Resaca Ramps Reserves in Permian Basin

Permian Basin
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Resaca announced updated reserve study as of June 30, 2011 for the Company's oil and gas properties and to provide an update on the Company's production.

Reserves Update

As of June 30, 2011, Resaca's proved and probable ("2P") reserves were 27.5 million barrels ("MMbbls") of oil and 14.5 billion cubic feet ("Bcf") of natural gas, for a total of 29.9 million barrels of oil equivalent ("MMboe"). This represents 0.2 MMboe increase in Resaca's 2P reserves since June 30, 2010 after realization of 0.2 MMboe of production during the fiscal year ended 30 June 2011. The Company's proved reserves represented 49% of the 2P reserves as of June 30, 2011. Additionally, Resaca's possible reserves were 5.4 MMbbls of oil and 3.3 Bcf of natural gas as of June 30, 2011 for total proved, probable and possible ("3P") reserves of 32.9 MMbbls of oil and 17.8 Bcf of natural gas (35.8 MMboe). Resaca's 3P reserves increased 0.009 MMboe since June 30, 2010. All reserves are calculated on a net revenue interest basis (working interest volumes, less royalties).

Resaca's proved developed producing ("PDP") reserves as of 30 June 2011 were 2.8 MMbbls of oil and 2.5 Bcf of natural gas, for a for a total of 3.2 MMboe. This represents a 0.5 MMboe increase in PDP reserves since June 30, 2010 after realization of 0.2 MMboe of production during the fiscal year ended June 30, 2011. This represents a 20 percent increase in PDP reserves, after consideration of fiscal year production. The increase in PDP reserves is primarily attributable to the capital expenditure program initiated by the Company in February 2011 on the Company's Cooper Jal Unit, the Jordan San Andres Unit, and the Edwards Grayburg Unit.

Resaca commissioned Haas Petroleum Engineering Services, Inc. ("Haas") to prepare a reserve report for its primary and secondary recovery (water injection) reserves and Williamson Petroleum Consultants, Inc. ("Williamson") to prepare a reserve report considering only those additional reserves which could be recovered through tertiary recovery (CO2 injection).

The reserve estimates are based on the unweighted average 12-month prices as of June 30, 2011 under the revised SEC rules, calculated as the unweighted arithmetic average of the first-day-of-the-month oil and natural gas prices for each month within the 12-month period ended June 30, 2011 of $90.09 per barrel for oil and $4.21 per MMbtu for natural gas, and are further adjusted by field for quality, transportation fees, and regional price differentials. The reserves are calculated "before tax" and consider the anticipated costs to develop and produce.

The Company's reserves estimates at June 30, 2011 include reserves related to the Grand Clearfork Unit property, which the Company sold on 15 July 2011 and do not reflect reserves associated with the Langlie Jal Unit property, which the Company purchased on August 5, 2011.

Production Update

Resaca's seven-day average daily production as of September 27, 2011 was 747 boe per day.

Commenting on the reserves and production update, J.P. Bryan, Chairman and CEO of Resaca, said, "We are pleased with the results from the work performed at Copper Jal, Jordan San Andres, and Edwards Grayburg, which are reflected in our reserves as of June 30, 2011. We look forward to further implementing our development plans on these properties.

As evidenced by our recent third party reserve report, we are well positioned with a solid asset base of long-life, oil weighted properties. Based on the PV10 value of our proved reserves alone, Resaca has a net asset value in excess of $12 per share without consideration of the increase in our reserves related to our purchase of the Langlie Jal property, which is significantly higher than our current stock price."


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Light Crude Oil : $50.43/BBL 2.26%
Natural Gas : $3.14/MMBtu 0.94%
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