Avatar Energy Ltd.
TSX VENTURE : AVG

Avatar Energy Ltd.

April 02, 2012 09:15 ET

Avatar Energy Ltd. Announces Sale of Non-Core Pembina Assets, Debt Reduction and Provides Operational Update

CALGARY, ALBERTA--(Marketwire - April 2, 2012) - Avatar Energy Ltd. ("Avatar") (TSX VENTURE:AVG) announces that it has closed the sale of certain non-core assets in the Pembina area to an industry participant for gross proceeds of $750,000, subject to post-closing adjustments. These non-core assets are not relevant to our area of focus or our acreage position in the Pembina Field. Proceeds from this transaction will be used to further reduce our credit facility.

Key Transaction Metrics:

  • 7 BOE/day of Avatar's Cardium light oil production
  • 1,848 net acres of land
  • Approximately $107,000 per BOE/day
  • 7 % of Avatar's December 2011 production

Operations Update:

Avatar and its joint venture partner plan to drill a well on our core Pembina acreage before August 1, 2012. The well will have a 1,200 metre horizontal leg into the Cardium sand and the completion program contemplates a 15 stage slick water fracture stimulation. The estimated cost to drill, complete, equip and tie-in this well is $2.5 million.

Initial three month production from offset wells in the same area average 120 to 245 BOE per day. Upon successful completion of the first well, Avatar's development program proposes four wells per section for a total of 16 gross wells.

Avatar believes the disposition of these non-core assets and our upcoming drilling program allow us to enhance our focus on increasing shareholder value.

BOEs

Reference to BOE means barrels of oil equivalent and is derived by converting gas to oil in the ratio of six thousand cubic feet (mcf) of gas to one barrel (bbl) of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner top and does not represent a value equivalency at the wellhead. References to BOEPD means barrel of oil equivalent per day.

FORWARD LOOKING STATEMENTS

This press release contains forward looking statements. More particularly, this press release contains statements concerning future drilling plans, proposed acquisition strategies, use of available funds and the likelihood of successful future results. Although the Corporation believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The risks to which the Corporation is subject include, but are not limited to, operational risks inherent in the exploration, development and production of oil and gas; availability of financing; general economic conditions and changes in the capital markets; volatility of oil and gas prices; competition; and changes in legislation and the regulatory environment. The forward looking statements contained in this press release are made as of the date hereof and the Corporation undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

Neither the 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.

Contact Information

  • Avatar Energy Ltd.
    Mr. Alan D. Jack, P. Eng
    President & Chief Executive Officer
    (403) 517-8818

    Avatar Energy Ltd.
    Ms. Lorie J. Hynes, CA
    Chief Financial Officer
    (403) 517-8818