Press release from Marketwire
Storm Resources Ltd. Announces Completion of Acquisition and Operational Update
Thursday, December 01, 2011
Storm Resources Ltd. Announces Completion of Acquisition and Operational Update18:39 EST Thursday, December 01, 2011CALGARY, ALBERTA--(Marketwire - Dec. 1, 2011) -STORM RESOURCES LTD. ("Storm") (TSX VENTURE:SRX) is pleased to announce the closing of the previously announced 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. The effective Aquisition date is September 1, 2011 and the net purchase price at closing amounted to $15.4 million, including adjustments. The purchase price was financed from existing cash resources and an expanded credit facility.There are seven producing wells on the property with an average annual decline of 6% and the working interest being acquired is 100%. The drilling of six infill wells and the initiation of a waterflood could potentially lift production to 450 Boe per day. Future development capital associated with this activity is estimated to be $12.6 million. OPERATIONS UPDATE In the Horn River Basin ("HRB"), completion operations on the second horizontal well (40% working interest) began November 12th and were suspended November 29th following an unexpected operational problem. After the first fracture stimulation was pumped, the bridge plug required to isolate the first interval became stuck in the horizontal section while it was being moved into position. The bridge plug was retrieved; however, the delay resulted in the expiry of the window of availability for the fracturing crew.At Umbach, the third horizontal well (60% working interest) completed with 11 fracture stimulations, began producing November 17th and is currently flowing 2.2 Mmcf per day gross raw gas (1.2 Mmcf per day net sales gas plus 35 barrels per day net condensate and natural gas liquids). Total production at Umbach from all three horizontal wells (60% working interest) is currently 5.5 Mmcf per day gross raw gas (2.9 Mmcf per day net sales gas plus 90 barrels per day net condensate and natural gas liquids). Based on field estimates, production in November was approximately 735 Boe per day. Production in the fourth quarter of 2011 is now forecast to be approximately 800 to 850 Boe per day (19% oil and NGLs) with production in December expected to be approximately 950 Boe per day (24% oil and NGLs). Capital expenditures in 2011 are now expected to total $40 million which includes $15.4 million for the acquisition of the Mica property. Prior to this update, guidance had included fourth quarter average production of approximately 900 Boe per day with 2011 capital expenditures totaling $26 million. The previously announced acquisition of Storm Gas Resource Corp. ("SGR") is expected to close in early January 2012 and will add approximately 400 Boe per day with the suspension of operations on the second HRB horizontal resulting in SGR having a cash position of approximately $1.0 million at closing. 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 Storm's future development capital associated with activities, future production volumes of oil and natural gas and future capital expenditure levels. 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 of SGR, 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 the acquisition of SGR (the "SGR Acquisition"). Storm has provided this anticipated date in reliance on certain assumptions believed to be reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory and court approvals and the time necessary to satisfy the conditions to the closing of the acquisition. The closing date of the SGR Acquisition may change or not occur at all for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the SGR Acquisition. 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.