Feb. 22, 2011 (Filing Services Canada) -- Ironhorse Oil & Gas Inc. (IOG - TSX Venture), is pleased to provide information on the Company's oil and natural gas reserves as at December 31, 2010, as evaluated by its independent engineers.
The Company's year-end reserves evaluation with an effective date December, 31, 2010 was prepared by GLJ Petroleum Consultants and Sproule Associates Limited in accordance with standards contained in the Canadian Oil and Gas Evaluation Handbook. Reserve definitions are set out by the Canadian Securities Administrators in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
Highlights of our activities in 2010 are itemized below:
* A drilling success rate of 100%, with 4 (2.9 net) new oil wells drilled and placed on production in the Dawson, AB and Leon Lake, SK areas and one (0.8 net) gas well drilled at Jedney, BC.
* Oil production increased significantly to average 178 bbl per day as compared to 11 bbl per day in 2009 increasing the Company's oil weighting to 19% from 1% in 2009. Total production decreased 14% to 922 boe per day from 1,071 boe per day in 2009 due to natural declines in gas production.
* Exploration discoveries and development drilling resulted in proved plus probable reserves additions of 628 Mboe, negative technical revisions and dispositions were 484 Mboe and 37 Mboe respectively, resulting in net positive additions of 107 Mboe. Negative technical revisions were largely due to lower gas prices which had a negative impact on the economic life of the gas reserves.
* The Company's proved plus probable reserves are 34% oil and liquids weighted with a 72:28 proved to probable ratio.
* Three year average finding and development costs, including changes in future capital and technical revisions, of $17.07 per boe proved and $13.34 per boe proved plus probable.
* During the year Ironhorse expended $3.5 million on land and seismic bringing its total capital expenditures for 2010 to $13.5 million. The Company acquired 10,120 (9,544 net) acres of land as it continues to develop new focus areas which are prospective for oil.
* Net asset value of $1.48 per share at December 31, 2010 calculated as the net present value of future cash flows from proved and probable reserves before tax discounted at 10% less net debt estimated at $14.9 million divided by 27.9 million common shares.
Activities in 2011 will focus on the following:
* Acquiring additional acreage which is prospective for oil resource plays.
* Drilling vertical and horizontal oil wells at Leon Lake as the Company continues to develop its Upper and Lower Shaunavon project at Leon Lake, Saskatchewan.
* Continuing with plans to place its Pembina, Alberta Nisku oil wells on production. These oil wells are estimated to be capable of producing at rates in excessive of 4,000 (800 net) boe per day.
* Drilling newly acquired lands which are prospective for oil.
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Reserves - Oil Equivalent (Mboe)
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Proved Proved Proved Total Total Proved
Producing Developed Undeveloped Proved Probable Plus
Non Probable
Producing
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2010 1,464 291 961 2,715 1,037 3,752
2009 1,657 144 1,091 2,892 1,091 3,983
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Reserves Reconciliation - Oil Equivalent (Mboe)
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Proved Probable Proved
Plus
Probable
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2009 2,892 1,091 3,983
Discoveries
& Extensions 394 234 628
Technical
Revisions (205) (279) (484)
Production (338) - (338)
Disposition (28) (9) (37)
2010 2,715 1,037 3,752
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Net Present Values before tax ($000's)
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2010 2009
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Discount Proved Proved Proved Total Total Proved Proved
Factor Producing Developed Undeveloped Proved Probable Plus Plus
Non Probable Probable
Producing
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10% 17,007 1,384 23,659 42,050 13,923 55,973 67,695
15% 14,929 849 19,918 35,696 10,533 46,229 57,345
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Net asset value per share before tax discounted at 10% ($000's)
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2010 2009
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Proved Plus Probable 55,973 67,695
Net Debt (14,849) (9,869)
Net Asset Value 41,124 57,826
Common Shares Outstanding
- 000's 27,876 24,110
Per Share $1.48 $2.40
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GLJ Petroleum Consultants Escalating Price Forecast as at December 31, 2010 and December 31, 2009
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Light Sweet Oil AECO/NIT-Spot
Edmonton Par ($CDN/bbl) ($CDN/MMBTU)
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2010 2009 2010 2009
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2011 86.22 86.42 4.16 6.79
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2012 89.29 89.58 4.74 6.89
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2013 90.92 92.74 5.31 6.95
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2014 92.96 95.90 5.77 7.05
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2015 96.19 97.84 6.22 7.16
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For further information, please contact:
Rob Solinger
VP Finance & CFO
(403) 355-3620
rsolinger@ihorse.ca
or visit our website at www.ihorse.ca.
Ironhorse Oil & Gas Inc. is a Calgary-based junior oil and natural gas production company trading on the TSX Venture Exchange under the symbol "IOG".
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
Forward-Looking Statements
Statements throughout this release that are not historical facts may be considered to be "forward-looking statements". These forward looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including management's assessment of future plans and operations, drilling plans and timing thereof, expected production rates and additions and the expected levels of activities may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and changes in the regulatory and taxation environment. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manor; and field production rates and decline rates. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this release are made as at the date of this release.
Boe Conversion - Certain natural gas volumes have been converted to barrels of oil equivalent ("boe") whereby six thousand cubic feet (mcf) of natural gas is equal to one barrel (bbl) of oil. This conversion ratio is based on an energy equivalency conversion applicable at the burner tip and does not represent a value equivalency at the wellhead.
Source: Ironhorse Oil & Gas Inc. (TSX-V: IOG) http://www.ihorse.ca
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