Waldron Energy Corporation

Waldron Energy Corporation

November 15, 2010 07:00 ET

Waldron Energy Corporation Announces Third Quarter 2010 Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Nov. 15, 2010) - Waldron Energy Corporation ("Waldron" or the "Corporation") (TSX:WDN) announces financial and operational results for three and nine months ended September 30, 2010. These reports are available for review at www.sedar.com and on the Corporation's website at www.waldronenergy.ca.

Q3 2010 Highlights

- Third quarter 2010 production averaged 2,362 barrels of oil equivalent per day ("boepd") compared to 2,043 boepd in the second quarter of 2010 and 816 boepd in the third quarter of 2009

- Funds from operations was $2,541,000 in the third quarter of 2010 compared to $1,810,000 in the second quarter of 2010 and $3,530 in the third quarter of 2009

- Brought the Ricinus 15-10 well on production on September 7, 2010 at a 30-day IP of approximately 800 boepd, including 210 bbls per day of natural gas liquids

- Acquired five key sections of land at Ricinus, all of which are on the high perm trend determined by geological mapping & high quality 3D seismic

- Toronto Stock Exchange listing on September 9, 2010

Three months ended Nine months ended
Sept 30, Sept 30,
2010 2009 2010 2009
Financial (000's except for
per share amounts) (unaudited) (unaudited) (unaudited) (unaudited)
Petroleum and natural gas
sales $ 6,535 $ 1,452 $ 16,962 $ 6,049
Funds from operations $ 2,541 $ 4 $ 5,807 $ 1,137
Per share basic & diluted $ 0.09 $ 0.00 $ 0.23 $ 0.28
Net loss $ 1,125 $ 1,336 $ 3,841 $ 3,208
Per share basic & diluted $ 0.04 $ 0.33 $ 0.15 $ 0.79
Capital expenditures $ 3,794 $ 1,780 $ 13,604 $ 6,006
Acquisitions $ - $ - $ 44,910 $ -
Working capital deficiency
(excluding bank debt) $ 2,150 $ 701 $ 2,150 $ 701
Current bank debt (credit
facilities $28 million) $18,550 $ 7,190 $ 18,550 $ 7,190
Total assets $91,775 $36,056 $ 91,775 $36,056
Shareholders' equity $61,406 $22,592 $ 61,406 $22,592
Natural Gas (mcf/d) 10,568 4,658 8,978 5,019
Light crude oil (bbls/d) 232 11 187 33
NGL (bbls/d) 369 28 231 18
Boepd 2,362 816 1,914 888
Netback per boe (6:1)
Sales price $ 30.08 $ 19.35 $ 32.46 $ 24.97
Royalties $ (3.91) $ (2.63) $ (4.68) $ (4.43)
Operating expenses $ (9.19) $ (9.68) $ (10.23) $ (9.18)
Transportation expenses $ (1.60) $ (1.72) $ (1.60) $ (1.77)
Operating netback $ 15.38 $ 5.32 $ 15.95 $ 9.59

Waldron's first nine months of operations in 2010 has been a very active and successful period. The Corporation is focused on creating shareholder value by internally generating an inventory of high-quality unconventional liquids rich natural gas and light oil prospects, complemented by strategic acquisitions in its core area. In a short period of time, Waldron has accumulated an Ellerslie liquids rich drilling inventory of approximately 35+ high perm vertical locations and 40+ horizontal locations, 20 vertical and horizontal Belly River light oil locations and 10 horizontal Glauconite liquids rich locations. Our strong asset base, large inventory of high-quality high-impact multi-zone prospects and undeveloped land bodes well for increasing shareholder value.

During the third quarter, Waldron continued to focus on the liquids rich Ellerslie natural gas channel at Ricinus. Waldron's successful 15-10-36-9W5 exploration well (the "15-10 well"), that was drilled and completed in Q2, came on production on September 7th with a 30-day IP of approximately 800 boepd, including 210 bbls of natural gas liquids and the second month of production averaged 600 boepd. On September 25th, after delays due to wet weather, Waldron commenced drilling the 03-14-36-9W5 Ellerslie/Viking exploration vertical well (the "3-14 well"). The 3-14 well was drilled to 3,500 meters and has just been cased with the completion, testing and tie-in expected by mid-December 2010. Additionally, Waldron has initiated a proprietary 3D seismic shoot over the 15-10 and 3-14 wells and eight contiguous sections of Waldron's land. This seismic shoot, expected to be completed by early-December, will further delineate the high perm channel on the Corporation's contiguous lands and further define drilling locations.

Waldron has two additional 100% working interest wells planned for the fourth quarter at 14-20-37-8W5 (the "14-20 well") and at 7-29-37-8W5 (the "7-29 well"). Both wells are targeting the high permeability Ellerslie channel and are expected to be drilled by year end. The 14-20 well was spud on November 8, 2010, and is expected to be a 30 day drill and is targeting the Ellerslie, Glauconite and Notikewin zones.

During the quarter, Waldron acquired an additional five key sections of land at Ricinus that are directly on trend with Waldron's previous discoveries. These sections add five additional high perm vertical drilling locations to Waldron's inventory and are defined by geological mapping and high quality 3D seismic.

Waldron also made strides at increasing operating efficiency by improving runtimes on wells and facilities, and conducting in-house maintenance and repairs, all with the effect of decreasing costs and increasing operating efficiencies. Waldron will continue to actively monitor and capitalize on optimization opportunities as they become available.

Waldron has reached an agreement to sell nine net sections of non-core undeveloped P&NG Viking rights in the Crystal area for proceeds of $5.5 million with a closing date of November 30, 2010. Proceeds from the sale of these lands will be used to reduce bank indebtedness and/or increase its capital programs. The Corporation did not have any production from or reserves assigned to the mineral rights being sold.


Waldron currently has a multi-year inventory of low risk drilling opportunities concentrated in west central Alberta that includes 70+ liquids rich vertical and horizontal Ellerslie locations at Ricinus and 10+ liquids rich Glauconite horizontal locations on the Hoadley trend. These liquids rich natural gas locations are also complemented by both horizontal and vertical Belly River Oil opportunities at Ferrybank and Viking potential at Ricinus. By capitalizing on Waldron's experienced technical team, the Corporation expects to continue to expand its inventory of drilling opportunities through the internal generation of high impact projects.

Although not the focus in 2010, Waldron is continuing to license its liquids rich horizontal Glauconite gas and Belly River light oil opportunities to create a balanced inventory of drilling prospects for 2011 and forward.

2010 has seen a continued weakness in natural gas prices due to high storage levels and the development of shale gas plays in North America. Although natural gas prices remain depressed, Waldron aims to continue to provide shareholder value through its liquids rich natural gas opportunities as liquids and oil prices remain strong. The Corporation's plays remain economic through the high liquids content, low operating costs, lower annual declines on vertical wells and large reserves per section. Waldron is positioning itself to quickly capitalize on its drilling inventory by continuing to expand our opportunities and de-risking our play types.

Waldron is currently producing approximately 2,700 boepd and continues to be on track to achieve its current guidance of December 2010 average production of 2,800 boepd and a 2010 yearly average of 2,050 boepd.

Investor Information

Currently, Waldron has 28,620,478 common shares, 7,182,560 common share purchase warrants and 2,335,000 options outstanding.

Waldron is a Calgary, Alberta based corporation engaged in the exploration, development and production of petroleum and natural gas. The Corporation's common shares are currently listed on the TSX under the trading symbol "WDN." Additional information regarding Waldron is available under the Corporation's profile at www.sedar.com or at the Corporation's website, www.waldronenergy.ca.

Forward Looking and Cautionary Statements

This news release contains forward-looking statements relating to the Corporation's plans and other aspects of the Corporation's anticipated future operations, strategies, financial and operating results and business opportunities. These forward-looking statements may include opinions, assumptions, estimates, management's assessment of value, reserves, future plans and operations.

Forward-looking statements typically use words such as "will," "anticipate," "believe," "estimate," "expect," "intend," "may," "project," "should," "plan,," "intend," and similar expressions suggesting future outcomes, and include statements that actions, events or conditions "may," "would," "could," or "will" be taken or occur in the future. Specifically, this press release contains forward-looking statements relating to the number and location of drilling locations; current production rates; whether or not geological zones are prospective; results and confirmation of exploration concepts; timing of operations; estimated costs; sale of assets and the use of proceeds there from; estimated December 2010 average production; and estimated 2010 yearly average production. In addition, statements regarding reserves are deemed to be forward-looking statements, as they involve estimates and assumptions as to the expectation that the reserves can be economically exploited in the future. The forward-looking statements are based on various assumptions including expectations regarding the success of current or future drill wells; the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; estimates of future production; assumptions concerning the timing of regulatory approvals; the state of the economy and the exploration and production business; results of operations; business prospects and opportunities; future exchange and interest rates; the Corporation's ability to obtain equipment in a timely manner to carry out development activities; and the ability of the Corporation to access capital and credit. While the Corporation considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements are subject to a wide range of assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodities prices; currency fluctuations; imprecision of reserves estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; general economic conditions; delays resulting from or inability to obtain required regulatory approvals and to satisfy various closing conditions; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Waldron believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not rely unduly on forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by applicable law, Waldron does not undertake any obligation to publicly update or revise any forward-looking statements.
Note Regarding BOEs

The term barrel of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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