PostRock Provides Operations Update
April 08 2013 - 6:30PM
PostRock Energy Corporation (Nasdaq:PSTR) today
provided an update on its production and capital projects for the
first quarter of 2013. During the quarter, approximately $9 million
was spent on development. Net oil sales during the quarter averaged
slightly more than 360 Bbls a day, a 77% increase from the first
quarter of 2012. At March 31st, net oil production exceeded
500 Bbls per day. Net gas sales during the period declined 13% from
the prior year to an average of 41.3 MMcf per day. The decline in
gas production was due to suspension of development spending on gas
projects since September 2011 due to low prices. The gas production
decline was amplified by challenging weather during the first
quarter. Based on PostRock's first quarter 27:1 realized price
equivalency ratio of oil to natural gas, production in the first
quarter increased very slightly from the fourth quarter of 2012. If
the projects described below continue to be successful, a more
meaningful rate of increase should be achieved as the year
progresses.
During the first quarter, the Company placed 55 new wells and 42
recompletions on production. Two recompletions were located in
Central Oklahoma with the other projects all being in the Cherokee
Basin. While project returns vary, overall, IRR's at the lease
level are expected to range from 30% - 50%. Based on current
oil prices and the high success rate on these projects, we expect
to drill an additional 150 oil wells and recomplete 20 additional
wells in the Cherokee Basin during the remainder of 2013.
PostRock also recently initiated a modest leasing program in
Central Oklahoma, where the Company currently holds approximately
2,500 net acres. While the leasehold position is modest, the
area represented the majority of the Company's year-end 2012 SEC
oil reserves. PostRock expects to begin its 2013 Central
Oklahoma drilling program during the third quarter. In total,
the Company plans to drill six wells, including two horizontal
wells, in Central Oklahoma during the remainder of 2013. The
wells will focus on currently producing horizons; however, we hope
to test a prospective horizon that does not produce locally but
that has been successfully developed elsewhere in the state.
At current gas prices, we do not expect to invest any material
amount of capital in our extensive Cherokee Basin gas reserves.
However, the recent rise in gas prices combined with ongoing
operating cost reductions may cause us to test a small number of
projects. We expect material natural gas development to become
attractive once gas prices reach the $4.50 to $5.00 per Mcf
level.
Commenting, Terry W. Carter, the Company's President and CEO,
said, "While our Cherokee Basin oil projects are very modest in
size, they are low risk and we have a significant inventory of
them. I am pleased to report that production from the Cherokee
Basin wells is, on average, slightly ahead of expectations while
costs are coming down. With the Cherokee Basin oil development
program now running smoothly, we will begin to focus on our Central
Oklahoma acreage. These projects are expected to have a more
significant impact on the Company's overall reserves and
production. If we can build on our recent production and
development trend, we believe we can begin to materially enhance
the value of our shareholders' investment."
PostRock Energy Corporation is engaged in the acquisition,
exploration, development and production of oil and natural gas,
primarily in the Cherokee Basin of Kansas and Oklahoma. The Company
owns and operates over 3,000 wells and nearly 2,200 miles of gas
gathering lines in the Basin. It also owns and operates oil
producing properties in Central Oklahoma and minor oil and gas
producing properties in the Appalachian Basin.
The PostRock Energy Corp. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7221
Forward-Looking Statements
Opinions, forecasts, projections or statements, other than
statements of historical fact, are forward-looking statements that
involve risks and uncertainties. Forward-looking statements in this
announcement are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance
that such expectations will prove to be correct. Actual results may
differ materially due to a variety of factors, some of which may
not be foreseen by PostRock. These risks and other risks are
detailed in the Company's filings with the Securities and Exchange
Commission, including risk factors listed in the Company's Annual
Report on Form 10-K and other filings with the SEC. The Company's
filings with the SEC may be found at www.pstr.com or www.sec.gov.
By making these forward-looking statements, the Company undertakes
no obligation to update these statements for revisions or changes
after the date of this release.
CONTACT: Company Contact:
David J. Klvac
Chief Financial Officer
dklvac@pstr.com
(405) 815-4304
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