ENHANCED OIL RESOURCES ANNOUNCES POSITIVE EBITDA OF $200,000 FOR THE SECOND QUARTER OF 2013; PROVIDES OPERATIONS UPDATE.
Enhanced Oil Resources Inc. has released its operating and financial results for the three and six months ended June 30, 2013 (all amounts are in United States dollars).
Highlights for the second quarter of 2013, including non-IFRS (international financial reporting standards) measures, compared with the corresponding quarter in 2012 are:
Revenue of $3.2-million; up 17 per cent from 2012 with 98 per cent of the revenue generated from crude oil; compares with $2.7-million for the same period last year; increase in revenue due to higher production and oil prices;
EBITDA (earnings before interest, taxes, depreciation and amortization) of $200,000, the highest in company history;
Operating netback of $41.30 per barrel of oil equivalent (boe);
A net comprehensive loss for the quarter ended June 30, 2013, of $400,000 compared with a $500,000 loss for the same period last year; decrease in the loss due in part to increased oil prices and production and lower workover expenses.
For the first half of 2013, the company also reported:
Revenue of $6.2-million, a net comprehensive loss of $1.3-million (one cent per share) for the six-month period, compared with $5.6-million and $1.1-million (one cent per share) for the same period in 2012, respectively;
Cash used in operations of $3.8-million, with $3.9-million represented by decreases in working capital, including a reduction in accounts payable of $3.3-million after completion of 2012 drilling program;
EBITDA of $228,000, the highest in company history;
Operating netback of $38.04 per boe.
Production update
Oil production during August to date has averaged 440 barrels of oil per day (bopd) while July production averaged 404 bopd. At the company's Crossroads field, oil production has averaged 304 bopd during August and 270 bopd during July. At the Milnesand field, oil production for August to date and July has averaged approximately 84 and 81 bopd, respectively, similar to averages from last quarter. After one year of oil production from the MSU No. 141 and No. 522 horizontal wells, production continues at approximately 20 bopd per well, consistent with last month's rates.
Crossroads update
Crossroads production has averaged approximately 316 bopd over the last two weeks, an increase of approximately 46 bopd over July levels. The Crossroads No. 106 well was successfully converted to a second water injector well in early August and is currently taking water at a rate of approximately 3,800 barrels of water per day (bwpd). Total water handling at Crossroads has averaged in excess of 11,000 bwpd since the No. 106 well was brought on-line. The Crossroads No. 105 and No. 302 wells have been brought back to production and are currently producing approximately 80 bopd.
Milnesand update
After approximately one year of production from the MSU No. 141 and No. 522 horizontal wells, the company continues to see consistent production rates of approximately 20 bopd per well, within the company's predrill expectations and considerably higher than the original vertical wells drilled to develop the field over 40 years ago.
The advanced petrophysical analysis and engineering studies within the Milnesand field, discussed in the company's May update, are now complete. Based on production data to date and analogous San Andres wells drilled elsewhere in the basin, the economics of horizontal infill wells at both the Milnesand and Chaveroo fields indicate that each 4,000-foot horizontal well could recover, in a most likely (P50 per cent) case, approximately 180,000 barrels of oil, having a net present value (10 per cent) of $2.8-million and an estimated rate of return in excess of 45 per cent. Based on the results of these economics, the company anticipates restarting the horizontal program in the fourth quarter of this year or early 2014.
Chaveroo update
The results of the recently completed studies at Milnesand and the similarity between the Milnesand and Chaveroo fields have accelerated the implementation of an infill horizontal drilling program across the Chaveroo field, where at least 60 horizontal wells could be drilled. The company is currently in discussions with all stakeholders at Chaveroo and has begun preparations for the drilling of two 4,000-foot laterals in and around the Jennifer Chaveroo San Andres unit. The company anticipates drilling these wells from existing well bores thereby accelerating the permitting process with the goal of initiating this program in late 2013 or early 2014.
Commenting on the results, Barry Lasker, president and chief executive officer, said: "Our operational execution is improving and together with increases in oil prices and reductions in our workover expenses since 2012, have combined to generate positive changes in our operating results. We have increased production in 2013 by 12 per cent to over 73,000 boe (401 boe/d; 98 per cent crude oil) for the six months ended June 30, which represents the highest sales rate in company history. The work of a newly assembled development team to evaluate and refine our drilling and CO2 development plans have put us in a position to potentially extend our proved and probable reserves in the Milnesand and Chaveroo fields with the additional drilling we expect to commence in the fourth quarter of 2013 and into 2014."
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