Veteran Resources Inc.
TSX : VTI

Veteran Resources Inc.

June 29, 2005 13:48 ET

Veteran Resources Inc. Announces Current Production of 1,500 Boe Per Day and an Increase to 2005 Capital Budget

CALGARY, ALBERTA--(CCNMatthews - June 29, 2005) - Veteran Resources Inc. (TSX:VTI) is pleased to announce that production is now approximately 1,500 barrels of oil equivalent (boe) per day as a result of initiating production from the previously announced discovery on its Earring, Alberta property. The well is producing at a stable rate of 2.8 cubic feet per day (460 boe per day) from a single zone, restricted by pipeline capacity. The Company currently has an additional 550 boe per day of tested production behind pipe, 300 boe per day of which is expected to be on stream by October, 2005.

As a result of ongoing drilling success, and the desire to accelerate activity in the Peace River Arch focus area, the Board of Directors has approved a $5 million increase to the 2005 capital budget to $21 million. The additional capital will be directed to the Company's exploration joint venture in the Cecil, Alberta core area through expenditures on land and seismic acquisitions in support of the 2006 drilling program.

The Company also announces that wet spring conditions have improved to the point that summer drilling operations have commenced on its Cecil property. During June, the Company operated one (0.5 net) well and participated in another two (0.5 net) wells. All three wells are currently awaiting completion and are expected to be tied-in during the third quarter of 2005. A fourth well at 100 percent working interest is currently drilling. Additionally, in order to expand on the drilling success at Cecil, the Company has commenced a 24 square mile three dimensional seismic program with its joint venture partner covering Crown lands adjacent to its Cecil property. Further Crown land postings will be initiated after interpretation of the seismic data, which is expected to be completed in August, 2005.

Veteran is maintaining its expectation for 2005 average production at 1,300 to 1,400 boe per day while marginally increasing 2005 exit rates to 2,000 boe per day. Giving effect to the 30 percent increase to the capital budget, and including the previously announced Ontario asset sale, year-end debt is expected to increase slightly to approximately $10 million. The debt will be supported by the Company's $27 million credit facility.

Caution to Reader

This report contains forward-looking statements and the reader is cautioned not
to place undue reliance on these statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although Veteran believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These statements are based on current expectations that involve a number of risks and uncertainties including but not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration, and production; the uncertainty of reserve estimations; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety, and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect Veteran's operations or financial results are included in Veteran's reports on file with regulatory authorities. The Company cautions that events or circumstances could cause actual results to differ materially from those projected. Particular risks related to the forward-looking statements addressed above are:

- Actual drilling results achieved in 2005 may differ from the levels of risk assigned by the Company, or the Company's drilling program could change if results are not as estimated, which will affect estimates of production volumes and cash flows.

- Actual prices received by the Company for its commodity sales may differ from the pricing estimates used in projections, based upon forecasts utilized by the Company's independent reservoir engineers Sproule Associates Limited, which will affect estimates of cash flows.

- The average estimated 2005 foreign exchange rate, based upon a forecast utilized by the Company's independent reservoir engineers Sproule Associates Limited, may differ from actual exchange rates for the year, which will affect estimates of cash flows.

- Actual interest rates may differ from estimates used by the Company which will affect estimates of cash flows.

- The cost of materials and services required to complete the 2005 drilling program may differ from cost estimates used by the Company. If this difference is significant, there may be an impact on the number of wells drilled in 2005 by the Company.

- The cost of materials and services required to operate producing wells may differ from cost estimates used by the Company which will affect estimates of cash flows.

Conversion

Boe's are derived by converting natural gas to oil in the ratio of 6 mcf to 1 bbl. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent an equivalency at the wellhead.

Contact Information

  • Veteran Resources Inc.
    Philip J. Loudon
    President and Chief Executive Officer
    (403) 699-8629
    or
    Veteran Resources Inc.
    J. Peter Henry
    Vice President and Chief Financial Officer
    (403) 699-8632
    Website: www.veteranresources.net