CALGARY, ALBERTA–(Marketwired – Aug. 27, 2013) – Forent Energy Ltd. (“Forent” or the “Company“) (TSX VENTURE:FEN) is pleased to announce that it has filed its unaudited condensed Interim Financial Statements and Management’s Discussion & Analysis, for the period ending June 30, 2013, with applicable securities regulatory authorities in Canada. Copies of these documents can be accessed under the Company’s profile on the SEDAR website at www.sedar.com and on the Company’s website www.forentenergy.com. In addition, Forent announces the following corporate operational updates.
Second Quarter Results
Total revenue from petroleum sales and operations increased to $264k for the first 6 months of 2013 compared to $218k for the same time period of 2012 (an increase of 21%) due to higher natural gas price realization and decreased royalty expenses. Daily production decreased to 58 boe/d from 78 boe/d (-26%) over the first 6 months of 2012 as a result of normal production declines of the Ferrybank and Huxley pools. Operating netbacks improved to $2.03/boe from – $0.32/boe for the same time period. The operating results of the Mervin field and the resulting gain from the divestiture of the property in the first quarter of 2013 have been recorded in discontinued operations for the periods presented. Due to this material change in Forent’s operating properties, year over year comparative analysis of the reserves, production and financial statements may not yield meaningful results.
During the first six months of 2013, the Company spent $389k on operations associated with the Alton Block in Nova Scotia and the Montgomery Block in Alberta. These expenditures included the abandonment of the Alton #1 exploration well and extending the mineral rights tenure of our lands in Montgomery.
Alton Update
At Alton in Nova Scotia, Forent successfully completed the abandonment of Alton #1 well in June 2013, to ensure the capital expended on the well was fully qualified as flow-through expenditures. The wellbore was left in a state that future re-entry could be easily accommodated should further testing be warranted. While the Alton #1 well encountered several significant natural gas shows during the drilling of the well and live oil was found in the mud tank while drilling through the main Gays River Reef target, due to mineralization of the reef pore space it was determined that the well would not be able to produce economically. The costs to abandon the well will be applied against the Company’s outstanding work commitment on the Block.
Forent has invested $10.6 million on the Alton Block since 2007 and we remain excited by the potential these lands offer. In addition to 8 geophysical anomalies targeting Gays River reef locations, on the northern portion of the Alton Block Forent sees significant potential for gas reserves in the Horton Shale. Data obtained from operators offsetting Forent’s acreage indicates a significant shale gas potential exists on these lands. Forent is actively looking for a joint venture partner to assist with the continued exploration on the Alton Block.
Montgomery Oil Discovery
At Montgomery in southern Alberta, in June 2013, the 01-16 wellbore was swab tested for 2 days recovering 25.4 m3 (160 bbls), of 38° API light sweet crude. Forent is very encouraged by the recovery of oil in the centre of the Montgomery Block and remains optimistic about the resource potential of the Second White Specks (“2WS”). This discovery is the first critical step in validating our view of a regional resource play on the Montgomery Block.
The 2WS formation is an organic rich, proven source rock which is, to date, economically productive from naturally fractured portions of the reservoir. This pervasive formation has produced light oil in Alberta from the Montana border as far north as township 60 (600 km fairway) and is estimated to contain nearly 460 billion barrels of oil in place (Source: Geological Survey of Canada).
In December 2012, the 01-16-12-029W4M well was drilled and rig released. This was the first well drilled within this township and, as anticipated, provided valuable data with respect to the hydrocarbon potential in the area. The 01-16 well was perforated and stimulated in the 2WS formation to determine if hydrocarbon recovery could be achieved from a vertical test well in an area that is interpreted to be not naturally fractured. After approximately 50% of the stimulation fluid was recovered, the well started to produce trace amounts of oil, which steadily increased during the well clean up period. Bottom-hole recorders were placed in the well and the well was shut-in to obtain pressure build-up and initial reservoir pressure data.
In June 2013, the recorders were recovered and over two days of swab testing the well recovered 25.4 m3 (160 bbls) of oil and 18.8 m3 (118 bbls) of water (stimulation fluid). During this swabbing period, the flowing bottom-hole pressure continued to decline and the well started to co-produce volumes of natural gas. Forent internally estimates that the 2WS formation contains over 7 mm bbls of light sweet oil in place per section and 27.5 bcf per section of associated gas in place. While Forent is very encouraged by the recovery of oil from the 2WS interval in the 01-16 well, there is no certainty of commercial viability of the resources and that early test data should not be considered representative of the production capabilities. Forent is considering additional inflow testing of the 2WS formation in due course.
Recently, Forent has re-processed and re-interpreted its proprietary 3D seismic survey incorporating the result of the 01-16 wellbore. This has refined our interpretation to better identify areas of enhanced fracturing within the 2WS analogous to the offsetting 06-06 producing well. Forent anticipates that the next phase of drilling on the Montgomery Block will target a location in an area of enhanced natural fracturing.
In addition to further evaluation of the 2WS potential in 01-16, Forent anticipates re-completing the wellbore in a Lower Mannville sand. This sand is interpreted to be regionally pervasive and charged with sweet natural gas. Based on the 01-16 well log parameters and the interpreted pressure gradient, this sand could contain up to 23 bcf per section of natural gas; however it has not been tested or completed and there is no certainty of classification as an undiscovered resource or that it will be commercially viable to produce.
Montgomery Land Extension
Over the last several months Forent has successfully completed a mineral rights acquisition program on our Montgomery Block in southern Alberta. This program was critical to facilitating our continued exploration at Montgomery and we are pleased to announce that we have extended our mineral rights tenure for time frames ranging from 3 to 4 years. Specifically, Forent maintained all mineral rights on the majority of the Block and acquired new leases over lands that we deemed to be more prospective based on our 3D seismic interpretation. Certain lands within our original Block that were deemed to be less prospective were allowed to expire. Our gross mineral position on this contiguous Montgomery Block is currently 6,658 ha (5,941 ha net).
Shares of Forent trade on the TSX Venture Exchange under the symbol “FEN”.
This release includes certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company’s registered filings which are available at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.
Barrel of Oil Equivalent Presentation – Natural gas is converted to a barrel of oil equivalent (“boe”) using six thousand cubic feet (“mcf”) of natural gas equal to one barrel of oil unless otherwise stated. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf to one barrel (“bbl”) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe measurements and conversions in this report are derived by converting natural gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Natural Gas Liquids (“NGL”) are reported in barrels directly.
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