Reliable Energy Ltd.
TSX VENTURE : REL

Reliable Energy Ltd.

November 27, 2009 13:57 ET

Reliable Announces its Financial & Operating Results for the Third Quarter Ended September 30, 2009

CALGARY, ALBERTA--(Marketwire - Nov. 27, 2009) - Reliable Energy Ltd. (the "Company" or "Reliable") (TSX VENTURE:REL) is pleased to report its operational and financial results for the third quarter ended September 30, 2009.

The financial statements and management discussion and analysis for the three and nine months ended September 30, 2009 for Reliable will be available at www.sedar.com or at the Company's website www.reliableenergy.ca.

OVERALL PERFORMANCE

The Company continued to expand its operations during the quarter, focusing on its planned drilling and seismic programs on its Bakken play in the Kirkella area in southeast Saskatchewan and southwest Manitoba.

Highlights in the quarter include:

  • The Company achieved a 420% increase in production during the quarter and a 224% year-to-date, compared with 2008. This was a result of Bakken oil production in Kirkella. Production for the quarter averaged 81 boe per day (net) compared with 16 boe per day (net) for the third quarter last year and the Company exited the quarter at 124 boe per day (net) of oil & natural gas production.
  • The Company completed and brought on production 3 of the 4 wells drilled during the second quarter. The fourth well was suspended.
  • Capital expenditures for the quarter totalled $1,956,658 and included completion and equipping activities of $706,843 and land acquisitions of $1,121,481. This compares with capital expenditures of $388,384 in 2008.
  • The Company added a further 11,495 (net) acres of undeveloped land in the quarter while lands under option decreased by 542 (net) acres.
  • During the quarter the Company commenced negotiations on a private placement and joint venture with Crescent Point Energy Corp. ("Crescent Point"). The private placement, totalling $5.2 million, included $4.8 million by Crescent Point, while the joint venture resulted in a contribution of lands and cash by Crescent Point for a 25% working interest in the joint venture area. The private placement and joint venture were finalized on October 2, 2009.
  • Commenced negotiations on the acquisition of Element Energy Canada Ltd. The acquisition, finalized on October 22, 2009, resulted in the issue of 11,025,000 shares of Reliable to shareholders of Element. Element's assets consisted of $1.5 million in cash and 1.4 sections of land in Alberta.
  • The Company recorded a net loss of $1,233,169 or $0.010 per share compared with a loss of $425,463 or $0.011 per share in 2008. The increased loss was mainly due to stock based compensation of $853,100 relating to stock options issued to directors, management, employees and consultants. Year to date, the Company has recorded net income of $93,206 or $0.001 per share compared with a loss of $1,277,021 or $0.034 per share in 2008. The increase in income was mainly the result of a future income tax recovery of $2,560,750.

OUTLOOK

With the completion of the Crescent Point and Element Energy transactions, the Company has made preparations for a significant increase in activity in the fourth quarter.

The Company has commenced a major 2D seismic survey in the Kirkella area, results of which will be used to identify drilling locations on our exploration prospects. The Company has drilled four development wells into its discovery pool at south Kirkella and has started drilling seven to nine (5.25 to 6.75 net) exploration wells on prospects identified in the Kirkella area.

Based on the current level of development and exploratory drilling, the Company expects to exit 2009 at 250 to 300 boe per day of production.

Reliable's remaining obligations from its 2008 flow through share financing at September 30, was approximately $5.8 million. The current exploratory drilling program and the 2D and 3-D seismic surveys will satisfy these requirements.

FINANCIAL AND OPERATING HIGHLIGHTS

  Three months ended 
  September
30, 2009
  June 30,
2009
    September
30, 2008
 
Financial         
Gross Revenue$      458,678 $      411,581 $        55,695 
Net (Loss) (1,233,169)  (745,528 (425,463
 Per share - basic (0.010)  (0.006 (0.011
Cash flow used in operations 234,351  626,856  397,929 
Capital expenditures 1,937,658  3,245,674  388,384 
Total assets 11,665,158  12,245,979  2,061,986 
Weighted average shares - basic 126,855,872  126,855,872  38,124,978 
          
Operational         
Production (boe) 7,547  7,779  1,429 
Lands         
 Undeveloped land (net acres) 73,863  62,368  13,322 
 Lands under option (net acres) 16,512  17,054  - 
Wells drilled         
 Gross -  4.0  1.0 
 Net -  3.9  0.5 

SELECTED QUARTERLY INFORMATION

  3 months ended September 30  9 months ended September 30
  2009 2008  2009 2008
Production         
 Natural gas - mcf 8,937 8,569  31,927 36,491
 Crude oil – bbls 6,057 -  14,413 -
 Total production - boe (6:1) 7,547 1,429  19,736 6,083
          
Gross sales revenue$      458,678$      55,695 $    1,071,821$      240,632
Royalties 76,202 14,745  161,741 55,991
Operating expenses 77,324 47,960  218,557 170,253
Net operating revenue 305,152 (7,010 691,523 14,388
          
Average price - $/boe 60.78 38.97  54.31 39.56
Operating costs - $/boe 10.25 33.56  11.07 27.99
Netback - $/boe 40.43 (4.91 35.04 2.37

Note: A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 

About Reliable
Reliable is an Alberta based public company listed on the TSX Venture Exchange. The Company has two core areas in the Western Canadian Sedimentary Basin: The focus area consists of a Bakken oil play situated on the Saskatchewan – Manitoba border. The second is a Nisku oil play in central Alberta.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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