|By Marketwired .||
|January 20, 2014 07:25 PM EST||
CALGARY, ALBERTA -- (Marketwired) -- 01/20/14 -- Rock Energy Inc. (TSX: RE) ("Rock" or the "Company") is pleased to report its operating results for the three months ended December 31, 2013. Rock is a Calgary-based crude oil exploration, development and production company.
Production and Operations
During Q4 2013, Rock's daily sales averaged approximately 4,000 boepd (92% oil & liquids) and the Company estimates production for the year ended 2013 to have averaged approximately 3,500 boepd (90% oil and liquids). Production for the quarter was temporarily affected as producing oil wells were shut in during the drilling of horizontal wells at both Mantario and Onward. Those wells have been restarted and Rock is currently producing over 4,500 boepd. Production at the Mantario field is presently exceeding 3,000 bopd including 175 - 200 bopd from each of the new horizontal wells.
During the quarter, Rock drilled a total of 16 (16.0 net) oil wells and 2 (2.0 net) dry and abandoned wells. At Mantario the Company drilled 3 (3.0 net) vertical step out oil wells, 2 (2.0 net) horizontal oil wells and 1 (1.0 net) exploration well which was dry and abandoned. At Onward the company drilled an additional 8 (8.0 net) horizontal Viking oil wells and 2 (2.0 net heavy oil exploration wells (1 successful Lloydminster Formation new pool discovery, and 1 dry and abandoned location). The Company also drilled 2 (2.0 net) successful oil wells in the Plains region during the quarter.
For the year ended December 31, 2013, the Company drilled a total of 46 (45.0 net) wells made up of 10 (10.0 net) oil wells, 31 (30.0 net) heavy oil wells, 1 (1.0 net) service well and 4 (4.0 net) dry and abandoned wells, for an overall net casing success rate of 91%.
Viking Light Oil Resource Play at Onward
Of the 8 horizontal Viking wells drilled in the fourth quarter, 5 were completed and put on production before the end of the year. Those 5 wells have experienced production rates over the first 30 days ranging from 45 bopd to 60 bopd, averaging 50 bopd. The remaining 3 wells have since been completed and brought on production and are experiencing initial production characteristics similar to the first five. Rock continues to refine the completion techniques of these wells and has noted an improvement in the production rates from the first 2 wells drilled by the company in the third quarter.
In management's opinion, the activity to date has begun to de-risk our lands with an economically viable Viking light oil resource play on 8.5 of our 38.5 sections of land. Currently, Rock is producing approximately 250 bopd of light Viking oil from the first 7 wells in this area (including the 2 wells drilled in September). The Company plans to continue to de-risk the resource on the remaining 30 sections to determine the full potential of this play.
During the first quarter of 2014, Rock plans to drill an additional 7 (7.0 net) horizontal wells in the Viking play at Onward, and 4 (4.0 net) additional 40 acre step out locations at Mantario (as of this date, 3 (3.0 net) of the Mantario wells have been drilled and cased as successful oil wells). This additional drilling activity will allow the Company to de-risk another 6 sections of land at Onward, and continue to determine the extent of the pool at Mantario.
For the remainder of 2014, Rock will continue to develop the Mantario pool including the construction of the infrastructure to allow for the water/chemical flood, de-risk the resource play at Onward and execute an active exploration program.
Advisory Regarding Forward-Looking Information and Statements
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 "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward looking statements and information concerning Rock's expectation of average production, including average production sales, and future drilling and development under its capital program.
The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Rock, including prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future well production rates; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the receipt, in a timely manner, of regulatory and other required approvals. Although Rock 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 Rock can give no assurance that they will prove to be correct. There is no certainty that Rock will achieve commercially viable production from its undeveloped lands and prospects.
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 natural 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 of petroleum and natural gas and 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; stock market volatility; and changes in legislation, including but not limited to tax laws, royalty rates and environmental regulations.
In this press release, the Corporation has adopted a standard for converting thousands of cubic feet ("mcf") of natural gas to barrels of oil equivalent ("boe") of 6 mcf : 1 boe. Use of boes may be misleading, particularly if used in isolation. The boe rate is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalent of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value.
Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Rock are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Rock 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.
Rock Energy Inc.
Allen J. Bey
President and Chief Executive Officer
Rock Energy Inc.
Vice President, Finance and Chief Financial Officer
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