Reliable Energy Ltd.
TSX VENTURE : REL

Reliable Energy Ltd.

May 25, 2011 18:27 ET

Reliable Energy Ltd. Announces 2011 First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 25, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Reliable Energy Ltd. ("Reliable" or the "Company") (TSX VENTURE:REL) is pleased to report its financial and operational results for the three months ended March 31, 2011.

HIGHLIGHTS

Three Months Ended March 31,20112010Change
(000s, except per share amounts)($)($)(%)
Financial
Gross revenue4,9172,133130
Net loss1,14171160
Per share – basic0.0050.00425
Per share – diluted0.0050.00425
Cash flow generated by operations (1)2,719934191
Per share – basic0.0120.005140
Per share – diluted0.0110.005120
Capital expenditures9,4565,03588
Total assets46,96625,28186
Working capital (deficiency)(9,982)(1,924)(419)
Shareholders' equity29,74116,46481
(000s)(#)(#)(%)
Share Data
At period-end236,338182,96629
Weighted average
Basic236,297182,80229
Diluted243,962192,50727
(%)
Operational
Production
Light crude oil (bbls/d)632289119
Natural gas (mcf/d)--107--
Total (boe/d)632307106
Total (boe)56,86527,621106
Average wellhead prices
Light crude oil ($/bbl)88.2680.4210
Natural gas ($/mcf)--4.24--
Total ($/boe)88.2677.2414
Operating cost ($/boe)14.0312.0616
Operating netback ($/boe)61.6452.5517
Three Months Ended March 31,20112010Change
(%)
Gross (net) wells drilled
Oil (#)4 (3.7)5 (4.0)
Gas (#)-- (--)-- (--)
Awaiting completion (#)2 (1.2)4 (3.0)
Shut-in or suspended (#)(3)-- (--)-- (--)
Dry and abandoned (#)-- (--)-- (--)
Total (#)(4)6 (4.9)9 (7.0)
Average working interest (%)8278
(1)Cash flow from operations, cash flow from operations per share and netback or operating netback are not recognized measures under International Financial Reporting Standards.Refer to the Management's Discussion and Analysis for further discussion.
(2)Barrels of oil equivalent ("boe") 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 tip and does not represent a value equivalency at the wellhead.
(3)Shut-in or suspended wells are cased wells not placed on production or producing wells that have been shut-in.
(4)Included in the total number of wells drilled was 1 gross (0.4 net) non-operated well.

FIRST QUARTER ACCOMPLISHMENTS

The success of Reliable's business strategy continues to be reflected in the record revenue, cash flow and operational success the Company achieved during the three months ended March 31, 2011. The Company's first quarter results included:

  • Spending $9.5 million in capital expenditures that included drilling 5 gross (4.5 net) horizontal wells in the Kirkella region of southeastern Saskatchewan/southwestern Manitoba and participating in the drilling of 1 gross (0.4 net) non-operated vertical exploratory well in Blaine County, Montana. Four of the five horizontals were placed on production during the quarter, while the vertical well was cased and is awaiting completion and testing, which is expected by the end of May. In addition, the Company completed and brought on-stream 4 gross (3.5 net) horizontal wells that were standing and awaiting fracing at year-end.
  • Growing average daily production 106% to 632 boe/d and exiting the quarter at 715 boe/d, up from 470 boe/d at December 31, 2010. Reliable is 100% weighted to light oil production.
  • Adding 3,730 acres to its land base for a total of 201,156 net undeveloped acres.
  • Improving cash flow from operations 191% to a record $2.7 million or $0.012 per basic share.
  • Achieving operating netbacks of $61.64/boe, representing increases of 17% and 21% over the first and fourth quarters of 2010, respectively.
  • Maintaining a strong financial position with forecasted net debt to cash flow of 1:1 and current unutilized lines of credit of $15.3 million.

Outlook

The Company's business plan for 2011 included a balance of development and exploration drilling aimed at adding reserves, production and cash flow, while further delineating and proving up the existence of oil reserves on its extensive undeveloped land base.

While Reliable's first quarter performance was strong, the Company continues to be affected by the availability of services and the above average precipitation levels in southeastern Saskatchewan and southwestern Manitoba. Consequently, Reliable is expecting a longer than normal spring breakup in these areas that could impact the Company's ability to fully execute the remainder of its 2011 business plan. Any further delays in securing services or getting into the field could have a negative effect that would necessitate a revision to its annual average production and cash flow guidance, and as a result, the Company will closely monitor conditions.

The second quarter is typically a period of limited activity due to spring breakup. However, the Company will be busy preparing its drilling and completion programs that are expected to commence in late June or July. Reliable is planning to drill ten horizontal wells in the Kirkella region that will further delineate its play area, while providing increased production and cash flow. In Blaine County, the Company plans to complete and test the vertical well it drilled during the first quarter and expects that two follow up wells will be drilled in this area during the second half of the year.

With an inventory of more than 250 net drill ready horizontal drilling locations that require no further technical review and an additional 200 net potential locations identified to date, Reliable is well positioned for long-term growth that will be significantly enhanced with the introduction of a water flood program.

ABOUT RELIABLE

Reliable Energy Ltd. is an Alberta based junior oil company with a strong exploration component that commenced operations in 2005. Reliable's activities are primarily focused in the Kirkella area situated on the Saskatchewan/Manitoba border where it holds over 80,000 net acres of undeveloped lands. Kirkella is a Bakken oil rich prospect area that possesses high operating margins and multiple formation potential. The Company has an inventory of approximately 250 net horizontal drilling locations with a further 200 net potential locations identified in the Kirkella region. Reliable's second focus area is in Blaine County, Montana, where the Company holds almost 100,000 net undeveloped acres on an emerging Bakken oil play.

Reliable's goal is to become a low cost, value added growth company. The Company's strategy is to concentrate on exploration and development drilling activities in oil rich core areas. Reliable will continue to build on its highly prospective light oil land position in Manitoba /Saskatchewan and Montana and, through prudent development, add to its reserves and production base with the objective of providing sustained future growth and superior returns to shareholders.

Common shares of Reliable Energy Ltd. are listed for trading on the TSX Venture Exchange under the symbol REL.

ADVISORY:This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, "Outlook" and the first two paragraphs of "About Reliable" are forward-looking statements. Although Reliable believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Reliable 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 forward-looking statements contained in this press release are made as of the date hereof and Reliable 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 so required by applicable securities laws.

This news release does not constitute an offer to sell or a solicitation of any offer to buy the securities in the United States. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of such Act.

Neither 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.

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