Second Wave Petroleum Ltd fka SCS

[NYBob]

Second Wave Petroleum Inc. Announces Filing of 2011 First Quarter Financial Results

http://www.cnxmarketlink.com/en/releases/archive/June2011/14/c5959.html

TSX Venture Exchange: SCS 82,899,295 Common Shares
CALGARY, June 14, 2011 /CNW/ - Second Wave Petroleum Inc. ("Second Wave"
or the "Company") is pleased to announce the filing of its interim financial
statements and management's discussion and analysis ("MD&A") for the quarter
ended March 31, 2011, which have been filed on SEDAR at www.sedar.com and are
also available on the Company's website at www.secondwavepetroleum.com.
Year to Date Highlights
<<

-- Obtained Judy Creek Pekisko Resource Assessment, effective April 30,
2011, with third party estimates of Total and Recoverable Petroleum
Initially in Place in the Pekisko formation under Second Wave's 100%
working interest lands at Judy Creek as described in the Company's news
release dated May 17, 2011.
-- Signed a strategic joint venture and farm out agreement focused on its
Judy Creek Beaverhill Lake light oil play pursuant to which the Company
will pay 15% of the drilling and completion costs on the first 13
potential earning wells to retain a 40% working interest in 50,000 acres
of joint venture lands. The first joint venture well (40% working
interest) was tested in the second quarter at gross rates of 1,825 boe/d
(86% oil) over a 15 day period and is currently pumping to permanent
facilities at rates of approximately 350 boe/d after cumulative oil
production of approximately 32,000 bbls. The second well has been
drilled and is awaiting completion and testing.
-- Disposed of 400 boe/d of non-core production effective February 1, 2011
for total consideration of $16.0 million. The disposition was accretive
to Second Wave on all 2011 metrics and further focuses the Company on
its Judy Creek oil plays.
-- Restarted the Judy Creek gas plant on February 8, 2011 following fire
damage that occurred in December 2010. During the two-month outage the
plant was rebuilt and improved to facilitate future development
activities.
>>
Selected First Quarter Financial Information
<<




Three months ended December
Three months ended March 31, 31,

($000s, except share % Change
and per boe amounts) 2011 2010 2010 % Change *



Petroleum and natural 6,015 (5)
gas sales 6,342 5 6,656

Royalties (657) (740) (11) (715) (8)

Lease Operating Costs (3,193) (2,349) 36 (2,634) 21

Transportation (228) (156) 46 (211) 8

Operating netback 2,264 2,770 (18) 3,096 (27)



Operating netback per (31)
boe 17.68 25.52 22.44 (21)

Net capital (86)
expenditures 1,275 18,836 27,315 (90)

Net Income (loss) (2,495) 2,754 - (6,857) 64



Cash flow from -
operating activities
per share - 0.03 0.02 -

Net income (loss) per -
share (0.03) 0.04 (0.08) (63)



Production volumes

Oil (bbl/d) 724 672 8 851 (15)

Natural gas liquids 114
(bbl/d) 92 43 73 26

Natural gas (mcf/d) 3,641 2,952 23 3,452 5

Combined (boe/d) (6:1) 1,423 1,206 18 1,500 (5)



Crude oil and liquids (3)
weighting (%) 57 59 62 (8)


>>
Operating Results in the first quarter were negatively impacted by the
following one time events:
<<

1. As previously announced the Company's Judy Creek gas plant was damaged
significantly by a fire on December 10, 2010. As a result of this damage
the Company shut in approximatley 1,650 boe/d of net production until
repairs could be made. The net impact of this lost production exceeded 800
boe/d for the quarter. Upon completing the required repairs and receiving
all regulatory approvals the Company started up the new plant on February
8, 2011 and systematically re-activated its Judy Creek wells over the
following four weeks. During the repair period the Company retained all of
its field staff and related services to facilitate the start up of the
field in February 2011.
2. The Company completed the disposition of its non-core Provost property in
south eastern Alberta in the first quarter for total proceeds of $16.0
million, consisting of $13.0 million cash and a $3.0 million secured note
payable to Second Wave on or prior to August 15, 2012, subject to
adjustment in certain circumstances. The disposition was effective as of
February 1, 2011 with the production from the Provost asset estimated at
approximately 400 boe/d at the time of disposition.
>>
Subsequent to quarter end the Company estimates its average production
rate for the month of April was approximately 1,927 boe/d (59% oil and natural
gas liquids) representing a 35% increase from the first quarter average.
Operating revenue, excluding royalties, for the month of April is estimated at
$3.4 million while operating costs per boe and netbacks per boe for the month
are estimated at $20.24 per boe and $38.46 per boe, respectively.
Operations Update
Judy Creek Beaverhill Lake Light Oil Play
Pursuant to its previously announced Beaverhill Lake joint venture
agreement, the Company has now drilled its first two (0.8 net) Beaverhill Lake
horizontal oil wells in 2011. The first well (0.4 net), located at
15-36-063-10W5, tested at rates of 1,825 boe/d (86% oil) over a 15 day period
and is currently pumping to permanent facilities at rates of approximately 350
boe/d after cumulative oil production of approximately 32,000 bbls. Production
from the 15-36 well is currently limited due to surface pumping capacity and
management intends to monitor the operations of the well over the next few
months to determine if a larger pumping system is required. The second well
(0.4 net) has been drilled and cased and is currently awaiting completion and
subsequent tie-in.
The Company anticipates drilling a total of 14 gross (5.6 net) Beaverhill
Lake wells within its Judy Creek joint venture lands in 2011, inclusive of the
two (0.8 net) wells drilled to date in 2011. The Company estimates that ten
(4.0 net) of these wells will be earning wells under the terms of its joint
venture agreement and four (1.6 net) will be development wells. Second Wave
will pay 15% of the drilling and completion capital costs on all earning wells
to retain a 40% working interest in the wells and the associated 3,840 acre
earning land blocks. The joint venture agreement provides for up to 13 earning
wells. Each of the two Beaverhill Lake wells drilled to date in 2011 are
earning wells. Second Wave will pay its proportionate 40% working interest
share on all development wells drilled on previously earned land blocks. In
Judy Creek the Company currently has 50,000 gross acres of Beaverhill Lake
mineral rights within the area covered by the joint venture agreement. The
Company also holds or has an option on an additional 9,200 acres of Beaverhill
Lake mineral rights in Judy Creek at a 100% working interest outside of the
joint venture agreement area.
Judy Creek Pekisko Medium Oil Play
In 2011 the Company has made significant strides with its Judy Creek
Pekisko medium grade oil play. Subsequent to the end of the first quarter, the
Company obtained a third party resource assessment on its Judy Creek Pekisko
pool with estimates of Total and Recoverable Petroleum Initially in Place in
the Pekisko formation under Second Wave's 100% working interest lands at Judy
Creek . The Company previously announced the resource assessment findings on
May 17, 2011.
The Company is currently planning to recommence its Pekisko drilling
program at the end of the third quarter with up to six (6.0 net) Pekisko
horizontal wells to be drilled by year end 2011. To date one (1.0 net) well
has been drilled in 2011 and is awaiting completion. The Company expects that
all Pekisko wells drilled in 2011 and 2012 can be drilled off of existing
producing pads, which should facilitate reduced cycle times and lower capital
commitments per well than what had previously been experienced during the
delineation drilling phase.
The Company had eight (8.0 net) Pekisko horizontal oil wells at year end
with less than 30 days of production prior to the Judy Creek gas plant outage
commencing in December 2010. These eight (8.0 net) wells have continued to
meet management's expectations with aggregate production rates from the wells
increasing since the start up of the Company's gas plant in February.
Production from all eight wells is currently limited by surface pumping
capacity and the Company continues to monitor the performance of the wells to
evaluate the feasibility of optimization alternatives.
The Company will look to provide a further operational update in the
third quarter as both its Judy Creek Beaverhill Lake and Pekisko oil plays
progress.
READER ADVISORIES
Barrels of Oil Equivalent (BOEs). The term BOE refers to barrel of oil
equivalent, with natural gas converted to crude oil equivalent at a ratio of
six thousand cubic feet to one barrel. BOEs may be misleading, particularly
if used in isolation. A BOE conversion ratio of six mcf (six thousand cubic
feet) to one bbl (one barrel) is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
Forward-Looking Statements. This news release contains forward-looking
statements as to the Company's internal projections, expectations and beliefs
relating to future events or circumstances. Forward-looking statements are
typically (but not necessarily) identified by words such as "anticipate",
"believe", "plan", "estimate", "expect", "plan", "intend", "potential", "may",
"will", "should" or similar words suggesting future outcomes. Although the
Company believes that these forward-looking statements are reasonable, undue
reliance should not be placed on them as they are subject to known and unknown
risks and uncertainties, many of which are beyond the Company's control.
Forward-looking statements are not guarantees of future outcomes. There can be
no assurance that the plans, intentions or expectations contained in the
forward-looking statements or upon which they are based will in fact occur or
be realized, and actual results may differ from those expressed or implied in
the forward-looking statements. The difference may be material.
Second Wave is subject to the inherent risks associated with the
exploration, development, exploitation and production of oil and gas. More
particularly, material risk factors that could cause actual results to differ
materially from those expressed or implied in the forward-looking statements
contained in this news release include: adverse changes in commodity prices,
interest rates or currency exchange rates; accessibility of capital when
required and on acceptable terms; lower than expected production of crude oil
and natural gas; production delays; lower than expected reserve volumes on the
Company's properties; increased operating costs; ability to attract and retain
qualified personnel or to secure drilling rigs and other services on
acceptable terms; competition for labour, equipment and materials necessary to
advance the Company's projects; unforeseen engineering, environmental or
geological problems; ability to obtain all required regulatory approvals on a
timely basis and on satisfactory terms; and changes in laws and governmental
regulations (including with respect to taxes and royalties). This list is not
exhaustive. Readers should also review the risk factors described in other
documents filed by the Company from time to time with securities regulatory
authorities in Canada, including its most recent annual information form,
copies of which are available electronically at www.sedar.com and at
www.secondwavepetroleum.com.
Specific forward-looking statements contained in this news release
include statements regarding: 2011 drilling plans generally; the number of
Beaverhill Lake wells to be drilled during 2011 on the Company's Judy Creek
joint venture lands, and the proportion thereof expected to be earning wells
and development wells; the timing for recommencement of the Pekisko drilling
program; the number of Pekisko wells to be drilled before the end of 2011; and
expected improvements in cycle times and capital commitments per well from
drilling future Pekisko wells off existing pads. In making such
forward-looking statements, Second Wave has made various assumptions
regarding, among other things: the accuracy of geological and geophysical data
and interpretations of that data; future oil and natural gas prices; future
capital requirements; future exchange rates; the accessibility and cost of
capital (including credit); the Company's ability to economically produce oil
and gas from its properties and the timing and cost to do so; and its ability
to obtain qualified staff, equipment and supplies in a timely and
cost-efficient manner.
The forward-looking statements included herein are made as of the date of
this news release and Second Wave undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by
securities laws.






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-30-

/For further information:
Colin B. Witwer, President and CEO Randy Denecky, VP, Finance and CFO
Second Wave Petroleum Inc. Calgary, Alberta, Canada Telephone: (403)
451-0165 Email: [e-mail] Web: www.secondwavepetroleum.com
/

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