Reece Reports Increase in Revenues for Q2 by 139%
Reece Energy Exploration Corp. has provided its results for the second quarter of 2008.
Some of the more salient year over year highlights include:
- Increased revenues by 139%;
- Increased profit by 424% to 1,133,251 from -$347,831;
- Increased cash flow from operations by 351% to $4,862,531 from $1,078,491;
- Average production for the quarter increased by 37%;
- Completed a private placement financing for $7.5 million;
- Increased the Corporation's credit facility by $7 million to $20 million;
- Drilled nine (9.0 net) extended reach, multi-stage fractured, horizontal wells in the Dodsland field with a 100% success rate;
- Acquired more land in the Dodsland field on which to drill further horizontal wells; and
- Drilled the first two (1.0 net) horizontal wells on Reece's Bakken
Reece's growth continued in the second quarter of 2008 through further drilling at Dodsland and Crystal Hill, as well as the start of its exploratory Bakken project. A total of 12 (10.33 net) wells were drilled during the quarter achieving a 95% success rate.
As a result of the new drilling, Reece's average production for the quarter was up by 276 BOE/d or 37% to 1,016 BOE/d over 2007 and by 11% to 98 BOE/d over the first quarter of 2008. Reece's average production for the month of June, 2008 was 1,213 BOE/d, with field estimates of average production for the month of August, 2008 increasing to approximately 1,500 BOE/d. Due to the increased production and high commodity prices, Reece's cash flow and revenues have increased significantly. Cash flow from operations in the second quarter of 2008 was up by 351% year over year, reaching a total of $4.9 million. In turn, revenues increased to $7.9 million or by 139% when compared to the same period in 2007.
In order to expedite planned capital expenditures, Reece completed a private placement financing in April raising $7.5 million. In addition, on the strength of Reece's third-party engineering report dated December 31, 2007, the Corporation had its credit facility increased from $13 million to $20 million.
The Dodsland Viking play near Kindersley, Saskatchewan saw the majority of the activity and expenditures in the second quarter of 2008. Nine (9.0 net) horizontal, multi-staged fractured wells were drilled during the quarter. At the end of June, seven of these wells were on production which added over 400 bbl/d of light oil net to Reece. Drilling, completions and tie-ins are continuing in this core area with the wells being tied into a 100% owned and operated battery in the field.
The Bakken play has been progressing as planned with two (1.0 net) of the three scheduled exploratory wells having been drilled in the second quarter. The first exploratory well was considered a success and is now on production. This well is scheduled to be fractured before the end of September. Testing of the second exploratory well was completed in July, 2008, and it was determined that the well did not have sufficient quantity of oil to be considered economic. Drilling of the third exploratory well was completed at the end of July, 2008, and the well is currently being tested. Drilling of the fourth well has commenced and the project has moved into the delineation stage. A further four to seven (2 to 3.5 net) wells are scheduled to be drilled before the end of the year. Reece has decided not to release any further drilling, testing or production information concerning these wells until the end of the third quarter due to competitive land issues.
During the second quarter, Reece drilled one (0.33 net) well at its Crystal Hill play. The well was successful and has added approximately 12 bbl/d net of light oil production to Reece. An additional 5 to 7 (1.7 to 2.3 net) wells have been scheduled to be drilled in this field before the end of the year.
- Penn West Energy Trust Completes Acquisition of Reece Energy (May 01)
- Reece Drills Deep at Saskatchewan's Bakken Wells (Nov 03)
- Reece Drills 14 Wells in 3Q (Oct 23)