Rock Energy Inc.
TSX : RE

Rock Energy Inc.

December 22, 2010 08:30 ET

Rock Energy Revises Guidance and Provides Activity Update

CALGARY, ALBERTA--(Marketwire - Dec. 22, 2010) - Rock Energy Inc. (TSX:RE) ("Rock") announces revisions to its guidance for 2010 and 2011 and provides activity update.

Production Update and Guidance for 2010 and 2011

Rock has experienced a temporary reduction in its production throughout the latter part of the fourth quarter of 2010 primarily due to excessive production downtime and reduced well performance related to cold weather conditions on its heavy oil operations. In addition, natural gas production in November and December 2010 was below expectations due to access being restricted to third party facilities within its West Central Alberta core area.

As a result, Rock announces a revision to its production guidance for 2010. Exit production rates for 2010 are anticipated to be between 3,600 boe per day and 3,800 boe per day from a previous estimate of 4,400 boe per day to 4,600 boe per day. Average production for 2010 is now expected to be between 3,600 boe per day and 3,700 boe per day from a previous estimate of 3,800 boe per day to 4,000 boe per day. Approximately 75 percent of the production rate reduction is attributable to heavy oil operations. 

The Company is actively proceeding to restore production levels. Given restricted access to third party facilities for natural gas production and time to recover from reduced heavy oil production considerations, the Company has decided to revise its previously announced average production guidance for 2011 to be between 4,200 boe per day and 4,400 boe per day from a previous estimate of 4,500 boe per day to 4,700 boe per day. Similarly, exit production rates for 2011 are anticipated to be between 4,700 boe per day and 4,900 boe per day from a previous estimate of 5,000 boe per day to 5,200 boe per day.

Activity Update

Elmworth

Rock is proceeding with its planned drilling program for 2010 to further confirm the existence of Montney natural gas reserves on Rock's land in Elmworth.

In that regard, Rock is pleased to announce that its second 100% working interest Montney vertical test well (14-12-70-10W6M) was tested in November 2010 with results that were in excess of those attained on the first Montney vertical test well drilled by the Company in January 2010. The well encountered natural gas in several zones including the Montney zone. The Montney zone was completed, fracture stimulated and tested for 4 days with an initial rate of 3.0 million cubic feet per day and a final rate of 1.0 million cubic feet per day at a flowing tubing pressure of 360 psi. The well also produced approximately 40 to 50 barrels per million cubic feet of natural gas liquids. This successful test has further confirmed the existence of Montney natural gas reserves on Rock land in the Elmworth area that will provide the necessary information for future horizontal drilling locations. 

Rock is currently drilling its first 50% working interest Montney horizontal well (13-7-71-9W6M) in the Elmworth area which is expected to be completed and tested during the first quarter of 2011.

In addition, Rock is drilling a 100% working interest Montney vertical test well (6-6-69-9W6M) on its south Elmworth lands which is expected to be completed and tested in January 2011.

Updates on the Elmworth drilling program are expected to be released by the Company by the end of January 2011.

Plains

Rock has drilled 31 (31.0 net) heavy oil wells of a planned 32 heavy oil well drilling program for 2010 in the Plains area. The Company is planning to drill an additional 15 (15.0 net) heavy oil wells in the first quarter of 2011 as part of a planned 40 heavy oil well program in 2011.

Rock continues to develop an inventory of drilling opportunities and now has over 200 heavy oil drilling locations within its Plains core area.

Despite temporary production shortfalls, Rock remains well positioned for 2011 as we prove up our resource play in Elmworth and build inventory and opportunities for growth.

Advisory Regarding Forward-Looking Information and Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward looking statements and information concerning: 2010 and 2011 average and exit production; the Company's drilling plans; production rates and anticipated liquid yields from the Elmworth 14-12 Montney vertical well and information derived therefrom; anticipated drilling and completion date of Rock's first Elmworth horizontal Montney test well and Rock's Elmworth vertical test well; Rock's drilling plans in the Plains area; and Rock's inventory of drilling locations.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Rock, including prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future well production rates; reserve and resource volumes; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the receipt, in a timely manner, of regulatory and other required approvals. Although Rock believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Rock can give no assurance that they will prove to be correct. There is no certainty that Rock will achieve commercially viable production from its undeveloped lands and prospects.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the oil and gas industry in general such as: operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation of petroleum and natural gas and loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; stock market volatility; and changes in legislation, including but not limited to tax laws, royalty rates and environmental regulations.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Rock are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

The forward-looking statements and information contained in this press release are made as of the date hereof and Rock undertakes no obligation 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 press release contains test results for various Rock wells. Actual production from these wells could differ materially from these test results.

For further information please visit our website at www.rockenergy.ca.

Contact Information

  • Rock Energy Inc.
    Allen J. Bey
    Chief Executive Officer
    (403) 218-4380
    or
    Rock Energy Inc.
    John H. Van de Pol
    President & Chief Financial Officer
    (403) 218-4380
    www.rockenergy.ca