HOUSTON, May 7, 2014 /CNW/ - Enhanced Oil Resources Inc.
(TSX.V: EOR; OTCQX: EORIF) ("EOR" or the "Company") is
pleased to provide the following operations update for the year to
date.
CO2 Gas Contract
The Company is pleased to announce that it has successfully
executed an extension of its CO2 take or pay contract
with Kinder Morgan CO2 Company, L.P. Initial
CO2 delivery will now commence no later than
January 2018. The extension enables
the Company to focus on its previously announced infill drilling
program while ensuring our shareholders a CO2 supply is
available for enhanced recovery operations once the fields are
further developed.
2013 End of Year Reserves
The Company has previously announced that its independent
reserves evaluator, Cawley Gillespie
& Associates, Inc. (CGA) completed their review of the
Company's oil and gas reserves as of December 31, 2013. Estimated total proved
reserves increased to 4.5 million barrels from 3.9 million barrels
compared to the prior year and after production of 117,000 barrels
during 2013. The discounted estimated net present value, (NPV at
10%) of future cash flows attributable to the reserves was
$68.5 million at year-end 2013
compared to $54.2 million at the
prior year-end. Proved developed reserves were 1,024,000
equivalent barrels (or $30.6 million
NPV at 10%), an increase from the 898,000 equivalent barrels
($34.9 million NPV at 10%) reported
for 2012. Additional capital of approximately $6.5 million relating to large workover expenses
that will be required in the proved developed reserves category in
the Crossroads field, accounted for the reduction in the discounted
proved developed NPV at 10%. The Company commenced one of
these workovers during the first quarter of 2014 at cost of
$2.7 million.
Production Update
Oil production has averaged approximately 312 BOPD for the year
to date, down from 355 BOPD at December 31,
2013. The reduction in production is mainly a result of
mechanical issues in our Crossroads field as outlined later in this
update. On a field by field basis, the Company's Crossroads
field production has averaged 210 BOPD. The Milnesand field has
averaged approximately 68 BOPD which is similar to averages from
last quarter. Included in the Milnesand production, the MSU #141
and #522 horizontal wells continue to produce at approximately 15
BOPD per well in line with our pre-drill expectations.
Crossroads Update
Crossroads production averaged approximately 210 BOPD over the
last three months, a decrease of approximately 60 BOPD over third
quarter levels. During the first quarter of 2014 we had
approximately 100 BOPD shut in at the Crossroads field due to down
hole failures at the #101, #102 and #202 wells. The #101 well was
brought back on line in early April. The #102 well remains shut-in
pending a work over to side track the well that is tentatively
scheduled for later this summer. A work over program to repair the
#202 well was initiated in early January of this year with the well
sidetracked to a new bottom-hole depth of 12,039 feet, successfully
drilling through 400 feet. of Devonian reservoir. The well is
currently producing/cleaning up at a daily rate of 22 BOPD and 2000
BWPD. We anticipate that the well will return to former oil
production rates of 40-50 BOPD by the end of the month.
Milnesand Update
After approximately eighteen months of production from the MSU
#141 and #522 horizontal wells, we continue to see consistent
production rates of approximately 15 BOPD per well, a decrease of
approximately 1-2 BOPD per well over the last 6 months. The low
decline that we are seeing continues to reflect that significant
oil remains in place at Milnesand, and that additional oil can be
recovered by the use of horizontal well technology. Decline curve
analysis indicates that these proof-of-concept horizontal wells
will recover approximately 75 to 80 thousand barrels of oil and by
analogue will recover approximately 160 thousand barrels of oil for
each 4,500 ft. horizontal well. We have 20 additional lateral wells
to drill at Milnesand and conceptually an additional 40 wells at
our Chaveroo San Andres field, located 8 miles to the north west of
Milnesand.
Chaveroo Update
In late 4th quarter 2013, the Company conducted a
large volume fracture treatment in a vertical wellbore to assess
re-fracture technology applications within the Chaveroo field. The
well was shut in, non-producing, prior to the treatment, and post
treatment production is currently averaging approximately 300 BFPD
with a slight oil cut. Research progresses regarding fracture
treatment optimization.
Farm-out Update
In early 2014 the Company opened a data room for potential
participants in the infill horizontal drilling program at Milnesand
with a proposal deadline set for March 31,
2014. More than ten companies were given access to the data
room and as of April 30 we have
received several letters of intent. We anticipate formalizing an
agreement sometime over the next few weeks. However, there is no
guarantee that an agreement will be consummated with any party.
About Enhanced Oil Resources Inc.
Enhanced Oil Resources Inc. (TSX.V: EOR; OTCQX: EORIF) trades in
Canada on the TSX Venture Exchange
under the symbol "EOR" and is quoted in the United States on OTCQX under the symbol
"EORIF". Enhanced Oil Resources Inc. is an early-stage company,
with a principal goal of increasing crude oil and natural gas
production through enhanced oil recovery ("EOR") and infill
drilling projects it is initiating in the Permian Basin.
Forward-Looking Statements
Certain statements contained herein are "forward-looking
statements" and "forward-looking information" under applicable
securities laws, including statements regarding beliefs, plans,
expectations or intentions regarding the future relating to
Enhanced Oil Resources Inc.'s operations, business prospects,
expansion plans and strategies.
Forward-looking information typically contains statements with
words such as "intends", "anticipate", "estimate", "expect",
"potential", "could", "plan", "continue", "scheduled" or similar
words suggesting future outcomes. Readers are cautioned not
to place undue reliance on forward-looking statements because it is
possible that expectations, predictions, forecasts, projections and
other forms of forward-looking information will not be
achieved. Forward-looking statements are based on the opinion
and estimates of management at the date the statements are made,
and are based on a number of assumptions and subject to a variety
of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected
in the forward-looking statements. Although Enhanced Oil
Resources believes that the expectations reflected in such
forward-looking statements are reasonable, Enhanced Oil Resources
can give no assurance that such expectations will prove to be
correct, that our oil production at Crossroads will be maintained,
that the lateral wells will be drilled as expected or result in
commercial production or that current oil production will continue
or increase as expected or indicated. Further, there can be
no assurance that the Company will commence or complete the
construction of a connecting pipeline for the transmission of
CO2 as contemplated, or within the timeline required
under its current CO2 contracts or be able to justify
the related economics of the project or complete it in the
timeframes discussed or currently contemplated. The Company
cannot guarantee that a farm out of its Milnesand project will
occur and that financing will be achieved. Readers should refer to
Enhanced Oil Resources' current filings, which are available at
www.sedar.com, for a detailed discussion of these factors,
risks and uncertainties. The forward-looking statements or
information contained in this news release are made as of the date
hereof and Enhanced Oil Resources 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 laws or regulatory
policies.
Certain financial measures, namely Netback and EBITDA, are not
prescribed and do not have a standardized meaning prescribed by
IFRS and, therefore, may not be comparable with the calculation of
similar measures by other companies. A netback is a per barrel (or
Mcf) computation determined by deducting royalties, production
expenses, transportation and selling expenses from the oil or gas
sales price to measure the average net cash received from the
barrels or Mcf sold. EBITDA refers to income (loss) before
interest, income taxes, depletion, depreciation, amortization and
accretion and is often referred to as "cash flow from
operations".
ON BEHALF OF THE BOARD OF DIRECTORS
(signed)
Barry D Lasker, CEO
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE
EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF
THIS RELEASE.)
SOURCE Enhanced Oil Resources Inc.