share - basic (0.000) (0.014)
- diluted (0.000) (0.014)
Capital expenditures 9,341,004 14,506,098
Net debt (surplus) (excluding fixed commodity
contracts) (5,552,955) (5,552,955)
Shareholders' equity 42,993,541 42,993,541
Total assets 50,784,334 50,784,334
Common share data:
Weighted average basic 251,326,851 202,649,400
Weighted average diluted 251,326,851 202,649,400
Issued and outstanding 274,283,373 274,283,373
Three Months Year
Ended Ended
December 31, December 31,
Operating Highlights 2010 2010
(6:1 boe conversion)
Average daily production
Natural gas (mcf/d) 2,522 2,900
Liquids (Oil & NGLs) (bbls/d) 38 38
Oil equivalent (boe/d) 458 521
Production (boe/d) per million shares 2 2
Average sales price (including fixed commodity
contracts):
Natural gas ($/mcf) 4.64 4.83
Liquids (Oil & NGLs) ($/bbl) 70.55 67.59
Oil equivalent ($/boe) 31.39 31.80
Operating cost ($/boe) 9.03 12.65
Operating netback ($/boe) (including fixed
commodity contracts) 20.03 16.51
Wells drilled - gross (net):
Gas 2 (2.00) 4 (2.80)
Oil -- 4 (2.55)
Suspended -- --
D & A -- --
Total 2 (2.00) 8 (5.35)
Reserves
Bowood's reserves were evaluated at December 31, 2010 by GLJ Petroleum
Consultants ("GLJ"), an independent engineering firm. GLJ's evaluation was
conducted in accordance with standards set out in the Canadian Oil and Gas
Evaluation Handbook and is compliant with National Instrument 51-101 ("NI
51-101"). All reserve numbers are Company gross(i) before royalties.
Bowood Energy Light and
2010 Reserves (before Medium Heavy
royalties) (forecast Gas Oil Oil NGLs Total
prices) mmcf mbbls mbbls mbbls mboe
----------------------------------------------------------------------------
December 31, 2010
Proved producing 4,029 97 4 16 788
Proved developed non-
producing 1,177 58 0 6 261
Proved undeveloped 488 27 0 2 110
----------------------------------------------------------------------------
Total Proved 5,694 182 4 24 1,159
Probable 2,697 86 1 15 552
----------------------------------------------------------------------------
Total Proved plus Probable 8,391 269 6 39 1,711
----------------------------------------------------------------------------
Note: Columns may not add due to rounding
(i)"Gross" reserves means the Company's working interest (operating and
non-operating) share before deduction of royalties payable to others and without
including any royalty interest of the Company
Reserve Reconciliation
The following tables provides a reconciliation of the Company's gross reserves
of oil, natural gas, and natural gas liquids for the year ended December 31,
2010 versus the year ending December 31 2009.
Light and
Medium Natural
Crude Natural Gas
Oil Heavy Oil Gas Liquids BOE
--------------------------------------------------
(Mbbl) Mbbl (MMcf) (Mbbl) (Mboe)
Proved
----------------------------------------------------------------------------
Balance at Dec. 31, 2009 64 2 5,060 11 921
Extensions and Improved
Recovery 79 - 397 3 147
Technical Revisions 2 4 223 8 48
Discoveries 47 - 1,096 6 236
Acquisitions - - 2 - 0
Dispositions - - - - -
Economic Factors - - (25) - (4)
Production (9) (1) (1,058) (3) (190)
--------------------------------------------------
Balance at Dec. 31, 2010 182 4 5,694 24 1,159
--------------------------------------------------
--------------------------------------------------
Light and Natural
Medium Natural Gas
Crude Oil Heavy Oil Gas Liquids BOE
--------------------------------------------------
(Mbbl) Mbbl (MMCF) (Mbbl) (Mboe)
Proved plus Probable
----------------------------------------------------------------------------
Balance at Dec. 31, 2009 193 3 8,019 24 1,557
Extensions and Improved
Recovery 19 - 182 - 49
Technical Revisions (1) 4 (409) 9 (57)
Discoveries 66 - 1,695 9 358
Acquisitions - - 3 - -
Dispositions - - - - -
Economic Factors - - (40) - (7)
Production (9) (1) (1,058) (3) (190)
--------------------------------------------------
Balance at Dec. 31, 2010 269 6 8,391 39 1,711
--------------------------------------------------
Note: Columns and rows may not add due to rounding
NET PRESENT VALUES OF FUTURE NET REVENUE AS OF DECEMBER 31, 2010
(Forecast Prices and Costs)
Before Income Tax ($000s)
--------------------------------------------------
Discounted at
Reserve Category 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
Proved
Developed Producing 13,892 12,052 10,654 9,566 8,700
Developed Non-Producing 6,055 5,055 4,306 3,731 3,280
Proved Undeveloped 1,844 1,491 1,220 1,007 839
Total Proved 21,791 18,598 16,180 14,305 12,819
Probable 14,161 10,088 7,572 5,916 4,771
Total Proved and Probable 35,953 28,686 23,752 20,221 17,590
After Income Tax ($000s)
--------------------------------------------------
Discounted at
Reserve Category 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
Proved
Developed Producing 13,892 12,052 10,654 9,566 8,700
Developed Non-Producing 6,055 5,055 4,306 3,731 3,280
Proved Undeveloped 1,844 1,491 1,220 1,007 839
Total Proved 21,791 18,598 16,180 14,305 12,819
Probable 12,532 8,882 6,659 5,212 4,219
Total Proved and Probable 34,323 27,479 22,839 19,517 17,038
Note: Columns may not add due to rounding
It should not be assumed that the undiscounted and discounted future net
revenues estimated by GLJ which are set forth above represent fair market
value.
GLJ's reserves evaluation is based upon the following price forecast
(effective January 1, 2011)
Medium and Light Crude Oil Natural Gas NGL
------------------------------------------------------------
WTI
Cushing Edmonton Cromer Alberta
Oklahoma Par Price Medium Gas
40 40 29 Reference
degrees degrees degrees Price AECO - C Pentanes Exchange
API API API Plantgate Spot Plus Rate
Year (US$/bbl) ($/bbl) ($/bbl) ($/MMBtu) ($/MMBtu) ($/bbl) ($US/$Cdn)
---------------------------------------------------------------------------
2011 88.00 86.22 82.78 3.89 3.92 90.54 0.98
2012 89.00 89.29 83.04 4.37 4.51 91.96 0.98
2013 90.00 90.92 83.64 4.91 5.06 92.74 0.98
2014 92.00 92.96 84.59 5.35 5.52 94.82 0.98
2015 95.17 96.19 87.54 5.80 5.97 98.12 0.98
2016 97.55 98.62 89.75 6.09 6.28 100.59 0.98
2017 100.26 101.39 92.26 6.31 6.50 103.42 0.98
2018 102.74 103.92 94.57 6.45 6.65 106.00 0.98
2019 105.45 106.68 97.08 6.60 6.80 108.82 0.98
2020 107.56 108.84 99.04 6.75 6.95 111.01 0.98
Escalated at 2.0% per year thereafter.
Annual General Meeting
Bowood Oil and Gas Inc. has scheduled its Annual General and Special Meeting for
Friday June 3rd, at 3:00 pm MST at the Calgary Petroleum Club.
About Bowood Energy Inc.
With operations based in Calgary, Alberta, Bowood Energy Inc. is a TSX-V Tier 2
corporation. Through its wholly owned subsidiary, Bowood Energy Ltd., the
Company is engaged in the acquisition, exploration, development, and production
of oil and gas resources. Current projects are in the Province of Alberta.
Bowood Energy Inc.
Robert Mercier, President & CEO
Reader Advisories
Forward-Looking Statements: This news release contains certain forward-looking
statements, including but not limited to, management's assessment of future
plans and operations, the anticipated spudding dates of various wells, capital
expenditures and the timing thereof and expected timing and results from
operations, that involve substantial known and unknown risks, uncertainties and
assumptions, certain of which are beyond the Company's control. Such risks,
uncertainties and assumptions include, without limitation, those associated with
oil and gas exploration, development, exploitation, production, marketing,
processing and transportation, loss of markets, volatility of commodity prices,
currency fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, delays resulting from or inability to obtain required regulatory
approvals and ability to access sufficient capital from internal and external
sources, the impact of general economic conditions in Canada, the United States
and overseas, industry conditions, changes in laws and regulations (including
the adoption of new environmental laws and regulations) and changes in how they
are interpreted and enforced, increased competition, the lack of availability of
qualified personnel or management, fluctuations in foreign exchange or interest
rates, stock market volatility and market valuations of companies with respect
to announced transactions and the final valuations thereof, and obtaining
required approvals of regulatory authorities. The Company's actual results,
performance or achievements could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no assurances can
be given that any of the events anticipated by the forward-looking statements
will transpire or occur, or if any of them do so, what benefits that the Company
will derive there from. Readers are cautioned that the foregoing list of factors
is not exhaustive. Additional information on these and other factors that could
affect the Company's operations and financial results are included in reports,
including the Company's annual information form for the financial year ended
December 31, 2010, on file with Canadian securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com). All subsequent
forward-looking statements, whether written or oral, attributable to the Company
or persons acting on its behalf are expressly qualified in their entirety by
these cautionary statements. Furthermore, the forward-looking statements
contained in this news release are made as at the date of this news release and
the Company does not undertake any obligation to update publicly or to revise
any of the included forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by applicable
securities laws.
BOE may be misleading, particularly if used in isolation. A BOE conversion of 6
Mcf: 1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead.
For more information on Bowood Energy Inc. (TSX VENTURE:BWD) and to see the
updated corporate presentation please visit our website at:
http://www.bowoodenergy.ca.
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