Twoco Petroleums Ltd.
TSX VENTURE : TWO

Twoco Petroleums Ltd.

April 30, 2012 19:54 ET

Twoco Petroleums Ltd. 2011 Highlights and 2012 Update

CALGARY, ALBERTA--(Marketwire - April 30, 2012) - Twoco Petroleums Ltd. ("Twoco" or the "Company") (TSX VENTURE:TWO) is pleased to announce financial and operating results for 2011 and an update of its 2012 activities.

Twoco has filed the following documents on the System for Electronic Document Analysis and Retrieval (SEDAR):

  1. Annual information form for the year ended December 31, 2011, which includes the disclosure and reports relating to reserves data and other oil and gas information required pursuant to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators ("NI 51-101");
  2. Audited financial statements as at and for the year ended December 31, 2011, together with the notes thereto and the report of the auditors thereon; and
  3. Management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2011.

Copies of these documents may be obtained via SEDAR at www.sedar.com.

Highlights of 2011 include:

  • An increase of 104% in volume and an increase of 201% in value of its oil and natural gas reserves from December 31, 2010 to December 31, 2011, as evaluated by Sproule Associates Limited ("Sproule") in accordance with NI 51-101;
  • Total Reserve Values, using Sproule's December 31, 2011 forecast pricing and calculated using a 10% discount rate, of $37.896 million on a Total Proved basis and $97.035 million on a Total Proved Plus Probable basis;
  • Total Proved plus Probable heavy oil reserves of 3,442,700 barrels representing a 718% increase from the December 31, 2010 corporate reserve evaluation of the Company's Sparky heavy oil property in the Warspite area of Alberta;
  • Heavy Oil Reserve Values, using Sproule's December 31, 2011 forecast pricing and calculated using a 10% discount rate, of $35.836 million on a Total Proved basis and $93.195 million on a Total Proved Plus Probable basis;
  • Petroleum and natural gas sales revenue of $6,057,941 - a 9% increase from the year ended December 31, 2010 - due to the 5 horizontal oil wells drilled on the Company's Sparky heavy oil property in the Warspite area of Alberta;
  • Cash flow from operations of $439,641 in 2011 versus cash flow used by operations of ($338,441) in the year ended December 31, 2010;
  • Average production of 603 boe per day (includes 99 barrels per day of oil and natural gas liquids) - a 16% decrease from the year ended December 31, 2010 - a result of shut-in volumes due to low natural gas prices, a lack of natural gas drilling activity and production declines of the Company's natural gas properties. In the Fourth Quarter 2011, Twoco averaged 162 barrels per day of oil and natural gas liquids production;
  • Participation in the drilling of 4 gross (3.86 net) wells which resulted in 2 gross (1.93 net) tri-leg horizontal oil wells, 1 gross (0.97 net) quad-leg horizontal oil well and 1 gross (0.97 net) vertical well targeting natural gas that was dry and abandoned. The Company's tri-leg horizontal oil wells commenced production in August, 2011 and the Company's quad-leg horizontal oil well commenced production in December 2011;
  • Net Loss of $21,166,920 ($0.31 per share) - a result primarily from higher depletion, depreciation and impairment expenses in the amount of $17,868,528. The impairment for accounting purposes relates to the decline in the value of natural gas properties. The decline cannot be offset against the significant increase in the value of oil properties even though the value of proved plus probable oil and natural gas reserves increased by 201% from December 31, 2010 to December 31, 2011;
  • Capital expenditures of $6,060,212;
  • Current land position of 103,622 gross (75,034 net) acres;
  • Operating costs of $12.54 per boe;
  • Operating netback of $12.14 per boe;
  • Operating netback of $57.25 per barrel in respect of the Company's production of Sparky heavy oil;
  • General and administrative expenses of $3.99 per boe; and
  • In 2011, the Company issued a total of 1,093,595 common shares in payment of interest accrued to December 31, 2011 on its $3.4 million principal amount of redeemable, convertible, unsecured 8% debentures.

Highlights of Twoco's operations for the 2012 year to date include:

  • Current production of 575 boe per day (includes approximately 200 barrels per day of oil and natural gas liquids);
  • Twoco estimates current shut-in and behind pipe production capability of 300 boe per day; and
  • On April 30, 2012, the Company and Alberta Treasury Branches entered into an indicative term sheet extending the next review date of the Company's credit facilities to July 31, 2012.

Twoco is an oil and gas company engaged in the exploration for, and the acquisition, development and production of, oil and natural gas reserves primarily in the Province of Alberta. Twoco has 72,491,140 common shares issued and outstanding as at today's date.

In this news release the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (Mcf) of natural gas for one barrel (Bbl) of oil based on an energy equivalency conversion method. Boes may be misleading particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1Bbl is based on an energy equivalency conversion method primarily applicable to the burner tip and does not represent a value equivalency at the wellhead.

Forward-Looking Statements:

Certain information set forth in this news release contains forward-looking statements or information ("forward-looking statements"), including statements regarding behind pipe production capability. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Twoco's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, operational risks in exploration and development, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and the ability to access sufficient capital from internal and external sources. Although Twoco believes that the expectations in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. As such, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Twoco does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement. This news release shall not constitute an offer to sell or the solicitation of any offer to buy securities in any jurisdiction.

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.

Contact Information

  • Twoco Petroleums Ltd.
    Wayne A. Malinowski
    President and Chief Executive Officer
    (403) 231-8653
    (403) 237-6048 (FAX)