SOURCE: Vanguard Energy Corporation

Vanguard Energy Corporation

January 03, 2014 07:00 ET

Vanguard Energy Corporation Announces Results of Operations for the Fiscal Year Ended September 30, 2013

HOUSTON, TX--(Marketwired - Jan 3, 2014) - Vanguard Energy (OTCQX: VNGE), an oil development and production company today announced the results of operations for its Fiscal Year ended September 30, 2013.

Highlights for the year include:

  • Revenue from oil and gas sales for the year were $4,644,356 as compared to $3,369,407 for the prior year
  • Net income (loss) for the year was ($3,399,031) compared to ($1,027,157) for the same period of 2012 due to significant non-cash deductions associated with DD&A and an Impairment charge of $3,634,312
  • Shareholders' Equity declined to ($131,398) from $3,267,633 for the prior year
  • General and Administrative costs were $1,373,123 for the year compared to $1,564,475 in FY 2012.
  • The Company produced and sold 45,758 net barrels of oil during the year ending September 30, 2013 as compared with 35,597 net barrels sold in FY 2012.

Management Comments
Mr. Warren Dillard, President and CEO of Vanguard Energy said; "The past fiscal year was one of consolidation during which only 2 more wells were drilled and completed, and those proved to not be very commercially satisfactory during the year. The company expended most of its available drilling funds early in the year, thus the year was primarily spent assessing the company's Batson Dome property to determine what the company's best strategy might be going forward. In January of 2013 the company announced that 'it is seeking ways to accelerate shareholder value. In that regard, we are investigating the possibility of selling its interest in oil and gas properties in Southeast Texas. The company has not received any binding offers for its properties nor has it established a price it would consider for its properties.' Having completed our field evaluation and with the filing of our FY2013 Form 10-K with the SEC, assisted by a detailed geological evaluation and an updated reserve report, the company is now prepared to resume a concerted effort to either sell the property or engage in a corporate transaction with another similar E&P company to be better positioned for growth."

At the end of the year the company engaged a new reserve engineering firm to evaluate its properties and prepare its annual reserve report. They estimate the PV-10 of the proved reserves at $6.466 million. The Proved Producing (PDP) reserve estimate of $3.845 million, represented by 70,220 net barrels, is a material reduction from the 208,677 barrels reported as of September 30, 2012. Net production during the year of 45,758 barrels accounted for a portion of the reduction, but the balance was due to calculations of reservoir potential that was influenced by further detailed analysis of the producing formations' drive systems and the declines in production from certain wells at a greater rate than previously experienced. The interpretation of 3D seismic this year provided additional input as we delineated the field more precisely, resulting in limiting the estimates of remaining recoverable oil. The decline in production from certain wells was greater than anticipated and indicated shorter production lives of those wells as compared to previous estimates. This also contributed to the reserve estimate reduction.

The Non-Producing (PDNP) reserves with an estimated PV-10 of $2.621 million is represented by 54,148 net barrels, a material reduction from the 73,578 net barrels reported as of September 30, 2012. This reduction resulted partially from certain non-producing zones being put on production (a shift in category to PDP) and the balance from the limitations cited above regarding the proved producing reserves. 

Although we reported Proved Undeveloped (PUD) reserves of 371,022 barrels in FY 2012, our engineers determined this year that such classification was not appropriate due to the faults and reservoir drive mechanisms identified in the field, and they were thus removed from the report. Rather, the reserve engineers have estimated 237,701 barrels of Probable reserves with a PV-10 of $5.644 million, a change in category of certain potential future production from our leases.

Management believes that our new methodology used to estimate proved reserves did not constitute a correction of an error. Rather, the company elected to change our methodology in order to utilize a more conservative approach and we benefited from better data analysis with the aid of subsequent production information and seismic interpretation.

The company's proved properties are evaluated quarterly for the possibility of impairment. The Company recorded an impairment expense of $3,634,312 at the close of FY 2013 as a result of the estimated future revenues and expenses due to the reductions in proved reserves discussed above. The declines experienced in production limited the life of certain wells, resulting in a greater DD&A adjustment of $1,850,814 for the year, thus lowering the remaining valuation of the wells. These adjustments were offset somewhat by a reduction of Participation Liability by $999,485 resulting from reduced estimated net cash flows from certain wells in which an outside party has a 20% Net Profits Interest.

Operations Update
Mr. Dillard further commented; "In spite of the lack of satisfactory new drilling during the year, with earlier wells drilled during FY 2012 producing during the entire 2013 year, sales of oil increased substantially. After a thorough study during the 4th quarter of FY 2013 and subsequent to the end of the year of the well logs, geology and previous completion techniques, considerable effort has been made to examine every formation or producible zone in every wellbore to determine what might be done to improve production. This examination has resulted in significant work over efforts that are now proving to be very helpful and are increasing daily production from what was an average low of 112 gross barrels per day (80 net barrels per day) during this past November at its lowest. During November and December we commenced work to recomplete two of our nonproductive wells, one of which came online in late December at an initial rate of approximately 28 BOPD gross (21 net). The second well is in the process of flowing back work over fluids. We do not have stabilized rates for either of these wells as we are in the process of optimizing production."

Conference call
The Company will host a conference call on January 9, 2014 at 10:30 AM Eastern time (9:30 CT, 7:30 PT) to discuss the results of operations and provide additional details on drilling activity. The dial in number for those interested in participating is 888-505-4375. The participant code is 3883201. The call will be web cast and can be viewed on the Company web site at www.vanguardenergy.com.

About Vanguard Energy
Vanguard Energy is an oil drilling and production company that has had a focus on established oil fields in southeast Texas. Concentrating on oil properties in established areas with proven production, Vanguard applies its managerial expertise to maximize production while minimizing risk. Vanguard believes it can create significant shareholder value by building cash flow and oil reserves through an aggressive, focused acquisition and development program in the prolific southeast Texas oil-producing region. Vanguard's initial area of operation is in the famous Batson Dome Field where it controls 500 strategic acres with substantial oil reserves. For more information visit the Company's web site at www.vanguardenergycorp.com

Safe Harbor
This press release and other statements Vanguard Energy may make in the future contain forward-looking statements that relate to Vanguard's plans, objectives and future estimates. Various risks, uncertainties and other factors could cause actual results to differ materially from those expressed in any forward-looking statements. For a more detailed list of such risks, uncertainties and other factors, please refer to the Risk Factor section of Vanguard's Registration Statement on Form S-1 and in its periodic filings with the Securities and Exchange Commission. Vanguard makes no commitment to update any forward-looking statement, or to disclose any facts, events, or circumstances after the date of this release that may affect the accuracy of any forward-looking statement, except as may be required by applicable law.