Emerge Oil & Gas Inc.
TSX : EME

February 01, 2010 18:59 ET

Emerge Announces 2010 Capital Budget and Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Feb. 1, 2010) -

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Emerge Oil & Gas Inc. ("Emerge" or the "Company") (TSX:EME) is pleased to announce that its Board of Directors has approved a 2010 capital expenditures budget of $55 million for exploration and development ("E&D") activities. This represents a more than 100% increase over the Company's 2009 capital expenditures budget for E&D activities. Execution of the 2010 capital budget is anticipated to result in 2010 average daily production of between 5,400 to 5,600 boe/d, as compared to average daily production of approximately 1,240 boe/d in 2009.

Of the $55 million planned capital budget, nearly 50% is expected to be directed toward drilling, completions and equipping activities. Emerge anticipates drilling a total of 55 (55 net) wells, with over 80% of the locations planned for the Lloydminster area, primarily in Saskatchewan, targeting multi-zone, heavy oil within the Mannville group. A further 25% of our 2010 capital budget is allocated to reactivation and recompletion activities, primarily on certain shut-in and suspended wells acquired by the Company in its previously announced asset acquisition on November 30, 2009. The Company expects to target up to 110 wells in its reactivation program, with the majority focused in the Company's Lloydminster heavy oil area. Approximately 12% of the Company's capital budget is expected to be invested in facilities and infrastructure projects, primarily in the Lloydminster area, to accommodate the growth in the Company's oil production in the area. This will include expansion of central oil batteries, construction of gathering systems and a sales line, and waterflood project infrastructure.

The Company expects to fund its capital budget through a combination of cash flow and existing credit facilities. The budget is based on an oil pricing assumption of US$75/bbl WTI. Any surplus cash flow is expected to be used toward additional drilling activities in the fourth quarter, to acquire additional assets, or to reduce debt.

Operational Update

Current production, based on field estimates, is approximately 4,600 boe/d, weighted approximately 98% to oil. To-date in 2010, the Company has drilled 9 (9 net) Sparky heavy oil wells in Saskatchewan at a 100% success rate. The Company's combined debt and working capital deficiency is currently approximately $14 million, and the Company has total credit facilities with its lender of $37.5 million.

In the fourth quarter of 2009, the Company grew production to an average 2,400 boe/d, up 69% from the third quarter of 2009, and up 2186% compared to the fourth quarter of 2008. The Company drilled 14 (14 net) heavy oil wells in the fourth quarter of 2009 at a 100% success rate. Emerge's 2009 exit production was 4,300 boe/d, representing a 3483% increase over 2008 exit production of 120 boe/d. The Company's significant production growth in 2009 is attributed primarily to two acquisitions, one corporate acquisition of 950 boe/d and one asset acquisition of 2,200 boe/d combined with the related drilling and reactivation programs undertaken on the assets.

About Emerge Oil & Gas Inc.

Emerge is engaged in the exploration for and development and production of oil and natural gas in Western Canada. The Company currently operates within two principal areas, namely, the Lloydminster area of West-Central Saskatchewan and East-Central Alberta and the Battlebend area of East-Central Alberta. Emerge is headquartered in Calgary, Canada.

Forward-Looking Statements

Certain statements contained in this news release constitute "forward-looking statements" under applicable securities laws. Such forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "does not expect", "is expected", "anticipates", "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might", or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as "forward-looking statements".

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 to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. The forward-looking statements contained in this news release are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.

Barrel of Oil Equivalent

The Company may present petroleum and natural gas production and reserve volumes in barrel of oil equivalent ("boe") amounts. For purposes of computing such units, a conversion rate of 6,000 cubic feet of natural gas to one barrel of oil equivalent (6:1) is used. The conversion ratio of 6:1 is based on an energy equivalency conversion method which is primarily applicable at the burner tip and does not represent value equivalence at the wellhead. Readers are cautioned that boe figures may be misleading, particularly if used in isolation.

Contact Information

  • Emerge Oil & Gas Inc.
    Thomas J. Greschner
    Chairman, President & CEO
    (403) 718-3852
    (403) 718-3851 (FAX)
    or
    Emerge Oil & Gas Inc.
    Anita Tonn
    Vice President, Finance & CFO
    (403) 718-3855
    (403) 718-3851 (FAX)