Torquay Oil Corp.
TSX VENTURE : TOC.A
TSX VENTURE : TOC.B

April 28, 2011 08:30 ET

Torquay Announces One Million Barrels of Light Oil Reserves

CALGARY, ALBERTA--(Marketwire - April 28, 2011) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES, TO UNITED STATES NEWS WIRE SERVICES OR TO UNITED STATES PERSONS.

Torquay Oil Corp. (TSX VENUTRE:TOC.A) (TSX VENUTRE:TOC.B) ("Torquay" or the "Company") is pleased to announce its financial and operating results for the three months and year ended December 31, 2010.

Torquay highlights for 2010 are as follows:

  • Entered into a farm in agreement at Lake Alma, Saskatchewan with a Major Industry Participant and successfully earned 81 gross (49 net) sections of land by drilling four earning wells.
  • Closed its initial public offering for gross proceeds of $14,000,000.
  • Acquired approximately 125 bopd at Viewfield, Saskatchewan establishing a new core area. In conjunction with this acquisition, Torquay completed a $12,000,000 financing.
  • Tied in solution gas from six wells at Viewfield, Saskatchewan resulting in higher netbacks due to NGL recovery.
  • Entered into a second farm in agreement at Lake Alma, Saskatchewan with another Major Industry Participant to earn up to 5.75 gross (5.75 net) sections of land by drilling two earning wells.
  • Added Total Proved plus Probable reserve volumes of 1.06 mmboe (93% light oil & NGL's).
  • Invested $33,300,000 in acquisitions and capital projects – drilled nine gross (7.4 net) wells.
Fourth Quarter 2010 highlights:
  • Earned an additional five gross (3.0 net) sections at Lake Alma.
  • Closed a $15,000,000 bought deal financing.
  • Produced an average of 510 boepd (95% light oil & NGL's).
  • Achieved funds flow of $1.9 million ($0.05 per share)
Subsequent to December 31, 2010, Torquay:
  • Acquired approximately 50 boepd in southeast Saskatchewan establishing a new core area.
  • Acquired a partner's working interest in the Lake Alma area increasing the Company's land holdings to 90 gross (86 net) sections at Lake Alma.
  • Completed permitting the 217 km2 Lake Alma 3D seismic program.
  • Earned 3.75 gross (3.75 net) sections from the second Major Industry Participant farm in.
  • Defined over 40 conventional, Mississippian, light oil drilling locations.
  • Increased its operating line of credit from $3.0 million to $9.65 million.

2010 Year End Reserves Summary

This summary of Torquay's reserves evaluation as at December 31, 2010 was prepared by McDaniel & Associates Consultants Ltd. ("McDaniel"), the Company's independent reserves evaluator. The National Instrument 51-101 forms F1, F2, F3 and F4 have been included in the Company's Annual Information Form filed on SEDAR and can be viewed at www.sedar.com or www.torquayoil.com.

Gross Company Interest Reserves (as at Dec. 31/10)
(before deduction of royalties payable, not including royalties receivable)
NGL's
(Mbbl
)Gas
(MMcf
)Oil
(Mbbl
)Oil Eq.
(Mboe
)
Proved Producing34197317384
Proved Developed Non-producing10454866
Proved Undeveloped398178197
Total Proved47340543647
Total Probable20133370412
Total Proved Plus Probable674739131,058

Net Present Value of Reserves

Below is a table showing the Company's net present value of future net revenue attributable to reserves using forecast prices and costs. The prices used were McDaniel Forecast Prices as at January 1, 2011. The estimated future net revenues are presented before deducting future estimated site restoration costs, and are reduced for estimated future abandonment costs and future capital costs associated with non-producing, undeveloped and probable additional reserves. Estimated values disclosed do not necessarily represent fair market value.

Summary of Future Net Revenue Before Income Taxes ($(000's)
Discounted at:0%5%10%
Total Proved23,73015,26113,747
Total Probable19,38114,35611,256
Total Proved Plus Probable43,11129,61725,003

Financial and Operational Highlights

Torquay has filed on SEDAR its audited Financial Statements and related Management Discussion and Analysis ("MD&A) for the three months and year ended December 31, 2010. Selected financial and operational information is outlined below and should be read in conjunction with Torquay's audited financial statements and related MD&A which are available for review at www.sedar.com or www.torquayoil.com.

Year Ended
($000's except per unit amounts)Dec. 31, 2010
Petroleum & natural gas revenue4,483
Funds flow from operations1,971
Per share (diluted)$ 0.09
Net loss(1,590)
Per share (diluted)$ (0.07)
Capital expenditures33,284
Net positive cash & working capital13,226
Weighted common shares outstanding (diluted) (1)22,666
Production
Crude oil (bbls/d)286
NGL's (bbls/d)42
Natural gas (mcf/d)177
Total boe/d (2)358
Pricing
Crude oil ($/bbl)77.35
NGL's ($/bbl)38.00
Natural gas ($/mcf)4.21
Average ($/boe)68.45
Netbacks ($/boe)
Petroleum & Natural gas revenue68.45
Royalties(10.01)
Operating costs(7.63)
Field netback50.81
(1)Basic per share amounts are calculated by dividing net income or loss by the weighted average number of Class A and Class B shares outstanding during the period. In addition, Class B shares are converted into Class A shares at $10 divided by the current market price, defined as the weighted average trading price per Class A share for the prior 30 consecutive trading days which was $1.65.
(2)BOE/d calculation from first day of production, July 4, 2010.

Torquay is a uniquely positioned, oil focused, junior exploration company formed to generate and develop its own prospects, acquire oil-weighted properties and participate with joint venture partners in oil exploration and development in the Western Canadian Sedimentary Basin. The Company's Class A Shares and Class B Shares trade on the TSX Venture Exchange under the symbols TOC.A and TOC.B. The Company currently has 35,669,572 Class A Shares and 1,260,000 Class B Shares outstanding.

FORWARD LOOKING STATEMENTS:

This news release contains forward-looking statements and forward-looking information (collectively "forward looking information") within the meaning of applicable securities laws. Forward-looking information typically use words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. In particular, forward looking information in this news release includes, but is not limited to: statements with respect to, drilling, completion, seismic and facility plans, capital expenditures and the expected results from operations. The forward-looking information is based on certain key expectations and assumptions made by Torquay, including expectations and assumptions concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; future well production rates and estimates of operating costs; reserve and resource volumes; the state of the economy and the exploration and production business; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; ability to market oil and natural gas successfully and the ability of the Company to access capital. Although Torquay believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Torquay 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. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, results from operations will not meet with expectations and risks associated with the oil and gas industry generally. Additional information on the foregoing risks and other factors that could affect Torquay' operations and financial results are included in Torquay's annual information form and other reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements contained in this news release are made as of the date hereof and Torquay 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. The term BOE may be misleading, particularly if used in isolation. A BOE conversion of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead.

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

Contact Information

  • Torquay Oil Corp.
    Mr. Brent McKercher
    President & Chief Executive Officer
    403 233 2444 ext. 30
    403 262 6991
    brent@torquayoil.com

    Torquay Oil Corp.
    Mr. Darwin Little
    Vice President, Finance & Chief Financial Officer
    403 233 2444 ext. 31
    403 262 6991 (fax)
    darwin@torquayoil.com