Enhanced Oil Resources Increased O&G Revenue in 2008 by 260%
Enhanced Oil Resources has announced its audited financial results for the year ending December 31, 2008.
Oil and gas revenue in 2008 increased $3.1 million or 260% to $4.3 million as a result of increased production and an increase in the average price of oil and gas sales compared to 2007. During 2008, the Company acquired the Crossroads Devonian Unit and post acquisition has increased daily production from 38 barrels of oil per day (bopd) to a current production rate of 112 bopd. Gross oil sales increased to 53,700 barrels of oil equivalents ("boe's") or 42,700 net boe's compared to 17,900 net boe's in 2007, an increase of 140% over net sales in 2007. For 2008 the Company averaged 147 boe's per day while current daily production is averaging approximately 200 boe's per day. The average price received for sales was US$93.24 per boe compared to US$66.23 per boe received in 2007. Lease operating expenses related to oil and gas properties increased $1.4 million related to additional production.
Improved operating efficiencies and well cycling at the Chaveroo oil field have resulted in an overall reduction of operating costs per boe to $27.11 in the 4th quarter of 2008 as compared to $53.93 in the first three quarters of the year. Activity to further reduce operating costs is ongoing.
The Company incurred a net loss and comprehensive loss of $10.1 million for the year ended December 31, 2008 compared to a net loss of $10.0 million compared to the same period in 2007. The Company reported loss per share of $.09 for 2008 compared to $.13 per share reported for 2007 on average outstanding shares of 107,487,030 shares in 2008 compared to 78,602,164 average outstanding shares reported for 2007. Operating expense and general and administrative expense increased $1.5 million and $1.9 million, respectively, in 2008 as a result of increased production and increased personnel related to the Company's two business segments. Non-cash expense decreases aggregating of $1.7 million compared to 2007 were principally comprised of a foreign currency translation gain in 2008 of $1.4 million and a decrease in stock-based compensation expense of $0.7 million. Depreciation, depletion and accretion expenses increased $0.9 million in 2008.
At December 31, 2008, the Company had a working capital of $6.4 million, principally cash of $5.2 million. Resource property expenditures in the St. Johns Field were $33.4 million in 2008 compared to $22.2 million in 2007. Expenditures related to oil and gas properties were $18.3 million in 2008, including oil field acquisitions of $6.1 million and CO2 pilot project expenditures of $7.4 million.
Chief Executive Officer Barry Lasker stated "The results achieved in 2008 were significant in moving us further along toward reaching our objectives for our two key strategic project areas. These projects are inherently long-term and management will continue to take a long-term view as it considers, among other criteria, current and expected economic and operating alternatives. To that end, we engaged Tristone Capital in February 2009 to assist us in securing a development partner in the St Johns Field. That project is moving toward a mid-year conclusion and we are optimistic that it can result in the commencement of the full-field development of the St Johns Field in the near term. We remain encouraged by the results to date of our Milnesand pilot CO2 injection project and with continued positive results we anticipate being able to add significant value to the Company in additional reserves and production."
The Company reported that among the significant results achieved in 2008 compared to 2007 were the following:
- Raised aggregate net proceeds of $91.6 million through equity issuances of $32.5 million and $59.1 million, respectively;
- Drilled and completed 15 wells and 13 wells, respectively in the St Johns Field;
- Delivered independent engineering reserve estimates in 2008 of recoverable CO(2) and helium of 4.2 Tcf and 18 Bcf respectively;
- Increased St Johns' Field acreage in 2008 to 250,714 gross acres and initiated the unitization process for Arizona leases;
- Increased net crude oil production to 42,700 boe's compared to 17,900 boe's;
- Reactivated 50 oil wells to production
- Acquired oil field interests at Crossroads Unit in Lea County, New Mexico with estimated contingent resources of approximately 13 million barrels potentially recoverable through CO(2) injection compared to acquisitions in 2007 of an estimated CO(2) recoverable contingent resource of approximately 53 million barrels; Crossroads Unit represents current proved reserves of 148 thousand Bbls
- Acquired a field extension to the Milnesand Unit for US$0.436 million in October 2008.
- Reported net oil and gas netback of $28.12 per BOE
- Reported a decrease in cash used by operations of 30% to $3.474 million