CALGARY, Aug. 27 /CNW/ -- /NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR DISSEMINATION IN THE U.S./ CALGARY, Aug. 27 /CNW/ -
Novus Energy Inc. ("Novus" or the "Company") (TSXV: NVS) announces
that it has filed its unaudited interim consolidated financial
statements and management's discussion and analysis ("MD&A") as
at and for the three and six months ended June 30, 2010. These may
be accessed through the SEDAR website www.sedar.com and at the
Company's website www.novusenergy.ca. Novus plans on using its
strong financial position to complete an aggressive drilling
program in its core Viking oil area of Dodsland, Saskatchewan. The
Company plans to focus the majority of its efforts over the near
term on developing these assets and pursuing complementary
acquisitions to consolidate its interests within the Dodsland area.
FINANCIAL HIGHLIGHTS - For the three months ended June 30, 2010,
Novus' gross revenue increased 284% to $3,087,877 compared to
$804,001 recorded in the comparative period in 2009. For the six
months ended June 30, 2010, gross revenue was $6,074,547, compared
to $1,715,221 in the comparative period of 2009, representing a
254% increase. - Funds flow used in operations was $686,199 in the
second quarter of 2010, versus $475,918 in the comparative three
month period of 2009. For the first half of 2010, funds flow used
in operations was $764,930, compared to $1,854,949 recorded in the
first half of 2009. - Novus' capital program, excluding non-cash
and business combination transactions, for the three month period
ended June 30, 2010, was $20,155,349, versus $328,639 spent in the
comparative period of 2009. Novus' capital program, excluding
non-cash and business combination transactions, for the first six
months of the year was $26,093,307 compared to $548,797 spent in
the first six months of 2009. - As at June 30, 2010, the Company
had no bank debt and had positive working capital of approximately
$23 million. OPERATIONAL HIGHLIGHTS - Average daily production for
the second quarter of 2010 increased 137% to 774 boe/d compared to
327 boe/d recorded in the corresponding period in 2009. Average
daily production for the first six months of 2010 was 742 boe/d, up
134% from the 317 boe/d recorded in the corresponding period in
2009. - Average crude oil and liquids production for the second
quarter of 2010 was up 318% to 322 bbls/d versus 77 bbls/d in the
comparative quarter of 2009. Natural gas production averaged 2,717
mcf/d for the second quarter of 2010, an 81% increase from 1,502
mcf/d in the comparative period of 2009. - Average crude oil and
liquids production for the first six months of 2010 was up 292% to
298 bbls/d versus 76 bbls/d in the comparative period of 2009.
Natural gas production averaged 2,669 mcf/d, an 85% increase from
1,444 mcf/d in the comparative period of 2009. - Current production
is approximately 1,225 boe/d, weighted 60% towards oil and liquids.
- During the second quarter of 2010, Novus participated in the
drilling of 10 Viking horizontal oil wells (10 net) in the Dodsland
area. - On April 19, 2010, the Company announced that it had closed
three separate transactions within its core Viking oil resource
play at Dodsland, Saskatchewan encompassing an aggregate 4,000
acres (approximately 6.25 sections) for the consideration of $3.85
million. - On May 3, 2010, the Company entered into a farm-in
agreement with a private oil and gas company to earn up to 16.25
net sections of land with petroleum and natural gas rights in the
Viking formation in the Dodsland area of Saskatchewan. In addition
to the farm-in, the Company also closed the acquisition of 640
acres of land (one section) in the Dodsland area. - On May 18,
2010, the Company successfully closed an offering of 22,730,000
common shares of Novus at a price of $1.10 per common share for
aggregate gross proceeds of approximately $25 million. - On June 2,
2010, Novus announced that it had closed three separate
acquisitions of assets within its core area of Dodsland,
Saskatchewan. Pursuant to the agreements, Novus acquired a total of
6,400 acres (10 sections) for aggregate proceeds of $2.6 million
and the issuance of 390,000 common shares of Novus. - On July 8,
2010 the Company announced that it closed an acquisition of assets
within its core area of Dodsland, Saskatchewan. Pursuant to the
acquisition agreement, Novus acquired 4,240 net acres
(approximately 6.5 net sections) of prospective land in the Viking
oil resource play. The purchase price for the acquired lands was
entirely payable through the issuance of 794,199 common shares of
Novus at an ascribed price of $0.80 per common share. - Novus now
controls 77 net sections in its Dodsland Viking core area, and has
a six year drilling inventory of more than 240 Viking horizontal
oil wells based upon a drilling density of four wells per section.
In the first half of 2010, Novus drilled 16 net horizontal Viking
oil wells. Completion operations were hampered by wet weather, and
production from the wells was not tied in until late in the second
quarter and early in the third quarter of the year. On July 8,
2010, the Company announced production figures of approximately 72
boe/d per well on its first five wells that had been on production
in excess of 30 days. These five wells have now been on stream for
in excess of 60 days, and Novus is pleased to announce that current
production is averaging approximately 74 boe/d per well. These
production figures include unconserved gas which is being flared
until early September when it is anticipated that these volumes
will be tied into the Company's soon to be completed battery and
flow lines. All 16 horizontal Viking wells drilled by Novus have
now been on production for over 30 days and are currently averaging
approximately 51 boe/d per well, including unconserved gas. Novus
is extremely pleased with the performance of 14 of these wells and
the stable nature of the production to date. The Company has
validated its Viking lands, with the drilling of successful wells
in the Flaxcombe, Whiteside, Kerrobert, Forgan, Avon Hills and
Dodsland regions. Economics are proving to be robust, and the
Company is content that it has proven a significant recoverable oil
resource to be present on its land base. With the solid results of
its initial drilling program and comfort in the production profiles
of its wells, Novus will embark on the next stage of its Viking
drilling program in mid September, and will drill a minimum of 11
wells (11 net). The Company currently has 76 wells surveyed in the
area, and plans an active drilling program for the balance of 2010
and 2011. Novus is currently planning the last phase of its
drilling program for 2010 and will provide an update to further
drilling plans later in the year. Pursuant to the successes the
Company experienced on its first phase of its drilling program in
the Dodsland area, Novus has determined that on the majority of its
future drilling operations it will drill approximately 600 meter
horizontal lateral legs using monobore technology with completion
operations employing 11-15 stage energized foam fracs of 13-14
tonnes of sand per stage. Novus has drilled, cased, completed and
tied-in the majority of its wells in this fashion for approximate
capital costs of $975,000 per well. 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. A
summary of financial and operational results for the three and six
month period ended June 30, 2010, along with the comparative
period, are outlined in the following table: Three months ended Six
months ended June 30 June 30 2010 2009 2010 2009
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Financial (000s, except per share amounts)
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Revenue 3,088 804 6,075 1,715
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Funds flow from (used in) operations (686) (476) (765) (1,855)
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per share - basic and diluted - (0.01) (0.01) (0.06)
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Net loss 4,120 1,415 6,944 10,562
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per share - basic and diluted 0.03 0.03 0.05 0.36
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Capital expenditures, net 20,155 329 26,093 549
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Working capital 22,868 5,461 22,868 5,461
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Weighted average shares outstanding 153,288 42,755 141,102 29,110
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Three months ended Six months ended June 30 June 30 Operational
2010 2009 2010 2009
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Production
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Oil & liquids (bbls/d) 322 77 298 76
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Gas (mcf/d) 2,717 1,502 2,669 1,444
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Oil equivalent (boe/d) 774 327 742 317
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Average realized prices
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Oil & liquids ($/bbl) 68.14 44.96 69.74 42.39
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Gas ($/mcf) 4.42 3.57 4.80 4.32
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Oil equivalent ($/boe) 43.81 26.96 45.21 29.89
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A summary of capital expenditures for the three and six month
period ended June 30, 2010, along with the comparative period is
outlined in the following table. Three months ended Six months
ended June 30 June 30 2010 2009 2010 2009
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Land acquisition/ retention $ 4,482,572 $ 63,928 $ 4,504,746 $
134,073 Geological, geophysical and seismic 242,100 - 364,609 6,787
Drilling and completions 11,859,464 56,049 16,868,869 370,800
Drilling royalty credits (64,913) - (267,237) - Equipping and
tie-ins 1,398,500 186,597 1,288,752 10,665 Property acquisitions,
net 2,211,039 - 3,135,455 4,407 Furniture and fixtures 26,587
22,065 198,113 22,065
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Total expenditures $20,155,349 $ 328,639 $26,093,307 $ 548,797
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The above figures are exclusive of the following non-cash and
business combination transactions: - February 9, 2010 - 325,000
common shares with an ascribed value of $286,000 issued pursuant to
a farm-in agreement at Dodsland, SK; - March 1, 2010 - 18,666,211
common shares with an ascribed value of $16,986,252 issued pursuant
to a business combination; - March 4, 2010 - $702,274 paid pursuant
to a business combination; - April 7, 2010 - $1,250,000 paid
pursuant to a business combination; and - May 27, 2010 - 390,000
common shares with an ascribed value of $351,000 issued pursuant to
a lease acquisition agreement at Dodsland, SK. NON-GAAP FINANCIAL
MEASUREMENTS Included in this press release are references to funds
flow from (used in) operations, a financial measure commonly used
in the oil and gas industry. This measure has no standardized
meaning, is not defined by Canadian generally accepted accounting
measures ("GAAP"), and accordingly is referred to as a non-GAAP
measure. This supplemental measure is used by management to assess
operating results between periods and between peer companies as it
provides an indication of the 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
determines funds flow from (used in) operations as cash provided by
operating activities prior to changes in non-cash working capital
items and asset retirement expenditures. Funds flow from (used in)
operations has been presented for information purposes only and
should not be considered an alternative to, or more meaningful
than, cash flow from operating activities as determined in
accordance with GAAP. 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. The determination of
Novus' funds flow from (used in) operations may not be comparable
to similarly titled measures reported by other companies. 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' current financial position of having
$23 million of positive working capital and unused lines of credit
will allow for the exploitation of its drilling inventory and
expansion of the Company's opportunity suite through internally
generated prospects and strategic light oil acquisitions. Novus
Shares trade on the TSX Venture Exchange under the symbol NVS.
Novus currently has 166.4 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", "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. NOVUS ENERGY INC.,
Hugh G. Ross, President and CEO, (403) 218-8895; Ketan Panchmatia,
Chief Financial Officer, (403) 218-8876; Julian Din, VP Business
Development, (403) 218-8896
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