TIDMRSOX
RNS Number : 7388A
Resaca Exploitation Inc
07 February 2011
for IMMEDIATE release 7 february 2011
Resaca Exploitation, Inc.
("Resaca" or "the Company")
Reserves and Corporate Update
Resaca (AIM: RSOX), the oil and natural gas production,
exploitation, and development company focused on the Permian Basin
in the USA, is pleased to announce an updated reserve study as of
31 December 2010 for the Company's oil and gas properties and to
provide an update on the Company's recent and planned
activities.
Reserves Update
As of 31 December 2010, Resaca's proved and probable ("2P")
reserves were 27.1 million barrels ("MMbbls") of oil and 14.7
billion cubic feet ("Bcf") of natural gas, for a total of 29.6
million barrels of oil equivalent ("MMboe"). The Company's proved
reserves represented 48% of the 2P reserves. Additionally, Resaca's
possible reserves were 5.5 MMbbls of oil and 3.5 Bcf of natural gas
as of 31 December 2010 for total proved, probable and possible
("3P") reserves of 32.6 MMbbls of oil and 18.2 Bcf of natural gas
(35.7 MMboe). All reserves are calculated on a net revenue interest
basis (working interest volumes, less royalties).
This semi-annual reserve study was prepared by the Company's
internal reservoir engineers. Resaca commissioned Haas Petroleum
Engineering Services, Inc. ("Haas") to prepare a reserve report for
its primary and secondary recovery (water injection) reserves and
Williamson Petroleum Consultants, Inc. ("Williamson") to prepare a
reserve report considering only those additional reserves which
could be recovered through tertiary recovery (CO2 injection) as at
30 June 2010. Together, these reports provide a complete analysis
of Resaca's reserves. In preparing the 31 December 2010 reserve
study, the Company's internal reservoir engineers performed a
mechanical "roll forward" of the Haas and Williamson studies
adjusting for activity conducted during the period from 1 July 2010
to 31 December 2010 and for updated costs estimates. Details of the
reports are set out in the table below.
NPV @10%
Natural Discount
Oil Gas $MM
(MMbbls) (Bcf) MMboe (Pre-Tax)
---------- -------- ------ -----------
Proved Reserves
Haas 12.2 12.5 14.3 $257.3
Williamson 0 0 0 0
---------- -------- ------ -----------
Total Proved Reserves 12.2 12.5 14.3 $257.3
========== ======== ====== ===========
Probable Reserves
Haas 2.0 2.2 2.4 $54.2
Williamson 12.9 0 12.9 86.6
---------- -------- ------ -----------
Total Probable Reserves 14.9 2.2 15.3 $140.8
========== ======== ====== ===========
Total 2P Reserves 27.1 14.7 29.6 $398.1
========== ======== ====== ===========
Possible Reserves
Haas 4.2 3.5 4.8 $86.1
Williamson 1.3 0 1.3 8.8
---------- -------- ------ -----------
Total Possible Reserves 5.5 3.5 6.1 $94.9
========== ======== ====== ===========
Total 3P Reserves 32.6 18.2 35.7 $493.0
========== ======== ====== ===========
Corporate Update
On 7 January 2011, Resaca received funding on its two new credit
facilities, which were announced on 23 December 2010. Resaca
received $20 million from Chambers Energy Capital, L.P. and NGP
Capital Resources Company as a single draw on a four-year unsecured
credit facility. Also, the Company made an initial draw of $22
million on its new three-year $75 million senior secured revolving
credit facility with Regions Bank, which has an initial borrowing
base of $33 million based on the Company's reserves. These new
credit facilities have improved the Company's liquidity, reduced
its cash interest costs, and added available borrowing capacity for
development capital and acquisitions to implement the Company's
plans to increase production and proved reserves. After completion
of these financings, Resaca had approximately $14 million of
available liquidity.
With funding from the Company's new credit facilities, the
Company has initiated a $13 million capital program that will be
implemented over the next nine months. Resaca plans to build off
its investment and success at Cooper Jal, including the waterflood
response from increased water injection, the success of Phase I of
its refrac program, and its investment in infrastructure upgrades.
This investment and upgrading have materially increased the
production and recovery rates at Cooper Jal. The Company's
near-term capital plan includes projects that should produce
immediate production increases and also includes projects that
should provide longer-term production growth and position certain
properties for eventual CO2 floods. The near-term capital program
is focused on increasing production and shifting of reserves from
the proved undeveloped and possible reserve classes to the proved
producing reserve classes.
At the Cooper Jal property, the Company's plan is to perform 15
refracs as Phase II of the refrac program. The Company plans to
expand and optimize the existing waterflood program by cleaning out
and stimulating 17 injector wells, increasing the water injection
rate to 25,000 bw/d, and converting five plugged and abandoned
wells to water injection wells. The Company also intends to
increase artificial lifting capabilities on 14 producing wells at
Cooper Jal to produce more fluids from the existing producing
wells, convert four plugged and abandoned wells to producing wells,
and upgrade facilities and infrastructure at the property.
At the Jordan San Andres Unit, the Company plans to deepen four
existing wells and open the lower zone in one well to access
currently non-producing reserves. The Company also plans to
reactivate a waterflood on a portion of this unit, cleanout and
stimulate four water injection wells, and upgrade this property's
facilities and infrastructure.
At the Edwards Grayburg Unit, the Company intends to reactivate
the waterflood in an effort to shift possible reserves to proved
producing reserves and cleanout and stimulate eight producing
wells.
At the Company's Grand Clearfork Unit, plans include waterflood
enhancements and optimization and one producing well
recompletion.
December 2010 production from the Company's properties was 644
boe/d.
The Company expects to release its interim results for the six
months ended 31 December 2010 on or about 31 March 2010.
Commenting on the reserves and corporate update, J.P. Bryan,
Chairman and CEO of Resaca, said:
"Despite our limited capital resources over the last two years,
due to our ongoing efforts our reserve base has remained the same.
Our properties have reserve lives in excess of forty years and
continue to produce steady, predictable cash flows. With the
completion of our financing transactions, we have improved our
financial condition and now have the capital necessary to implement
our plans to grow the company both in terms of production and
reserves. We look forward to building upon our waterflood
improvement at Cooper Jal, the development of our other waterflood
projects, and the pursuit of low risk exploitation projects on
several fields that we believe will significantly increase
production in the near term."
For further information please contact:
Resaca Exploitation, Inc.
J.P. Bryan, Chairman and Chief Executive
Officer +1 713-753-1300
John J. ("Jay") Lendrum, III, Vice Chairman +1 713-753-1400
Dennis Hammond, President and Chief
Operating Officer +1 713-753-1281
Chris Work, Chief Financial Officer +1 713-753-1406
Buchanan Communications (Investor Relations) +44 (0)20 7466 5000
Tim Thompson
Chris McMahon
Ben Romney
Seymour Pierce Limited (Nomad and Joint
Broker) +44 (0)20 7107 8000
Jonathan Wright
Richard Redmayne
RBC Capital Markets (Joint Broker) +44 (0)207 653 4000
Martin Eales
About Resaca
Resaca is an independent oil and gas development and production
company based in Houston, Texas. Resaca is focussed on the
acquisition and exploitation of long-life oil and gas properties,
utilizing a variety of primary, secondary and tertiary recovery
techniques. Resaca's current properties are located in the Permian
Basin of West Texas and Southeast New Mexico. Additional
information is available at www.resacaexploitation.com.
In accordance with the AIM Rules, the information in this
announcement has been reviewed and approved by Dennis Hammond,
President. Mr. Hammond has a Bachelor of Science degree in
Petroleum Engineering, is a registered professional engineer in the
State of Texas, and has over 30 years relevant experience within
the sector.
The reserve estimates are based on the unweighted average
12-month prices as of 31 December 2010 under the revised SEC rules,
calculated as the unweighted arithmetic average of the
first-day-of-the-month oil and natural gas prices for each month
within the 12-month period ended 31 December 2010 of $79.43 per
barrel for oil and $4.38 per MMbtu for natural gas, and are further
adjusted by field for quality, transportation fees, and regional
price differentials. The reserves are calculated "before tax" and
consider the anticipated costs to develop and produce. The
estimates of reserves and future revenue were prepared in
accordance with the definitions and guidelines set forth in the
March 2007 Petroleum Resources Management System as sponsored and
prepared by the Oil and Gas Reserves Committee of the Society of
Petroleum Engineers.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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