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Press release from CNW Group

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

Tuesday, June 14, 2011

Second Wave Petroleum Inc. Announces Filing of 2011 First Quarter Financial Results20:01 EDT Tuesday, June 14, 2011TSX Venture Exchange: SCS82,899,295 Common SharesCALGARY, 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 HighlightsObtained 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 March 31,Three months ended December 31,($000s, except share and per boe amounts)20112010 %Change2010%Change *              Petroleum and natural gas sales6,3426,015 56,656(5) Royalties(657)(740) (11)(715)(8) Lease Operating Costs(3,193)(2,349) 36(2,634)21 Transportation(228)(156) 46(211)8Operating netback2,2642,770 (18)3,096(27)         Operating netback per boe17.6825.52 (31)22.44(21)Net capital expenditures1,27518,836 (86)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)724672 8851(15)Natural gas liquids (bbl/d)9243 1147326Natural gas (mcf/d)3,6412,952 233,4525Combined (boe/d) (6:1)1,4231,206 181,500(5)           Crude oil and liquids weighting (%)5759 (3)62(8)Operating Results in the first quarter were negatively impacted by the following one time events: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.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 UpdateJudy Creek Beaverhill Lake Light Oil PlayPursuant 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 PlayIn 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 ADVISORIESBarrels 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.   For further information: Colin B. Witwer, President and CEORandy Denecky, VP, Finance and CFO Second Wave Petroleum Inc. Calgary, Alberta, Canada Telephone: (403) 451-0165 Email: info@secondwavepetroleum.com Web:  www.secondwavepetroleum.com