Molopo Energy Limited

Molopo Energy Limited

December 20, 2012 17:01 ET

Molopo Energy Announces Preliminary Well Results from 54-1H

CALGARY, ALBERTA--(Marketwire - Dec. 20, 2012) - Molopo Energy Limited (ASX:MPO) today announces preliminary results from our Baggett 54-1H well, the first Bench B well drilled in our Fiesta acreage, as well as our expected 2012 exit production rate.

The well has been on gas lift for 34 days, producing for a total of 800 hours. Through this period, the well has performed consistently with other wells drilled in the Fiesta area, and these results will contribute to Molopo's ongoing development strategy in Fiesta. Since flow back of the well commenced, the peak 24 hour hydrocarbon wellhead rate thus far is 431 boe/d, comprising approximately 87 bbl/d of crude oil, 175 bbl/d of NGLs and 1,015 mcf/d of natural gas. In general, the wells are tending to produce a higher proportion of natural gas and lower initial production rates but appear to exhibit a flatter decline curve than originally anticipated. Understanding each of these characteristics and the impact on our economics is key as we develop our 2013 capital and operating budget.

Although the well results from 54-1H are preliminary, the information obtained from this and the two other wells drilled in Fiesta in the latter half of calendar year 2012 provides valid well performance from both Bench A and Bench B. Having actual data from wells drilled on our acreage supplements data available from other operators' Wolfcamp wells, and enables Molopo to proceed with finalizing our budget.

Once production commences from Barnhart 24-2H, the final well drilled in calendar year 2012, we will incorporate data from all well results into the budget and have a program designed to achieve economic growth in production and reserves. The team is focused on driving overall program costs down to further enhance the overall economics of the play. We anticipate releasing details of this budget in early 2013 upon approval by the Board.

Early in 2012, Molopo set a projected exit production rate which was based on production contributions from all 6 wells to be drilled in the latter half of 2012, and also assumed well performance consistent with type curves originally seen in the area. Due to timing delays, as well as variability in well performance, Molopo now expects to exit the year with a production level of approximately 1,000 boe/d. This exit production level is an increase of approximately 650% from the prior year's exit rate, and positions the company well to continue pursuing production and reserves growth.

The Wolfcamp is an emerging resource play that is effectively still in its infancy. With only 2-3 years of development behind it, operators in the area continue working to understand the play and execute optimal strategies for economically developing the vast resource within it. Work done to date demonstrates that the Wolfcamp is not homogenous and that variability of results should be expected across different parts of the play, and even across different parts of the same land block. Our focus in the Wolfcamp will be to continue investing capital prudently, to increase our production, reserves and cash flow, and to position Molopo for long term growth. Based on results to date, we believe our Wolfcamp assets can deliver attractive rates of return to the Company and its shareholders.

This press release contains certain forward-looking statements. These statements relate to future events or future performance of the Company. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "predict", "seek", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to certain events, and are subject to a number of risks, uncertainties and assumptions. Many factors could cause Molopo's actual results, performance, or achievements to materially differ from those described in this press release. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in other public disclosures made by the Company or this press release as intended, planned, anticipated, believed, estimated, or expected. Furthermore, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be produced profitably in the future. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary declaration. These statements speak only as of the date of this press release. The Company does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.

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