Resolute Energy Inc.

Resolute Energy Inc.

March 07, 2005 09:11 ET

Resolute Energy Reserves up 33%, Replacing 365% of Production


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: RESOLUTE ENERGY INC.

TSX SYMBOL: RSE

MARCH 7, 2005 - 09:11 ET

Resolute Energy Reserves up 33%, Replacing 365% of
Production

CALGARY, ALBERTA--(CCNMatthews - March 7, 2005) - Resolute Energy Inc.
(TSX:RSE) (Resolute or the Company) is pleased to provide the following
operational update and highlights of its independent reserve evaluations
conducted by Gilbert Lausten Jung Associates Ltd. (GLJ) and Sproule
Associates Ltd. (Sproule). The reports were prepared in accordance with
National Instrument 51-101 (NI 51-101) for the year ended December 31,
2004. GLJ has evaluated 100% of the Company's reserves with the
exception of the coalbed methane (CBM) reserves and up-hole Edmonton and
Belly River sands in central Alberta, which were evaluated by Sproule.
Capital expenditures used in calculating all finding, development and
acquisition (FD&A) costs are subject to final audit confirmation.

All references and calculations involving reserves are based on proved
plus probable reserves unless otherwise noted.

HIGHLIGHTS

Reserves

- Reserves increased by 33% to 24.9 million boe. Reserves per common
share correspondingly increased by 31%.

- Added 8.5 million boe of reserves, replacing production by 365%.

- Increased reserve life index to 9.6 years from 8.7 years in 2003.

- 2004 FD&A costs were $13.12/boe (three-year average - $10.58/boe)
pursuant to NI 51-101. Excluding changes in future capital, the cost was
$9.45/boe.

- Net present value of proved plus probable reserves, using a 10%
discount factor, increased by $2.00/share, a 70% increase over 2003.

Operating

- Fourth-quarter production averaged 7,073 boe/d.

- Current production is approximately 7,500 boe/d, excluding 200 boe/d
awaiting pipeline repairs and approximately 1,000 boe/d awaiting
compression facilities and pipelines at Malmo.

- Completed 7-well drilling program at Ante Creek in northwestern
Alberta with significantly improved initial well performance than 2004.

- Drilled 17 wells and re-completed 14 at Malmo.

- Currently drilling a 24-well Second White Specks program at Winnifred.

- Drilled an exploration well (50% W.I.) with multi-zone potential at
Gordondale.

Production

Fourth-quarter 2004 production averaged 7,073 boe/d. Current production
is approximately 7,500 boe/d, exclusive of 200 boe/d of production that
is temporarily shut-in at Kaybob due to a pipeline disruption. The
Kaybob production has been suspended since the beginning of 2005 but is
expected to be back on-stream by the end of March. Resolute's production
is anticipated to further increase by an estimated 1,000 boe/d following
installation of compression facilities and pipelines at Malmo.

2005 Capital Plans and Guidance

For 2005, the Company has budgeted an $85 million capital spending
program that will be funded from cash flow and existing credit
facilities. The Company plans to drill 110-120 wells this year.
Approximately 40% of the capital program is expected to be executed
during the first quarter. Capital expenditures for 2005 are tracking
below budget as $1.9 million of drilling materials and equipment were
pre-purchased in 2004 in anticipation of supply shortages during the
winter drilling season. Based on the results to date, the Company
confirms that current expectations for 2005 operating results continue
to be within the guidance released on November 4, 2004.

Northwest Alberta

Ante Creek

Resolute drilled 7 successful wells at Ante Creek between December and
February. All of the new wells were tied-in ahead of schedule by the end
of February. Following a year of experience in the area, the Company has
lowered drilling costs and improved completion techniques. Current
activities benefited economically from existing processing facilities
and pipeline systems which were constructed in 2004. Initial well
performance, on average, is significantly better than 2004 results.
Subject to continuing well performance, Resolute expects to initiate an
expanded drilling program in 2005/2006. Based on our current land
position and geological mapping, 35 - 50 locations have been identified
for potential drilling over the next three winters.

Gordondale

The Company participated in a successful exploration well (50% W.I.),
which has the potential to produce from multiple horizons. The well is
currently awaiting completion and is close to an existing pipeline. A
second well was dry and abandoned. In late 2004, the Company added
low-cost production by reactivating wells in the Gordondale Halfway
pool. As a result, Resolute plans to initiate an infill drilling program
later this year.

Chinchaga

Resolute drilled and abandoned a Slave Point test well (50% W.I.) in
January.

Central Alberta

Malmo

Resolute recently drilled 17 wells and re-completed another 14 for the
Horseshoe Canyon coals and Belly River sands in the Malmo area. Current
production is 3 mmcf/d (500 boe/d) with approximately 6 mmcf/d (1,000
boe/d) to be added by summer when additional compression and low
pressure pipelines are installed. An additional 30 wells are planned
over the remainder of the year.

As at December 31, 2004, Sproule assessed Resolute's CBM reserves in
central Alberta at 21 bcf on the basis of activities undertaken in 2004.
There were no CBM reserves booked in 2003. Resolute's 2005 capital
program has $29 million allocated for CBM development.

Bigoray

The Company undertook a successful 4-well recompletion program.

Southern Alberta

Winnifred

Resolute recently commenced drilling a 24-well Second White Specks
program as a follow-up to the successful Winnifred North program in
2004. The Company expects to complete wells and tie-in production from
the current drilling program following spring break-up. Available
capacity exists at Company-owned facilities to handle incremental
production resulting from this program.



2004 Reserves Information

RESERVE LIFE INDEX

Using Annualized Fourth
Quarter Production
------------------------------------------------------------------------
2004 2003
------------------------------------------------------------------------
Production (boe/d) 7,073 5,903
Proved reserves (mboe) 17,495 15,029
Proved reserve life index (years) 6.8 7.0
Proved + probable reserves (mboe) 24,853 18,718
Proved + probable reserve life index (years) 9.6 8.7



RESERVES SUMMARY
COMPANY INTEREST (Includes working interests and royalty interests.)

------------------------------------------------------------------------
2004
------------------------------------------------------------------------
Crude Natural Oil
Oil Gas NGL's Equiv.
(mbbl) (mmcf) (mbbl) (mboe)
------------------------------------------------------------------------
Proved producing 2,976 59,992 537 13,511
Proved non-producing 382 21,183 71 3,984
------------------------------------------------------------------------
Total proved 3,358 81,175 608 17,495
Probable 1,095 36,477 183 7,358
------------------------------------------------------------------------
Proved + probable 4,453 117,652 791 24,853
------------------------------------------------------------------------


------------------------------------------------------------------------
Year to
2003 Year Change
------------------------------------------------------------------------
Crude Natural Oil Oil
Oil Gas NGL's Equiv. Equiv.
(mbbl) (mmcf) (mbbl) (mboe) (mboe) (%)
------------------------------------------------------------------------
Proved producing 3,050 54,425 645 12,766 745 5.8%
Proved non-producing 98 11,843 192 2,263 1,721 76.0%
------------------------------------------------------------------------
Total proved 3,148 66,268 837 15,029 2,466 16.4%
Probable 608 17,591 149 3,689 3,669 99.5%
------------------------------------------------------------------------
Proved + probable 3,756 83,859 986 18,718 6,135 32.8%
------------------------------------------------------------------------


2004 RESERVES RECONCILIATION
COMPANY INTEREST (Includes working interests and royalty interests.)


Crude Natural Oil
Oil Gas CBM NGL's Equiv.
TOTAL PROVED (mbbl) (bcf) (bcf) (mbbl) (mboe)
------------------------------------------------------------------------
Opening balance 3,148 66.3 - 837 15,029
Drilling additions 370 13.3 8.2 49 4,007
Improved recovery 357 6.0 - 21 1,383
Revisions/economic
factors 125 (3.8) - (196) (705)
Acquisitions/
dispositions (98) 1.2 - - 108
Production (544) (9.8) (0.2) (100) (2,325)
------------------------------------------------------------------------
Closing balance(1) 3,358 73.2 8.0 610 17,497
------------------------------------------------------------------------
TOTAL PROVED
PLUS PROBABLE
Opening balance 3,755 83.9 - 987 18,718
Drilling additions 795 17.3 21.4 102 7,354
Improved recovery 440 7.9 - 26 1,778
Revisions/economic
factors 120 (2.2) - (223) (473)
Acquisitions/
dispositions (114) (0.5) - - (200)
Production (544) (9.8) (0.2) (100) (2,325)
------------------------------------------------------------------------
Closing balance(1) 4,453 96.5 21.2 791 24,853
------------------------------------------------------------------------
(1) Totals may include rounding differences.


2004 FINDING, DEVELOPMENT AND ACQUISITION COSTS (Includes all reserves
and capital for exploration, development and acquisition activities.
The analysis incorporates the effect of future capital and the effect
of revisions.)

Proved +
$ thousands except units and unit costs Proved Probable
------------------------------------------------------------------------
Exploration and development capital 80,432 80,432
Acquisition/dispositions (488) (488)
------------------------------------------------------------------------
Total capital 79,944 79,944
Future capital at December 31, 2004 (9,133) (16,467)
Future capital at December 31, 2003 31,445 49,363
Pre-purchased future development capital (1,867) (1,867)
------------------------------------------------------------------------
Total, including change in future capital 100,389 110,973
------------------------------------------------------------------------
Exploration and development
reserve additions (mboe) 5,390 9,132
Acquisitions/dispositions (mboe) 108 (200)
Revisions (mboe) (705) (473)
------------------------------------------------------------------------
Net total reserve additions (mboe) 4,793 8,459
------------------------------------------------------------------------
Finding, development and acquisition
cost ($/boe) 20.94 13.12
------------------------------------------------------------------------

3 YEAR FINDING, DEVELOPMENT AND ACQUISITION COSTS (Includes all reserves
and capital for exploration, development and acquisition activities
since the inception of Resolute. This includes the initial acquisition
of Equatorial Energy and the subsequent disposition of its Indonesian
assets. The analysis incorporates the effect of future capital.)

Proved +
$ thousands except units and unit costs Proved Probable
------------------------------------------------------------------------
2002 acquisition of Equatorial Energy 132,440 132,440
2003 disposition of Indonesian assets (23,500) (23,500)
------------------------------------------------------------------------
Net corporate acquisition cost 108,940 108,940
2002-2004 capital 162,223 162,223
------------------------------------------------------------------------
Total capital since inception 271,163 271,163
Future capital at December 31, 2004 31,445 49,363
Pre-purchased future development capital (1,867) (1,867)
------------------------------------------------------------------------
Total, including future development capital 300,741 318,659
------------------------------------------------------------------------
2002-2004 production (mboe) 5,262 5,262
Reserves at December 31, 2004 (mboe) 17,495 24,853
------------------------------------------------------------------------
Total reserve additions (mboe) 22,757 30,115
------------------------------------------------------------------------
Finding, development and acquisition
cost ($/boe) 13.22 10.58
------------------------------------------------------------------------


In this release, reserves and production are commonly stated in barrels
of oil equivalent ("boe") using a six-to-one conversion basis when
converting thousands of cubic feet of natural gas to barrels of oil and
a one-to-one conversion basis for natural gas liquids. Such conversion
may be misleading, particularly if used in isolation. A six-to-one
conversion ratio is based on energy equivalence between natural gas and
oil at the burner tip and does not represent economic equivalence of
Resolute's products at the wellhead or point of sale.

This news release contains statements that are forward looking, such as
those relating to results of operations and financial condition, capital
spending, financing sources, commodity prices, costs of production and
the magnitude of oil and gas reserves. By their nature, forward-looking
statements are subject to numerous risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly,
actual results may differ materially from those predicted. The
forward-looking statements contained in this news release are as of
March 7, 2005 and are subject to change after this date. Readers are
cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of preparation,
may prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements. Resolute disclaims any intention
or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

Resolute Energy Inc. is a growing, independent oil and gas company,
actively pursuing petroleum and natural gas exploration, development and
production in Western Canada. Based in Calgary, Alberta, Resolute's
common shares (RSE) trade on the Toronto Stock Exchange. Learn more
about Resolute at www.resoluteenergy.com

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Resolute Energy Inc.
    Brian Lemke
    President and Chief Executive Officer
    (403) 264-9562 or Toll Free: 1-888-608-1866
    or
    Resolute Energy Inc.
    C. Dean Setoguchi
    Vice President and Chief Financial Officer
    (403) 264-9562 or Toll Free: 1-888-608-1866
    Email: investors@resoluteenergy.com
    Website: www.resoluteenergy.com