RedWater Energy Corp. ("RedWater") (TSX VENTURE:RED) is pleased to
report record financial and operating results for the three and
nine month periods ended September 30, 2011. RedWater's interim
condensed financial statements and related management's discussion
and analysis for the three and nine months ended September 30, 2011
have been filed and are available on the SEDAR website at
www.sedar.com and may also be obtained on RedWater's website at
www.redwaterenergy.com.
Highlights
-- Begun its 4 well (4 net) Manville drilling program late in the third
quarter at Redwater. One well was spudded at the end of the third
quarter with the remaining three wells drilled in early October
-- Increased production to 123 barrels of oil equivalent per day ("boepd")
or 68% percent higher than the second quarter of 2011. For the nine
period, production was 93% percent higher than in the previous year
-- 66 boepd of oil in the third quarter vs. 34 boepd of oil in the
second quarter of 2011
-- 342 Mcf per day of natural gas in the third quarter vs. 232 Mcf per
day of natural gas in the second quarter of 2011
-- Fund flows from operations was ($136,976) for the third quarter compared
to ($256,507) for second quarter of 2011
-- Credit facility increased from $500,000 to $1,200,000 during the quarter
-- Cash on hand at September 30, 2011 was $1,427,653. In addition, the
Company had an unfunded bank line of $1,200,000 million
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
----------------------------------------
Operations
Production
Oil (bbls/d) 66 21 53 34
Natural Gas (Mcf/d) 342 102 230 79
----------------------------------------
BOEPD 123 38 91 47
Average Selling Price
Oil ($/bbls) $68.20 $65.92 $72.99 $70.85
Natural Gas ($/Mcf) 3.53 3.41 3.60 3.87
----------------------------------------
BOE ($/BOE) $46.45 $45.53 $51.27 $57.53
Operating Netback ($/BOE) $11.77 $13.64 $16.38 $26.81
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
----------------------------------------------------
Financial
Petroleum and Natural
Gas Revenues, net of
royalties $480,830 $155,326 $1,169,370 $699,441
Fund Flow from
Operations (136,976) (187,941) (382,356) (288,625)
Per Share, Basic &
Diluted (0.01) (0.02) (0.02) (0.03)
Income (loss) (413,952) (271,451) 371,797 (569,958)
Per Share, Basic &
Diluted (0.02) (0.02) 0.01 (0.07)
Capital Expenditures 1,936,801 616,516
Total Assets 10,282,683 3,711,586
Shareholders' Equity 7,933,113 1,572,615
Common Shares
Outstanding
Basic 26,030,092 11,450,938 25,081,956 8,649,912
Diluted 26,331,163 11,450,938 25,415,805 8,649,912
Share Trading
High 0.49 -- 0.55 --
Low 0.32 -- 0.32 --
Close 0.35 -- 0.35 --
Trading Volume 738,000 -- 4,134,300 --
Operational Review
RedWater was very active in the third quarter focused on
increasing the number of producing wells, extending the Company's
portfolio of drilling prospects and raising capital to exploit
those opportunities and sustain future growth. The Company
recompleted and tied-in 10 wells in the quarter. The majority of
these came on production on in mid-August. In addition, the Company
began its four well drilling program in the Redwater area targeting
Manville light oil. The first well was spudded late in the third
quarter with drilling completed early in the fourth quarter. These
wells are currently in varying stages of completion and are
expected to be brought on production in the fourth quarter.
Drilling costs averaged $350,000 per well, below management
estimates of $450,000 per well.
Additionally in the fourth quarter, management will continue its
efforts to bring on tested production in Redwater. The Company
expects to begin producing two recompleted Manville oil wells in
mid-December once a pipeline has been completed to conserve
solution gas. The Company also in the process of tying-in a
recompleted Manville gas well over the next 30 to 60 days. These
wells are expected to add 100 to 140 boepd.
Outlook
RedWater plans to continue to focus on developing its Manville
and Viking assets in Redwater and accordingly will dedicate the
majority of its capital spending towards these assets. The Company
is in the process of updating its 2012 capital expenditure program.
Finally, the Company continues to acquire complementary land
positions in its core areas.
Business of RedWater Energy Corp.
RedWater Energy Corp. is an emerging oil and gas exploration and
development company. RedWater is engaged in the acquisition,
enhancement and exploration of conventional oil and gas projects in
Western Canada with a focus on developing high working interest
light oil opportunities. RedWater's core properties are located in
Redwater, Westlock, Fairydell-Bon Accord and Long Coulee areas of
Alberta. www.redwaterenergy.com.
Cautionary Statements
Forward-looking information and statements
This news release contains certain forward-looking information
and statements within the meaning of applicable securities laws.
The use of any of the words "expect", "anticipate", "continue",
"estimate", "may", "will", "project", "should", "believe", "plans",
"intends" and similar expressions are intended to identify
forward-looking information or statements. In particular, but
without limiting the forgoing, this news release contains
forward-looking information and statements pertaining to the
following; the timing for completion and equipping of wells; the
volume and product mix of RedWater's oil and gas production and its
ability to develop RedWater's oil resource properties, the use of
the RedWater's cash flow from operations and expanded credit
facilities; the number of wells to be drilled and potential
development drilling and number of potential oil development
locations.
In addition, forward-looking statements or information are based
on a number of material factors, expectations or assumptions of
RedWater which have been used to develop such statements and
information but which may prove to be incorrect. Although RedWater
believes that the expectations reflected in such forward-looking
statements or information are reasonable, undue reliance should not
be placed on forward-looking statements because RedWater can give
no assurance that such expectations will prove to be correct. In
addition to other factors and assumptions which may be identified
herein, assumptions have been made regarding, among other things:
results from drilling and development activities consistent with
past operations; the continued and timely development of
infrastructure in areas of new production; continued availability
of debt and equity financing and cash flow to fund RedWater's
current and future plans and expenditures; the impact of increasing
competition; the general stability of the economic and political
environment in which RedWater operates; the timely receipt of any
required regulatory approvals; the ability of RedWater to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; drilling results; the ability of the operator of
the projects in which RedWater has an interest in to operate the
field in a safe, efficient and effective manner; the ability of
RedWater to obtain financing on acceptable terms; field production
rates and decline rates; the ability to replace and expand oil and
natural gas reserves through acquisition, development and
exploration; the timing and cost of pipeline, storage and facility
construction and expansion and the ability of RedWater to secure
adequate product transportation; future commodity prices; currency,
exchange and interest rates; regulatory framework regarding
royalties, taxes and environmental matters in the jurisdictions in
which RedWater operates; the ability of RedWater to successfully
market its oil and natural gas products that all necessary
regulatory approvals will be obtained as and when required, that
there will be no material adverse change in RedWater's affairs or
laws, rules or regulations relating to RedWater, its securities or
business, there will be no regulatory proceedings involving
RedWater or any of its directors or officers, or any cease trade or
other order prohibiting or restricting trading in RedWater's
securities, no major national or international event will have
occurred that has or would reasonably be expected to have a
material adverse effect on financial markets or the business,
operations or affairs of RedWater.
The forward-looking information and statements included in this
news release are not guarantees of future performance and should
not be unduly relied upon. Such information and statement,
including the assumptions made in respect thereof, involve known
and unknown risks, uncertainties and other factors that may cause
actual results or events to defer materially from those anticipated
in such forward-looking information or statements including,
without limitation: changes in commodity prices; changes in the
demand for or supply of RedWater's products; unanticipated
operating results or production declines; changes in tax or
environmental laws, royalty rates or other regulatory matters;
changes in development plans of RedWater or by third party
operators of RedWater's properties, increased debt levels or debt
service requirements; inaccurate estimation of RedWater's oil and
gas reserve and resource volumes; limited, unfavorable or a lack of
access to capital markets; increased costs; a lack of adequate
insurance coverage; the impact of competitors; and certain other
risks detailed from time-to-time in RedWater's public disclosure
documents, (including, without limitation, those risks identified
in this news release and RedWater's public company documents filed
on SEDAR).
The forward-looking information and statements contained in this
news release speak only as of the date of this news release, and
RedWater does not assume any obligation to publicly update or
revise any of the included forward-looking statements or
information, whether as a result of new information, future events
or otherwise, except as may be expressly required by applicable
securities laws.
Funds flow from operations are not measures that have any
standardized meaning prescribed by IFRS or Canadian GAAP and
accordingly are referred to as non - GAAP measures. Therefore,
these measures may not be comparable to similar measures presented
by other issuers. These measures have been described and presented
here and in our MD&A in order to provide shareholders and
potential investors with additional information regarding the
Corporation's liquidity and its ability to generate funds to
finance its operations. Management utilizes "Funds flow from
operations" as a key measure to assess the ability of the
Corporation to finance operating activities and capital activities.
All references to funds flow from operations throughout this report
are calculated based on cash flows from operating activities before
changes in non-cash working capital. Cash flows from operating
activities are the closest comparable figure which is calculated in
accordance with IFRS and Canadian GAAP.
BOE Equivalent
Barrel of oil equivalents or BOEs may be misleading,
particularly if used in isolation. A BOE conversion ratio 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.
Contacts: RedWater Energy Corp. Gary Waters President & CEO
(403) 995-0465gwaters@redwaterenergy.com