CALGARY, ALBERTA--(Marketwire - Nov. 20, 2012) - The General Partners of WCSB Oil and Gas Royalty Income 2010 Limited Partnership (the "WCSB 2010 Fund") and WCSB Oil and Gas Royalty Income 2010-II Limited Partnership (the "WCSB 2010-II Fund") are pleased to announce that they have completed the sale of royalties held on three wells, for total cash consideration of $3.7MM.
The WCSB 2010 Fund sold royalty interests on a single producing oil well and after this divestiture, continues to hold royalty interests on 28 wells, 26 of which were on production at the last reporting date being July 2012.
The WCSB 2010-II Fund sold royalty interests on two oil wells and after this divestiture, continues to hold royalty interests on 16 wells of which 14 were on production at the last reporting date being July 2012.
The transactions closed on Friday, November 16, 2012.
DETAILS OF THE TRANSACTIONS ARE AS FOLLOWS:
WCSB 2010 Fund
Sold royalty interest in one oil well for a price of $1,710,000.
Based on the information in WCSB 2010 Fund's October 31, 2012 independent reserve report, the purchase price equates to $63.33/BOE of proved plus probable reserves and to a present value discount rate of approximately 5%. On a producing barrel basis, using three months average production, (May to July 2012) the sale represents $93,000/flowing BOE.
The Fund's original investment in the oil well was $1,200,000 in March 2011. The well went on production in August 2011. Since going on production, the well has produced 9,361 BOE and generated total gross revenue to the Fund of $757,088.
The Fund has realized a total cash value of $2,467,000 which includes $757,000 of gross royalty revenue and sale proceeds of $1.71MM, representing the residual value of the Funds interest in the well. Further, investors in the Fund will benefit from $1.2MM of CDE and other tax deductions.
WCSB 2010-II Fund
Sold royalty interests in two oil wells for an aggregate price of $1.990MM.
Based on the information in WCSB 2010-II Fund's October 31, 2012 independent engineering report, the purchase price equates to $64.19/BOE proved plus probable reserves and to a present value discount rate of approximately 5%. On a producing barrel basis, using three months average (May to July 2012) it represents $261,840/flowing BOE.
It is important to note that these two oil wells were artificially constrained due to limited processing facilities during the three month period. Based on reasonable, unrestricted production the general partner estimates that the sale price equates to approximately $110,000/ flowing BOE.
The Fund's original investment in the two oil wells was $2.4MM in November 2010.
The wells went on production in February 2011 and March 2011. Combined, they have produced 15,185 BOE and generated total gross revenue of $1,297,000.
The Fund has realized a total value of $3,287,000 comprised of $1,297,000 of gross royalty revenue and sale proceeds of $1.99MM representing the residual value of the Funds interest in the two wells. Further, investors in the Fund will benefit from certain CDE and other tax deductions.
This sale of royalty interests is separate from the announcement of November 5, 2012, whereby the WCSB 2010 Fund and the WCSB 2010-II Fund announced that Sayer Energy Advisors has been engaged as exclusive agent to market the remaining royalty interests of the two funds.
There can be no assurance that the Funds will receive offers that are satisfactory, and the Funds are under no obligation to sell the balance of their royalty interests at this time.
WCSB's investment programs are energy focused income funds with a mandate to provide Canadian investors with income, capital appreciation, liquidity and a 100% tax deductible investment through direct participation by way of royalty interests in both oil and natural gas production. WCSB's unique business model eliminates exposure to capital market volatility associated with publicly traded energy issuers.
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements or information. Forward-looking statements and information are often, but not always, identified by the use of words such as "appear", "seek", "anticipate", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. The forward-looking statements and information are based on certain key expectations and assumptions made by management of the Fund. Although management of the Fund 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 since no assurance can be given that they will prove to be correct.
Forward-looking statements and information are provided for the purpose of providing information about the current expectations and plans of management of the Fund relating to the future. Readers are cautioned that reliance on such statements and information may not be appropriate for other purposes, such as making investment decisions. 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 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; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions and failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Accordingly, readers should not place undue reliance on the forward-looking statements, timelines and information contained in this news release. Readers are cautioned that the foregoing list of factors is not exhaustive.
The forward-looking statements and information contained in this news release are made as of the date hereof and no undertaking is given 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. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
This press release shall not constitute an offer to sell or the solicitation of any offer to buy the securities.
This release is provided for information purposes only.