Mar. 8, 2010 (Filing Services Canada) -- Ironhorse Oil & Gas Inc. (IOG - TSX Venture), is pleased to announce that its successful 2009 drilling program in the Shackleton, Saskatchewan and Pembina, Alberta areas has significantly increased the Company's proved producing gas reserves and proved undeveloped oil reserves.
The Company's year-end reserves evaluation with an effective date December, 31, 2009 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 from the 2009 and 2008 reserves reports are itemized below:
* Proved producing ("PP") reserves increased 31% from the previous year and total 1.7 Mmboe. The year over year increase in PP reserves is attributable to our 32 (16 net) new gas wells which were drilled and placed on production in the Shackleton, Saskatchewan.
* Proved reserves totalled 2.9 Mmboe, an increase of 33% from last year. The increase in proved reserves is a result of the 2 (0.4 net) new oil wells drilled at Pembina, Alberta which are expected to be placed on production by the end of this year.
* Proved plus probable reserves totalled 4.0 Mmboe a net increase of 145,000 boe in the Company's overall reserves after taking into account production for the year. The Pembina, Alberta oil discovery added 1.1 MMbbl of oil and Ngls to Ironhorse's reserves which was offset by a decrease in the Company's probable gas reserves at Shackleton, Saskatchewan. Probable gas reserves associated with the infill drilling program at the Shackleton, Saskatchewan property were removed due to lower gas prices.
* Three year average finding and development costs "F&DC", including changes in future capital, of $10.35 per boe proved and $8.22 per boe proved plus probable.
* Net asset value "NAV" per share of $2.40 at December 31, 2009 an increase of 25% from last year. The NAV per share was calculated on the net present value of future cash flows before tax discounted at 10% less net debt estimated at $9.9 million divided by 24.1 million common shares. This calculation does not include the results of the 2010 winter drilling program.
* Production in 2009 decreased 1% to averaged 1,071 boepd with a 99/1 gas to oil mix. As a result of the discoveries made to date in 2010 Ironhorse expects to exit the first quarter of 2010 producing over 1,000 boe per day with an 80/20 gas to oil mix.
* The December 31, 2009 reserves report does not incorporate results from Ironhorse 2010 winter drilling activities including drilling 3 (1.88 net) oil wells and 1 (0.8 net) gas well. The Company will provide an independent reserves evaluation update with respect to these properties in May of this year.
Reserves - Oil Equivalent (Mboe)
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PROVED PROVED PROVED TOTAL TOTAL PROVED PLUS
PRODUCING DEVELOPED UNDEVELOPED PROVED PROBABLE PROBABLE
NON PRODUCING
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2009 1,657 144 1,091 2,892 1,091 3,983
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2008 1,263 147 762 2,171 2,058 4,229
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Reserves Reconciliation - Oil Equivalent (Mboe)
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PROVED PROBABLE PROVED PLUS PROBABLE
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2008 2,171 2,058
Discoveries 232 1,324
Technical Revisions 20 (1,199) (1,179)
Production (391) 0 (391)
2009 2,892 1,091 3,983
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Net Present Values before tax ($000's)
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2009 2008
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DISCOUNT PROVED PROVED PROVED TOTAL TOTAL PROVED PROVED
FACTOR PRODUCING DEVELOPED UNDEVELOPED PROVED PROBABLE PROBABLE PLUS PLUS NON PROBABLE
PRODUCING
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5% 28,070 1,824 33,420 63,314 19,559 82,873 68,685
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10% 23,628 1,065 29,360 54,053 13,642 67,695 48,684
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15% 20,453 629 25,982 47,063 10,281 57,345 36,867
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Net asset value per share before tax discounted at 10% ($000's)
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2009 2008
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Proved Plus Probable 48,684
Net Debt (9,869) (6,796)
Net Asset Value 57,826 41,888
Common Shares Outstanding 24,110 21,780
Per Share $2.40 $1.92
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GLJ Petroleum Consultants Escalating Price Forecast as at December 31, 2009 and December 31, 2008
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LIGHT SWEET OIL EDMONTON PAR ($CDN/BBL) AECO/NIT-SPOT ($CDN/MMBTU)
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2009 2008 2009 2008
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2010 83.26 78.94 5.96 7.94
2011 86.42 83.54 6.79 8.34
2012 89.58 90.92 6.89 8.70
2013 92.74 95.91 6.95 8.95
2014 95.90 97.84 7.05 9.14
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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".
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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