CALGARY, ALBERTA--(Marketwire - Aug. 21, 2008) - NuLoch Resources Inc. (TSX VENTURE: NLR-A.V) advises that it has filed its unaudited interim financial statements for the three months ended June 30, 2008 at www.sedar.com.
NuLoch Resources Inc. was incorporated on May 13, 2005 and commenced operations on July 1, 2005. Production averaged 561 boe/d in the second quarter of 2008 and is currently 625 boe/d. Accomplishments in Q2 2008 - Completed Tableland Saskatchewan horizontal well and commenced evaluation; - Achieved quarterly profit of $823,000 compared to $54,000 loss in Q2 2007; - Funds flow from operations in Q2 was $2,374,000 compared to $333,000 in Q2 2007; - Averaged 561 boe/d - up 36% over Q1 and 125% higher than Q2 2007; - Expanded available line of credit to $9,000,000 in August.
HIGHLIGHTS
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Periods ended June 30,
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Three months Six months
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2008 2007 2008 2007
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OPERATING
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Production - daily average
Oil and NGL (bbls/d) 193 39 179 31
Natural gas (Mcf/d) 2,206 1,261 1,845 1,435
Combined (boe/d)(1) 561 249 487 269
Average sales prices
Oil and NGL ($/bbl) 119.39 69.26 108.16 67.09
Natural gas ($/mcf) 10.54 6.94 9.48 7.13
Combined ($/boe) 82.57 45.98 75.74 45.51
FINANCIAL
($ thousands except per share amounts)
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Petroleum and natural gas revenue 4,214 1,043 6,707 2,220
Funds flow from operations(2) 2,374 333 3,590 753
Per share - basic 0.07 0.02 0.12 0.03
Per share - diluted 0.07 0.02 0.12 0.03
Net earnings (loss) 823 (54) 1,108 (156)
Per share - basic 0.02 - 0.04 (0.01)
Per share - diluted 0.02 - 0.04 (0.01)
Working capital deficiency (3,895) (4,313) (3,895) (4,313)
Line of credit available(3) 9,000 5,500 9,000 5,500
Capital expenditures 7,451 1,467 12,501 2,795
COMMON SHARES
(thousands)
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Class A, end of period 30,780 15,197 30,780 15,197
Class B, end of period 653 653 653 653
Options, end of period 2,885 823 2,885 823
Basic, weighted average combined 33,716 21,722 29,156 21,722
Diluted, weighted average 34,378 21,722 29,409 21,722
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(1) Six mcf of natural gas is considered equivalent to 1 barrel of oil.
(2) Cash flow from operations before changes in non-cash operating working
capital.
(3) Effective August 2008
(see Advisories)
Financial Performance and Current Production NuLoch has posted exceptionally strong financial and operating results during the second quarter of 2008. At 561 boe/d, average production is up 36% over Q1 and 125% higher than Q2 2007. When combined with record oil prices and a rebound in the natural gas markets, the higher production rate translates into funds flow from operations that is twice that of the first quarter of 2008 and is over 7 times greater than that recorded in the second quarter of 2007. Since the end of Q2, the Company has added production from a 100% working interest oil well at Enchant to boost the current production rate to 625 boe/d. All of this production is located in Alberta. Tableland, Saskatchewan During Q2, NuLoch undertook completion operations on its horizontal well at Tableland, Saskatchewan. NuLoch is currently acquiring surface locations for potential follow-up wells and has plans to participate in at least one well in the second half of 2008 to further evaluate its extensive land position. The initial well, located at 14-04 HZ 01-04-001-10W2 has been fracture stimulated in eleven separate stages over its 1,434 metre horizontal length. The fracture stimulation injected hydrocarbon-based load fluid and ceramic proppant at planned volumes, rates and concentrations. The evaluation of the well commenced on June 21, 2008 and is continuing. This process is taking longer than originally anticipated. The well was shut-in for 9 days in early July when it was equipped with production tubing and a pumpjack. More recently, the well developed a hole in the tubing resulting in another 12-day period of shut-in while waiting on service rig availability and weather. Approximately 8,500 barrels of 29 degree API hydrocarbon-based load fluid was injected into the wellbore during the fracture stimulation. Formation crude oil is expected to have a specific gravity of at least 40 degrees. To August 18, 2008, approximately 6,800 barrels of load fluid and crude oil had been recovered over 777 hours. The well is producing an emulsion of crude oil, salt water and load fluid at 350 barrels per day, being the maximum capability of the pumping equipment. Approximately 75 percent of the emulsion is salt water. NuLoch is encouraged by the presence of formation oil and gas and the high fluid level in the well. Once fully evaluated, the production test may confirm an extension to a developing light oil resource play in North Dakota and could set up a significant development program in Canada. This is NuLoch's first well at Tableland Saskatchewan and the Company has earned a 70% working interest (before payout) in any production from this well. The Company has now earned working interests ranging from 35% to 50% in the balance of the 51 section farm-in block. Alberta Operations Alberta operations accounted for all of the 149 boe/d increase in average production in Q2 over Q1. The existing two (0.6 net) oil wells at Balsam benefited from equipment optimizations in Q1 and contributed 51 boe/d to the increase. Contributions also came from two natural gas wells (1.6 net) drilled in Q4 2007 that were brought on production in Q2 2008. The first well (0.6 net) is a Belly River producer that was started up on April 3 and provided an average of 77 boe/d in Q2. The other well (1.0 net) is completed in the Mississippian and averaged 50 boe/d after start-up on May 6, 2008 to provide 29 boe/d towards the quarter's average production rate. The Mississippian well is slightly sour and maximum production rates will require a complicated four mile tie-in to the nearest plant. However, the well is producing at a restricted rate utilizing a wellsite sweetening unit and a shorter, two mile, tie-in to an existing sweet gathering system. Additional de-bottlenecking is being undertaken. In July, NuLoch drilled another Mississippian well 1.5 miles away using the same play concept. The well is currently being tested for productive capability with encouraging early indications. The Company has two additional follow-up locations planned before the end of the year. NuLoch drilled a 100% working interest well at Enchant in March 2008 and completion operations were undertaken in July. The well commenced production as a flowing oil well on August 5 and has averaged a stable 90 barrels per day over its first 15 days. Tie-in of the associated solution gas (20 boe/d) is currently being organized and the Company plans a follow-up location this fall. Outlook The Company plans to drill four wells in the last four months of 2008 including a well at Tableland, two Mississippian gas wells and a follow-up to the oil well drilled at Enchant in Q1. The planned working interest at Tableland is 35 percent while the Alberta wells are all 100 percent. The seven shallow gas completions originally scheduled for Q2 are now planned for the second half of 2008. Advisories Use of Barrels of Oil Equivalent (boe) Disclosure provided herein in respect of boe units may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf of natural gas to 1 bbl of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and may not represent a value equivalency at the wellhead. Non-GAAP Measurement - Funds Flow Funds flow from operations, calculated as cash flow from operating activities before changes in non-cash working capital, is used by the Company as a key measure of performance. Funds flow from operations does not have a standardized meaning prescribed by Canadian GAAP and therefore may not be comparable with the calculation of similar measures for other companies. Funds flow from operations as presented is not intended to represent operating profits for the period, nor should it be viewed as an alternative to cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP. Many of the Company's peers in the oil and natural gas industry use the same definition and, therefore, disclosure herein enhances comparability with those peers. Funds flow from operations per share is calculated using the same share bases which are used in the determination of earnings per share. Forward-Looking Statements Certain statements in this document or incorporated herein by reference constitute "forward-looking statements". These forward-looking statements can generally be identified as such because of the context of the statements, including words indicating that the Company "believes", "anticipates", "expects", "plans" or words of a similar nature. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's products; industry capacity; the ability of the Company to implement its business strategy, including exploration and development activities; the ability of the Company to complete its capital programs; successful negotiations with bankers and other third parties; the success of exploration and development activities; production levels; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations); asset retirement obligations; and other circumstances affecting revenues and expenses. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.ContactsR. Glenn Dawson NuLoch Resources Inc.
President and CEO
(403) 920-0455
2200, 444 - 5th Avenue SW
NuLoch Resources Inc.
Calgary, Alberta T2P 2T8
(403) 920-0457 (FAX)
Email: nuloch@nuloch.ca
