Press release from Marketwire
Storm Resources Ltd. Announces Acquisition of Long Reserve Life Light Oil Pool in North Eastern B.C.
Monday, November 28, 2011
Storm Resources Ltd. Announces Acquisition of Long Reserve Life Light Oil Pool in North Eastern B.C.17:32 EST Monday, November 28, 2011CALGARY, ALBERTA--(Marketwire - Nov. 28, 2011) -STORM RESOURCES LTD. ("Storm") (TSX VENTURE:SRX) is pleased to announce the execution of a purchase and sale agreement in relation to the acquisition of 150 Boe per day in the Mica area of north eastern British Columbia (the "Acquisition"). Production comprises approximately 70% light oil (38 degrees API) and natural gas liquids and 30% natural gas. Details of the Acquisition are as follows:Acquisition cost is $15.9 million and closing date is December 1, 2011 with an effective date of September 1, 2011. The purchase price will be financed from existing cash resources and an expanded credit facility, and is subject to customary adjustments; in the first half of 2011, the field netback for the property averaged $48.00 per Boe, operating costs were $14.30 per Boe, and the royalty rate was 10%; there are seven producing wells with an average annual decline of 6%; working interest being acquired is 100%; Storm management estimates that Discovered Petroleum Initially in Place is approximately 7.0 million barrels of oil with recovery to date being 21% (an average of 210,000 barrels of oil has been produced to date from each producing well); drilling six infill wells and the initiation of a waterflood could potentially lift production to 450 Boe per day, with future development capital estimated to be $12.6 million; the acquired asset contains an estimated 719,000 Boe of proved plus probable reserves (70% light oil plus natural gas liquids) based on an independent reserve report dated October 20, 2011 prepared by InSite Petroleum Consultants Ltd. in accordance with National Instrument 51-101 (reserve estimate is based on forecast decline from existing producing wells and does not include any upside from infill drilling or initiating a waterflood).The Acquisition underscores Storm's commitment to growing its business in an environment of low natural gas prices through product diversification and access to higher netback opportunities. The Acquisition enhances Storm's opportunity base and provides additional financial capacity to support future growth.Storm Resources Ltd. began operations in August 2010. Storm is headquartered in Calgary, Alberta and is active in the Horn River Basin and Umbach areas of north eastern British Columbia, and at Red Earth in north central Alberta.READER ADVISORIESBoe Presentation - For the purpose of calculating unit revenues and costs, natural gas is converted to a barrel of oil equivalent ("Boe") using six thousand cubic feet ("Mcf") of natural gas equal to one barrel of oil unless otherwise stated. Boe may be misleading, particularly if used in isolation. A Boe conversion ratio of six Mcf to one barrel ("Bbl") 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 measurements and conversions in this report are derived by converting natural gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Mboe means 1,000 Boe.This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking statements and information concerning the combined company's working capital and bank facility, reserves, undeveloped land holdings and anticipated benefits from the Transaction. The forward-looking statements and information are based on certain key expectations and assumptions made by Storm, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates and reserve volumes; the timing of receipt of regulatory and shareholder approvals, the performance of existing wells; the success obtained in drilling new wells; and the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Although Storm believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Storm can give no assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. There are risks also inherent in the nature of the proposed acquisition, including failure to realize anticipated production or reserve increases; and incorrect assessments of values or future capital and operating costs.This press release also contains forward-looking statements and information concerning the anticipated timing for completion of, and the effective date of the acquisition. Storm has provided these anticipated dates in reliance on certain assumptions believed to be reasonable at this time. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these dates. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Storm's financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), and at Storm's website (www.stormresourcesltd.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Storm undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.FOR FURTHER INFORMATION PLEASE CONTACT: Brian LavergneStorm Resources Ltd.President and Chief Executive Officer(403) 817-6145ORDonald McLeanStorm Resources Ltd.Chief Financial Officer(403) 817-6145ORCarol KnudsenStorm Resources Ltd.Manager, Corporate Affairs(403) 817-6145www.stormresourcesltd.comNEITHER THE 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.