CALGARY, ALBERTA–(Marketwired – Oct. 15, 2013) – Rock Energy Inc. (TSX:RE) (“Rock” or the “Company”) is pleased to report its operating results for the three months ended September 30, 2013. Rock is a Calgary-based crude oil exploration, development and production company.
Production and Operations
During Q3 2013 Rock’s daily sales averaged approximately 3,850 boepd (92% oil & liquids), and the Company is currently producing over 4,000 boepd (approximately 90% oil & liquids). Production for the quarter has exceeded management’s forecast estimate of approximately 3,500 boepd, primarily due to Rock’s continuing success in its heavy oil pool at Mantario, which is currently producing over 2,700 bbls/d. During the quarter Rock drilled a total of eleven (11.0 net) oil wells. Seven (7.0 net) vertical wells were drilled in further delineating the pool at Mantario. At Onward, one (1.0 net) vertical well was drilled in conjunction with the water flood project, one (1.0 net) exploration well was successful in penetrating a new Lloydminster heavy oil pool and two (2.0 net) horizontal wells were drilled to test the light oil productivity of the Viking Formation.
Viking Light Oil Resource Play at Onward
Rock has assembled over 37 net sections of Viking rights in the Onward area, which surround our existing Lloydminster Formation water flood project. This largely contiguous acreage is approximately 2 miles north of the Kerrobert Viking oil pool and adjacent to multi-frac horizontal wells that were recently drilled by two industry competitors. Rock has assembled exploratory data from vertical Viking completions on its acreage, including positive production tests in three completions, and confirmed the existence of light oil in the Viking on our lands. During August and September, the Company successfully drilled and multi-stage fracture stimulated two Viking horizontal wells which have been on production for 15 days with production rates averaging approximately 40 bbls/d of 37 degree API oil. While these wells have not experienced any pressure declines and are still producing back some completion fluids (approximately 20-30% water cut with the oil), the initial production results are meeting management’s expectations. Rock believes these positive production tests, though not necessarily indicative of long term performance or ultimate recovery, confirm that the Viking light oil trend extends onto Rock’s acreage at Onward. The Company plans to continue to delineate the pool to determine the full potential of this light oil resource play.
During 2013, Rock has been able to deliver significant operational and exploration success in its core areas of operation. For the remainder of the year, operational activities for Rock will include continuing the delineation and de-risking of its new Viking light oil resource play at Onward, and at Mantario the Company will drill its first two horizontal wells and 2-4 vertical step-out locations.
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.
For further information please visit Rock’s website at www.rockenergy.ca.
Allen J. Bey
President and Chief Executive Officer
Rock Energy Inc.
Vice President, Finance and Chief Financial Officer