Online Energy Inc.
TSX VENTURE : ONL

April 28, 2011 17:34 ET

Online Energy Inc. Announces Filing of Year-End Financial Statements and Provides Reserves Disclosure

CALGARY, ALBERTA--(Marketwire - April 28, 2011) - Online Energy Inc. (the "Company" – formerly Jomar Capital Corp.) (TSX VENTURE:ONL) announces the filing of its audited consolidated financial statements and related MD&A for the year ended December 31, 2010 (collectively, the "Financial Statements"). Selected financial and operational information is outlined below and should be read in conjunction with the Financial Statements. The Financial Statements are available on the SEDAR website at www.sedar.com and on the Company's website at www.onln.ca.

Highlights

Highlights for the year-ended 2010 and the first quarter of 2011 were as follows:

  • On February 26, 2010, the Company (then Jomar Capital Corp.) completed its initial public offering, issuing 6,000,000 common shares at a price of $0.10 per share. The Company was classified as a Capital Pool Company pursuant to the rules of the TSX Venture Exchange Inc. ("TSXV");
  • On September 24, 2010, the Company announced the execution of an agreement to acquire all of the issued and outstanding shares of Online Energy Inc. ("Online Private"), a private Alberta company (the "Business Combination"). The Business Combination, constituted the qualifying transaction of the Company pursuant to Policy 2.4 of the TSXV Corporate Finance Manual. Online Private was originally created to pursue oil and gas exploration opportunities in Alberta through grassroots prospecting, posting of prospective Crown mineral rights, and subsequent bidding at Alberta Crown landsales;
  • On January 26, 2011, the Company completed the Business Combination with Online Private. Just prior to the completion of the Business Combination, the assets of Online Private included 24,800 acres of undeveloped land, approximately 300 BOE/d of oil, natural gas and NGL production located in the Greater Paddle River and Niton areas of west-central Alberta (the "Assets") and cash in the amount of approximately $6 million;
  • In accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), McDaniel & Associates Consultants Ltd. ("McDaniel") prepared a report dated March 29, 2011, and effective December 31, 2010, evaluating the crude oil, natural gas liquids and natural gas reserves attributable to the Assets (the "McDaniel Report"). Based on the McDaniel Report, the Total Proven plus Probable reserves associated with the Assets are 985,100 BOE with a present worth value before tax of $8,547,500 discounted at 10% per annum;
  • On February 28, 2011, the TSXV issued a final bulletin in connection with the completion of the name change of the Company from "Jomar Capital Corp." to "Online Energy Inc." and the consolidation of the common shares of the Company on the basis of one post-consolidation share for every six pre-consolidation common shares. These changes became effective on March 1, 2011;
  • On April 15, 2011, the Company announced that it has entered into an agreement with a syndicate of underwriters led by Wellington West Capital Markets Inc. (the "Underwriters") pursuant to which the Underwriters have agreed to purchase from the Company on a bought deal basis, an aggregate of 4,000,000 common shares at a price of $0.50 per share and 3,510,000 common shares on a "flow-through" basis at a price of $0.57 per share, for total aggregate gross proceeds of $4,000,700 (the "Offering"). The Offering is scheduled to close on or about May 5, 2011 and is subject to certain conditions including, without limitation, the receipt of all necessary approvals including the approval of the TSXV;
  • Upon closing of the Offering, the Company will have working capital of approximately $11,000,000 and no debt;
  • Current production continues to be maintained at approximately 300 BOE/d (32% oil and NGLs); and
  • Made significant progress assembling a solid platform for growth directed towards ongoing activities in the greater Paddle River area. The Company is focused on oil exploration and development projects in the Viking, Ostracod and Nordegg formations and liquids-rich gas opportunities in the Notikewin formation. The Company controls approximately 25,800 net acres of undeveloped land in this area and continues to accumulate assets through Crown landsales and third-party acquisitions.

Reserves

As at December 31, 2010, the Company did not own any oil and gas properties and, as a result, has not reported any reserves data or other oil and gas information effective as of such date. However, given the significance to the Company of the reserves attributable to the Assets, the Company commissioned the preparation of the McDaniel Report.

In accordance with NI 51-101, McDaniel prepared the McDaniel Report. The McDaniel Report evaluated the oil, NGL and natural gas reserves attributable to the Assets effective December 31, 2010. The McDaniel Report is dated March 29, 2011. The tables below are a summary of the oil, NGL and natural gas reserves attributable to the Assets and the net present value of future net revenue attributable to such reserves as evaluated in the McDaniel Report. The tables summarize the data contained in the McDaniel Report and, as a result, may contain slightly different numbers than such report due to rounding. Also due to rounding, certain columns may not add exactly.

The net present value of future net revenue attributable to reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures and well abandonment costs for only those wells assigned reserves by McDaniel. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to reserves estimated by McDaniel represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of oil, NGL and natural gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein.

The McDaniel Report is based on certain factual data supplied by the Company and the Company's opinion of reasonable practice in the industry. The extent and character of ownership and all factual data pertaining to petroleum properties and contracts (except for certain information residing in the public domain) were supplied by the Company to McDaniel. McDaniel accepted this data as presented and neither title searches nor field inspections were conducted.

Summary of Oil and Gas Reserves – Forecast Prices and Costs

Gross ReservesNet Reserves
Light and Medium Crude OilHeavy OilNatural Gas
Liquids
Natural
Gas
Light and Medium Crude OilHeavy OilNatural Gas LiquidsNatural
Gas
MbblsMbblsMbblsMMcfMbblsMbblsMbblsMMcf
Proved
Developed Producing-49.6261.12711.3-51.1158.32348.2
Developed Non-Producing--------
Undeveloped--------
Total Proved49.6261.12711.3-51.1158.32348.2
Probable10.889.3734.6-11.053.9614.6
Total Proved plus Probable
60.4

350.4

3445.9

-

62.1

212.2

2962.7

Net Present Value of Future Net Revenue – Forecast Prices and Costs Before Future Income Tax

Before Future Income Tax Expenses and Discounted at
0%5%10%15%20%
(M$)(M$)(M$)(M$)(M$)
Proved
Developed Producing12,5939,1207,1335,8795,025
Developed Non-Producing-----
Undeveloped-----
Total Proved12,5939,1207,1335,8795,025
Probable5,5032,5051,414921658
Total Proved plus Probable
18,096

11,625

8,548

6,800

5,682

Net Present Value of Future Net Revenue – Forecast Prices and Costs After Future Income Tax

Before Future Income Tax Expenses and Discounted at
0%5%10%15%20%
(M$)(M$)(M$)(M$)(M$)
Proved
Developed Producing11,1748,1556,4185,3164,562
Developed Non-Producing-----
Undeveloped-----
Total Proved11,1748,1556,4185,3164,562
Probable4,1731,8901,063691493
Total Proved plus Probable
15,347

10,045

7,481

6,007

5,054

Pricing Assumptions – Forecast Prices and Costs

McDaniel employed the following pricing, exchange rate and inflation rate assumptions as of December 31, 2010 in the McDaniel Report in estimating reserves data using forecast prices and costs.

Medium and Light Crude OilNatural GasNGL
YearWTI
Cushing
Oklahoma
40 degrees API
(US$/bbl
)Edmonton
Par Price
40 degrees API
($/bbl
)Cromer
Medium
29.3 degrees API
($/bbl
)Alberta Gas Reference Price
Plantgate
($/MMBtu
)AECO - C Spot
($/MMBtu
)Pentanes
Plus
($/bbl
)Exchange
Rate
($US/$Cdn
)
201185.0084.2077.204.054.2588.200.9750
201287.7088.4080.404.704.9090.400.9750
201390.5091.8082.505.205.4093.900.9750
201493.4094.8085.205.705.9096.900.9750
201596.3097.7087.906.156.3599.900.9750
201699.40100.9090.706.556.75103.100.9750
2017101.40102.9092.506.857.10105.200.9750
2018103.40104.9094.307.157.40107.200.9750
2019105.40107.0096.207.357.60109.300.9750
2020107.60109.2098.207.507.75111.600.9750

Escalated at 2%/yr. thereafter

Online Energy Inc. is a domestic junior oil and gas exploration and production company with assets in Alberta. Online trades on the TSX Venture Exchange under the symbol ONL. Basic corporate information and periodically updated presentations is available on the Company's website at www.onln.ca.

Cautionary Statements:

This press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Online. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.

In the interest of providing Online shareholders and potential investors with information regarding the Company, including management's assessment of Online's future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward-looking statements are based on the Company's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By its nature, such forward-looking information involves 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. Online believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements.

In particular, this press release may contain forward looking statements pertaining to the following:

  • the performance characteristics of the Company's oil and natural gas properties;
  • oil and natural gas production levels;
  • capital expenditure programs;
  • the quantity of the Company's oil and natural gas reserves and anticipated future cash flows from such reserves;
  • projections of commodity prices and costs;
  • supply and demand for oil and natural gas;
  • expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and
  • treatment under governmental regulatory regimes.

The material assumptions in making these forward-looking statements include certain assumptions disclosed in the Company's most recent management's discussion and analysis included in the material available on this press release.

The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:

  • volatility in market prices for oil and natural gas;
  • liabilities inherent in oil and natural gas operations;
  • uncertainties associated with estimating oil and natural gas reserves;
  • competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;
  • incorrect assessments of the value of acquisitions and exploration and development programs;
  • geological, technical, drilling and processing problems;
  • fluctuations in foreign exchange or interest rates and stock market volatility;
  • failure to realize the anticipated benefits of acquisitions;
  • general business and market conditions; and
  • changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.

These factors should not be construed as exhaustive. Unless required by law, Online does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.

Estimated values contained in this press release do not represent fair market value.

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

Contact Information

  • Online Energy Inc.
    Steve Dabner
    President & Chief Executive Officer
    (403) 262-1901 ext. 228
    sdabner@onln.ca

    Online Energy Inc.
    Thomas Love
    Chief Financial Officer
    (403) 262-1901 ext. 227
    tlove@onln.ca
    www.onln.ca