CALGARY, Aug. 26, 2011 /CNW/ -- /NOT FOR DISTRIBUTION TO U.S. NEWS
WIRE SERVICES OR DISSEMINATION IN THE U.S./ CALGARY, Aug. 26, 2011
/CNW/ - Novus Energy Inc. ("Novus" or the "Company") (TSXV: NVS)
announces that it has filed its unaudited condensed interim
financial statements and management's discussion and analysis
("MD&A") as at and for the three and six months ended June 30,
2011. These may be accessed through the SEDAR website www.sedar.com
and at the Company's website www.novusenergy.ca. Novus is pleased
to report that its 2011 Viking oil drilling program continues to
progress on schedule. The Company has now successfully
drilled 39 Viking oil wells in the Dodsland area of Saskatchewan,
with 32 of these wells having been completed. Thirty of the
wells that have been completed have been placed on production, with
the remainder to follow. Costs in the greater Dodsland area
continue to meet the Company's budget, with estimated per well
costs for drilling and completions on the Company's first 32 wells
averaging approximately $835,000. Total estimated field level
corporate production as of August 25, 2011 was approximately 2,625
boe/d, with approximately 78% of production comprised of oil and
liquids. Novus expects production will continue to steadily
increase through the balance of the year as additional wells are
drilled and placed on production. The Company expects to show
significant production growth in the second half of the year and
expects to comfortably meet its 2011 exit rate guidance of 3,000
boe/d, weighted 80% to oil and liquids production, early in the
fourth quarter. With recent land acquisitions in the Dodsland area,
Novus now controls 124.25 net sections of Viking rights, and has
identified 601 net risked, undrilled Viking oil locations.
FINANCIAL HIGHLIGHTS -- For the three months ended June 30, 2011,
Novus' gross revenue increased 168% to $8.29 million compared to
$3.09 million recorded in the comparative period in 2010. For the
six months ended June 30, 2011, gross revenue was $17.16 million,
compared to $6.08 million in the comparative period of 2010,
representing a 182% increase. -- Funds flow from operations was
$2.94 million in the second quarter of 2011, versus an outflow of
$711 thousand for the comparative three month period of 2010. For
the first half of 2011, funds flow from operations was $6.15
million, compared to an outflow of $796 thousand recorded in the
first half of 2010. -- Novus' capital program for the three month
period ended June 30, 2011, was $18.13 million, versus $20.13
million spent in the comparative period of 2010. Novus' capital
program for the first six months of the year was $30.38 million,
compared to $26.06 million spent in the first six months of 2010.
These figures are exclusive of the non-cash transactions and
business combinations, which occurred in 2010. -- Subsequent to
quarter end, the Company increased its credit facilities to $60
million, consisting of a $50 million revolving operating demand
loan and a $10 million acquisition/development demand loan. The
Company's borrowing capacity has increased substantially from the
$28 million of credit facilities which were available to it at the
beginning of 2011. -- At June 30, 2011, the Company had net debt of
$23.85 million. -- The Company currently has outstanding 22.64
million in-the-money warrants expiring March 31, 2012, which, upon
exercise, would result in proceeds of $16.98 million being realized
by the Company. OPERATIONAL HIGHLIGHTS -- Average daily production
for the second quarter of 2011 increased 70% to 1,318 boe/d
compared to 774 boe/d recorded in the corresponding period in 2010.
Average daily production for the first six months of 2011 was 1,430
boe/d, up 93% from the 742 boe/d recorded in the corresponding
period in 2010. -- Average crude oil and liquids production for the
second quarter of 2011 was up 162% to 844 bbls/d versus 322 bbls/d
in the comparative quarter of 2010. Natural gas production averaged
2,841 mcf/d for the second quarter of 2011, a 5% increase from
2,717 mcf/d in the comparative period of 2010. -- Average crude oil
and liquids production for the first six months of 2011 was up 215%
to 940 bbls/d versus 298 bbls/d in the comparative period of 2010.
Natural gas production averaged 2,940 mcf/d, a 10% increase from
2,669 mcf/d in the comparative period of 2010. -- Current
production is approximately 2,625 boe/d, weighted 78% towards oil
and liquids. -- During the second quarter of 2011, Novus
participated in the drilling of 19 wells (19.0 net), 14 of which
were Viking horizontal oil wells in the greater Dodsland area.
Fifteen wells (15.0 net) were completed, with six of them onstream
by June 30, 2011. -- Novus now controls 124.25 net sections in its
Dodsland Viking core area, and has a multi-year risked drilling
inventory of 601 net Viking horizontal oil wells. -- Novus acquired
a 100% working interest in approximately 55 net sections of land
with rights in the oil bearing Birdbear formation of southwestern
Saskatchewan. This acquisition complements the 24 net sections of
land Novus currently owns targeting this formation. These lands are
located in the immediate vicinity of the Company's Dodsland Viking
lands and provide the Company with an exciting opportunity to
target another prolific, emerging oil resource play, while
maintaining operational synergies. The Company will likely be
dedicating some of this year's capital expenditure program towards
the shooting of 3D seismic and the potential drilling of a number
of Birdbear locations. -- The upgrades at Novus' owned and operated
facilities at Whiteside and Avon Hills have now been completed. Gas
production from the Whiteside area is currently being conserved
with a number of additional pipelines being surveyed to handle new
solution gas volumes from our current drilling program. In the
first half of 2011, Novus drilled 17 net horizontal Viking oil
wells. Completion operations were hampered by wet weather,
and production from the wells was not tied in until the end of the
second quarter and early in the third quarter of the year.
With completion operations delayed, the Company's Viking oil
drilling program did not materially contribute to production levels
in the second quarter of 2011. Production for the second
quarter of 2011 was also impacted by prolonged third party plant
maintenance at Wembley which resulted in production from the area
being shut-in for nearly six weeks of the quarter. Prior to,
and subsequent to being shut-in, the Wembley property was producing
approximately 180 boe/d. Novus is pleased with the performance of
the wells and the stable nature of the production to date from its
current drilling program. The Company has drilled wells in its
Flaxcombe, Whiteside, Kerrobert, Forgan, Plato, Plenty and Dodsland
regions that are expected to meet or exceed internal type curve
forecasts of 48 bbls/d of initial oil production. The Company now
has several wells with at least 60 days of production history, and
these wells are now averaging 64 bbls/d of oil per well.
Results from the Flaxcombe sub area in the Dodsland region have
been extremely encouraging. The Company has determined that
these previously undrilled lands are characterized by two distinct
cycles in the Viking formation. The Company has now drilled
horizontal wells targeting both the lower and upper
cycle. Current production rates from wells in this area
which have been on production for at least 60 days are 80 bbls/d of
oil per well. Virgin pressures realized on these wells have
been up to 7,600 KPa which are amongst the highest pressures the
Company has recorded in any of its Viking wells drilled thus
far. Novus has mapped over ten sections of its lands where
both cycles are present and expects this area to add at least 80
drilling locations to its existing drilling inventory of 601 net
Viking oil locations. Reserves and production growth will
also increase as development of the two distinct Viking cycles
progresses. Production from the recently drilled wells has
far exceeded expectations, and is supportive of the longer term
potential the Company believes the area exhibits. 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. Novus is also excited to commence
drilling operations shortly on its first horizontal Viking light
oil well in Alberta. Based upon success, the Company would
pursue numerous other locations in the area throughout 2012. Novus
will be operating approximately 98% of the capital expenditures it
incurs in 2011, which gives the Company significant flexibility on
the timing and scale of its capital program. Novus is well
positioned financially, and as operator of the vast majority of its
capital program, the Company has the flexibility to accelerate its
drilling with continued success. A summary of financial and
operational results for the three and six month periods ended June
30, 2011, along with the comparative periods, are outlined in the
following table: Three months ended June Six months ended June 30
30 2011 2010 2011 2010 Financial (000s, except per share amounts)
Revenue 8,286 3,088 17,157 6,075 Funds flow from 2,938 (711) 6,146
(796) (used in) operations per share - 0.02 - 0.04 (0.01) basic and
diluted Net loss 760 4,498 2,092 6,335 per share - - 0.03 0.01 0.04
basic and diluted Capital 18,130 20,131 30,382 26,063 expenditures,
net Net debt 23,849 22,882 23,849 22,882 Weighted average 170,018
153,288 169,138 141,102 shares outstanding Three months ended June
Six months ended June 30 30 Operational 2011 2010 2011 2010
Production Oil & liquids 844 322 940 298 (bbls/d) Gas (mcf/d)
2,841 2,717 2,940 2,669 Oil equivalent 1,318 774 1,430 742 (boe/d)
Sales price per unit Oil & liquids 94.36 68.14 88.38 69.74
($/bbl) Gas ($/mcf) 4.01 4.42 3.97 4.80 Oil equivalent 69.09 43.81
66.27 45.21 ($/boe) INTERNATIONAL FINANCIAL REPORTING STANDARDS On
January 1, 2011, the Company adopted International Financial
Reporting Standards ("IFRS") for financial reporting purposes,
using a transition date of January 1, 2010. The unaudited condensed
interim financial statements as at and for the three and six months
ended June 30, 2011, have been prepared in accordance with IFRS.
Comparative information has been restated from the previously
published financial statements which were prepared in accordance
with Canadian Generally Accepted Accounting Principles ("GAAP").
NON-GAAP FINANCIAL MEASUREMENTS Included in this press release are
references to certain financial measures commonly used in the oil
and gas industry, such as funds flow from (used in) operations,
operating netbacks and net debt. These measures have no
standardized meanings, are not defined by IFRS or Canadian GAAP,
and accordingly are referred to as non-GAAP measures. 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. Novus determines funds flow from (used in)
operations as cash provided by (used in) operating activities prior
to changes in non-cash working capital items and decommissioning
expenditures. The determination of the Company's' funds flow
from (used in) operations may not be comparable to the same as
reported by other companies. Operating netbacks are calculated by
deducting royalties, field operations and transportation and
marketing expenses from production revenue. Operating
netbacks are used by management to assess operating results between
periods and between peer companies as they provide an indication of
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' reported amounts may not be
comparable to similarly titled measures reported by other
companies. These terms should not be considered an
alternative to, or more meaningful than, cash provided by
operating, investing and financing activities or net income as
determined by IFRS or Canadian GAAP as an indicator of the
Company's performance or liquidity. Net debt is calculated as
current assets less all current liabilities, including the current
portion of any bank debt. The Company monitors net debt as
part of its capital structure. 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 Shares trade on the TSX Venture
Exchange under the symbol NVS. Novus currently has 169.6 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", "expects",
"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. To view this news
release in HTML formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/August2011/26/c6384.html
table border="0" valign="top" tr td colspan="9" bNOVUS
ENER/bbG/bbY/bb /bbIN/bbC./bb /b /td /tr tr td /td
/tr tr td Hugh G. Ross /td td /td td /td td
/td td Ketan Panchmatia /td td /td td /td td
/td td Julian Din /td /tr tr td President and CEO /td td /td
td /td td /td td Chief Financial Officer /td td
/td td /td td /td td VP Business Development
/td /tr tr td (403) 218-8895 /td td /td td /td td
/td td (403) 218-8876 /td td /td td /td td
/td td (403) 218-8896 /td /tr /table p /p
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