CALGARY, Sept. 5 /CNW/ - Result Energy Inc. (TSX Venture:RTE) delivered
much higher production, cash flow and field activity for the second quarter
and first half of 2006 versus the same periods last year.
Production averaged 567 boed in the second quarter, up over 49% from
380 boed a year earlier. For the first half, production averaged 584 boed, a
45% increase over the same period in 2005. Result has continued to bring on
additional volumes and, as of August 31, 2006, production was 921 boed on a
sustained basis. The Corporation expects a further 350 to 500 boed to come on
stream through September and October.
Second quarter cash flow was up 47% to $665,477 from $451,617 for the
same period last year. First half cash flow was up over 100%, to $1,658,449
from $815,326 in 2005. Result declared a net loss of $416,350 for the quarter
compared to a net loss of $456,034 for Q2 2005. For the half, the loss was
$751,404 versus $493,612 for the same period last year.
Over 90% of Result's current production has come through the drill bit
and the Company intends to stick with this strategy of organic growth. Result
will focus on its three core areas over the remainder of 2006 and into 2007
exploiting the 80 prospects currently in inventory.
Result is pleased to provide the following update on recent exploration,
development, facility and related pipeline tie-in operations:
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- Pembina, Alberta - Following extended regulatory delays affecting the
construction of a third party compressor facility, Result has
recently been able to commence production from its two Viking gas
discoveries in the Pembina-Modeste area. These wells are flowing at
an initial combined net rate of 900 mcfd (150 boed). This is
expected to climb to 300 boed net as downstream facilities are
adjusted to cope with the additional volumes. Result is shooting
additional 3-D seismic at Modeste on lands acquired earlier this year
to detail additional Viking prospects.
- Peace River Arch, Alberta - At Clear Hills, Alberta, a new third
party gas processing plant has been commissioned and is expected to
be fully operational by mid-September. This plant will provide
service to various stranded and shut-in gas wells in the greater
Clear Hills area, including Result's five shut-in gas wells in the
Clear Hills Field. Result's wells are expected to produce, in
aggregate, at an estimated 2,000 mcfd net (330 boed) once the plant
is running at full capacity. During the second quarter, Result was
successful in acquiring four undeveloped sections in the greater
Clear Hills area that the Company expects to add to drilling
inventory for Q1-07.
- In the Worsley area, Result has participated in drilling a total of
5 gross (2.1 net) wells in the first half of 2006, resulting in 2 gas
wells that are currently producing, 2 that are awaiting testing and
one waiting for a workover. Three gas wells commenced producing in
the June/July period, with estimated combined incremental production
of 1,160 mcfd (net) or 195 boed (net).
- Result continues to aggressively develop additional prospect
inventory throughout its Peace River Arch core area. At the present
time, the Company holds, or has the opportunity to earn via farmin,
interest in approximately 71 undeveloped sections (39.13 net
sections), with more than 30 unrisked drilling opportunities
identified. Additional 3-D seismic acquisition and land purchases are
budgeted for third and fourth quarters of this year.
- Kakwa, Alberta - Result recently participated in a new 3D survey over
its working interest lands in this area and, pending results of the
seismic, has plans to drill a Cadomin test. With this well, Result
will increase its interest to 35% in 5.5 sections of land along a
proven prolific trend with multi-zone potential existing in the
Cardium, Dunvegan, Fahler, Bluesky and Cadomin.
- West Saskatchewan - Result continues to enjoy success in its western
Saskatchewan core area, centred around the Dodsland gas project. In
July, Result completed a 6 well exploration and development program,
which yielded 4 (3.0 net) cased potential gas wells, and 2 (1.6 net)
D & A wells. Completion and testing operations are planned to be
conducted over the next 2 to 3 months, with potential tie-in of a
portion of these wells by mid Q4-06.
- At the North Dodsland property, Result participated in drilling 5
(2.5 net) Viking gas wells in the June/July period. This included a
2 section pilot project evaluating a potential expansion of
down-spacing from 2 to 4 per section. Result has interests in a total
of 18 sections (with all but 1 at 50% WI) in this property. The five
wells are tied in and flowing and the Company is cautiously
optimistic that this will lead to quarter section spacing over all
the Dodsland properties. If successful, this will add over 45
development drilling locations to Result's drilling inventory.
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Result's current field estimated production volume is approximately
921 boed. As noted above, additional productive capability from the Clear
Hills (330 boed) is anticipated to be fully on stream by the end of September,
with Pembina gradually building over the next two months. At that time Result
expects to be producing in excess of 1,400 boed weighted 98% towards natural
gas.
The Company's existing bank revolving credit facility has been expanded
to $9.2 million and is scheduled to be increased to $10.2 million by the end
of Q3 as the existing backlog of production is brought on stream.
Bill Matheson noted "Even with soft gas prices and facilities delays, we
managed to deliver record growth in the second quarter. As the Pembina and
Clear Hills projects come on-stream, we expect all financial and operating
results to strengthen even further. This, in turn will lead to increased field
activity for the balance of 2006 and into 2007."
Given these factors, Result is in process of completing a short-term
convertible debenture financing of up to $3.275 million, with a coupon rate of
Prime plus 3% and a maturity date of February 28, 2008, subject to prior
redemption or conversion. The conversion price is set at $1.15 per share.
Proceeds will be used to supplement working capital and for general corporate
purposes. Closing of the financing is expected on or about September 12, 2006
and is subject to final approval from the TSX Venture Exchange.
Result Energy Inc. is a publicly traded Canadian energy company involved
in the exploration and development of oil and gas properties in western
Canada. Result trades on the TSX Venture Exchange under the symbol "RTE" and
has a total of 47,658,138 common shares outstanding.
The TSX Venture Exchange does not accept responsibility for the adequacy
and accuracy of this release.
Investors are cautioned that this news release contains forward looking
information. Such information is subject to known and unknown risks,
uncertainties and other factors that could influence actual results or events
and cause actual results or events to differ materially from those stated,
anticipated or implied in the forward-looking information. Readers are
cautioned not to place undue reliance on forward-looking information, as no
assurances can be given as to future results, levels of activity or
achievements. The term barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. A boe conversion ratio of six thousand
cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence
is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the wellhead. All
boe conversions herein are derived from converting gas to oil in the ratio mix
of six thousand cubic feet of gas to one barrel of oil.
