TIDMRSOX
RNS Number : 5918X
Resaca Exploitation Inc
17 February 2012
FOR IMMEDIATE RELEASE 17 FEBRUARY 2012
Resaca Exploitation, Inc.
("Resaca" or "the Company")
Reserves Update, Production Update, and Bone Springs Farmout
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 2011 for the Company's oil and gas properties, to
provide an update on the Company's production, and to announce the
farmout of rights to potential reserves in the Bone Springs
formation.
Reserves Update
As of 31 December 2011, Resaca's proved and probable ("2P")
reserves were 28.1 million barrels ("MMbbls") of oil and 15.4
billion cubic feet ("Bcf") of natural gas, for a total of 30.6
million barrels of oil equivalent ("MMboe"). This represents 0.7
MMboe increase in Resaca's 2P reserves since 30 June 2011 after
realization of 0.1 MMboe of production during the six months ended
31 December 2011. The Company's proved reserves represented 52
percent of the 2P reserves as of 31 December 2011. Additionally,
Resaca's possible reserves were 6.5 MMbbls of oil and 3.3 Bcf of
natural gas as of 31 December 2011 for total proved, probable and
possible ("3P") reserves of 34.6 MMbbls of oil and 18.7 Bcf of
natural gas (37.6 MMboe). Resaca's 3P reserves increased 1.8 MMboe
since 31 December 2011. All reserves are calculated on a net
revenue interest basis (working interest volumes, less
royalties).
Resaca's proved developed producing ("PDP") reserves as of 31
December 2011 were 3.3 MMbbls of oil and 2.6 Bcf of natural gas,
for a for a total of 3.7 MMboe. This represents a 0.5 MMboe
increase in PDP reserves since 30 June 2011 after realization of
0.1 MMboe of production during the six months ended 31 December
2011. This represents a 16 percent increase in PDP reserves, after
consideration of fiscal year production. The increase in PDP
reserves is primarily attributable to the continued capital
expenditure program at the Company's Cooper Jal Unit, the Jordan
San Andres Unit, and the Edwards Grayburg Unit and the acquisition
of the Langlie Jal Unit, net of the sale of the Grand Clearfork
Unit.
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 (CO(2) injection) as
of 30 June 2011. Together, these reports provide a complete
analysis of Resaca's reserves as of 30 June 2011. The Haas and
Williamson reports consider all properties except for the Langlie
Jal Unit, which was acquired in August of 2011. In conjunction with
that acquisition, the Company received a reserve report considering
reserves from primary, secondary and tertiary recovery on the
Langlie Jal Unit from W. Craig Gaines ("Gaines"). In preparing the
31 December 2011 reserve study, the Company's internal reservoir
engineers performed a mechanical "roll forward" of the Haas,
Williamson, and Gaines studies, adjusting for activity conducted
during the period from 1 July 2011 to 31 December 2011 and for
updated costs estimates. In addition, appropriate reserve
classifications were adjusted for activity conducted during the
period from 1 July 2011 to 31 December 2011 and the timing of
certain investment activity was adjusted. 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
Primary and Secondary
Recovery 13.7 12.9 15.8 $366.5
CO(2) Recovery 0 0 0 0
---------- -------- ------ -----------
Total Proved Reserves 13.7 12.9 15.8 $366.5
========== ======== ====== ===========
Probable Reserves
Primary and Secondary
Recovery 2.9 2.5 3.3 $65.1
CO(2) Recovery 11.5 0 11.5 140.8
---------- -------- ------ -----------
Total Probable Reserves 14.4 2.5 14.8 $205.9
========== ======== ====== ===========
Total 2P Reserves 28.1 15.4 30.6 $572.4
========== ======== ====== ===========
Possible Reserves
Primary and Secondary
Recovery 4.1 3.3 4.6 $103.9
CO(2) Recovery 2.4 0 2.4 17.7
---------- -------- ------ -----------
Total Possible Reserves 6.5 3.3 7.0 $121.6
========== ======== ====== ===========
Total 3P Reserves 34.6 18.7 37.6 $694.0
========== ======== ====== ===========
The reserve estimates are based on the unweighted average
12-month prices as of 31 December 2011 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 30 June 2011 of $96.19 per barrel
for oil and $4.12 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.
Production Update
For the month of February 2012 to date, Resaca's daily
production has averaged 750 boe per day.
Farmout Of Bone Springs Rights
Resaca recently farmed out its 50% working interest in deep
rights underlying its 320 acre Cotton Draw property in Southeastern
New Mexico to one of the most active exploration and production
companies in the Permian Basin. The Cotton Draw property lies on
top of the Bone Springs formation, which has recently been one of
the most active oil plays in the United States. Horizontal wells
drilled in the immediate area have realized initial production
rates in excess of 1,000 boe per day. Up to two horizontal wells
could be drilled on the Cotton Draw property. Resaca retained a
4.25% royalty interest in the deep rights and has a right to
receive an additional 12.5% working interest (a 9.375% net revenue
interest) in each well drilled on the property after the well pays
out. After payout of each well, Resaca would have a total net
revenue interest of 13.625%. Resaca expects at least one Bone
Springs well to be drilled on its Cotton Draw property in calendar
year 2012.
Commenting on the reserves and production update and the Bone
Springs Farmout, J.P. Bryan, Chairman and CEO of Resaca, said:
"We are pleased with the continued success at Copper Jal, Jordan
San Andres, and Edwards Grayburg and the acquisition of Langlie Jal
Unit and initial production increases we have seen at this property
in a short period of time. These achievements have contributed to
growth in both our 2P reserves and our PDP reserves over the last
eighteen months.
The farmout of the Bone Springs potential beneath our Cotton
Draw is a potentially significant event for Resaca. This farmout
will allow Resaca to participate in up to two potentially prolific
wells without using any of its capital."
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 (Investor Relations) +44 (0)20 7466 5000
Tim Thompson
Helen Chan
Ben Romney
finnCap Limited (Nomad and Broker) + 44 (0) 20 7600 1658
Sarah Wharry, Corporate Finance
Victoria Bates, Corporate Broking
About Resaca
Resaca is an independent oil and gas development and production
company based in Houston, Texas. Resaca is focused 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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