Storm Resources Ltd. Announces Acquisition of Long Reserve Life Light Oil Pool in North Eastern B.C.
November 28 2011 - 5:32PM
Marketwired
STORM RESOURCES LTD. ("Storm") (TSX VENTURE:SRX) is pleased to
announce the execution of a purchase and sale agreement in relation
to the acquisition of 150 Boe per day in the Mica area of north
eastern British Columbia (the "Acquisition"). Production comprises
approximately 70% light oil (38 degrees API) and natural gas
liquids and 30% natural gas. Details of the Acquisition are as
follows:
-- Acquisition cost is $15.9 million and closing date is December 1, 2011
with an effective date of September 1, 2011. The purchase price will be
financed from existing cash resources and an expanded credit facility,
and is subject to customary adjustments;
-- in the first half of 2011, the field netback for the property averaged
$48.00 per Boe, operating costs were $14.30 per Boe, and the royalty
rate was 10%;
-- there are seven producing wells with an average annual decline of 6%;
-- working interest being acquired is 100%;
-- Storm management estimates that Discovered Petroleum Initially in Place
is approximately 7.0 million barrels of oil with recovery to date being
21% (an average of 210,000 barrels of oil has been produced to date from
each producing well);
-- drilling six infill wells and the initiation of a waterflood could
potentially lift production to 450 Boe per day, with future development
capital estimated to be $12.6 million;
-- the acquired asset contains an estimated 719,000 Boe of proved plus
probable reserves (70% light oil plus natural gas liquids) based on an
independent reserve report dated October 20, 2011 prepared by InSite
Petroleum Consultants Ltd. in accordance with National Instrument 51-101
(reserve estimate is based on forecast decline from existing producing
wells and does not include any upside from infill drilling or initiating
a waterflood).
The Acquisition underscores Storm's commitment to growing its
business in an environment of low natural gas prices through
product diversification and access to higher netback opportunities.
The Acquisition enhances Storm's opportunity base and provides
additional financial capacity to support future growth.
Storm Resources Ltd. began operations in August 2010. Storm is
headquartered in Calgary, Alberta and is active in the Horn River
Basin and Umbach areas of north eastern British Columbia, and at
Red Earth in north central Alberta.
READER ADVISORIES
Boe Presentation - For the purpose of calculating unit revenues
and costs, natural gas is converted to a barrel of oil equivalent
("Boe") using six thousand cubic feet ("Mcf") of natural gas equal
to one barrel of oil unless otherwise stated. Boe may be
misleading, particularly if used in isolation. A Boe conversion
ratio of six Mcf to one barrel ("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. All
Boe measurements and conversions in this report are derived by
converting natural gas to oil in the ratio of six thousand cubic
feet of gas to one barrel of oil. Mboe means 1,000 Boe.
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends"
and similar expressions are intended to identify forward-looking
information or statements. More particularly and without
limitation, this press release contains forward-looking statements
and information concerning the combined company's working capital
and bank facility, reserves, undeveloped land holdings and
anticipated benefits from the Transaction. The forward-looking
statements and information are based on certain key expectations
and assumptions made by Storm, including expectations and
assumptions concerning prevailing commodity prices and exchange
rates, applicable royalty rates and tax laws; future well
production rates and reserve volumes; the timing of receipt of
regulatory and shareholder approvals, the performance of existing
wells; the success obtained in drilling new wells; and the
sufficiency of budgeted capital expenditures in carrying out
planned activities; and the availability and cost of labour and
services. Although Storm believes that the expectations and
assumptions on which such forward-looking statements and
information are based are reasonable, undue reliance should not be
placed on the forward-looking statements and information because
Storm can give no assurance that they will prove to be correct.
Since forward-looking statements and information address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, the risks associated
with the oil and gas industry in general such as operational risks
in development, exploration and production; delays or changes in
plans with respect to exploration or development projects or
capital expenditures; the uncertainty of reserve estimates; the
uncertainty of estimates and projections relating to reserves,
production, costs and expenses; health, safety and environmental
risks; commodity price and exchange rate fluctuations; marketing
and transportation; loss of markets; environmental risks;
competition; incorrect assessment of the value of acquisitions;
failure to realize the anticipated benefits of acquisitions;
ability to access sufficient capital from internal and external
sources; failure to obtain required regulatory and other approvals;
and changes in legislation, including but not limited to tax laws,
royalties and environmental regulations. There are risks also
inherent in the nature of the proposed acquisition, including
failure to realize anticipated production or reserve increases; and
incorrect assessments of values or future capital and operating
costs.
This press release also contains forward-looking statements and
information concerning the anticipated timing for completion of,
and the effective date of the acquisition. Storm has provided these
anticipated dates in reliance on certain assumptions believed to be
reasonable at this time. Accordingly, readers should not place
undue reliance on the forward-looking statements and information
contained in this press release concerning these dates. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect
Storm's financial results are included in reports on file with
applicable securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com), and at Storm's website
(www.stormresourcesltd.com). The forward-looking statements and
information contained in this press release are made as of the date
hereof and Storm undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, unless so
required by applicable securities laws.
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.
Contacts: Storm Resources Ltd. Brian Lavergne President and
Chief Executive Officer (403) 817-6145 Storm Resources Ltd. Donald
McLean Chief Financial Officer (403) 817-6145 Storm Resources Ltd.
Carol Knudsen Manager, Corporate Affairs (403)
817-6145www.stormresourcesltd.com