Nextraction Announces Third Quarter 2011 Results and Changes in Management TeamNovember 29, 2011
Vancouver, BC – Nextraction Energy Corporation (TSX-V: NE) (the "Company” or “Nextraction”), has filed consolidated interim financial statements and related management’s discussion and analysis for the period ended September 30, 2011 which can be found under the Company’s profile on SEDAR (www.sedar.com) and on the Company’s website at www.nextraction.com. All amounts herein are reported in Canadian dollars unless otherwise noted.
Nextraction’s operating and financial highlights for the third quarter are:
Production averaged 74 boe per day weighted 42% light oil and natural gas liquids and 58% natural gas, compared to average production of 54 boe per day weighted 39% light oil and natural gas liquids and 61% natural gas in the second quarter of 2011. Average production volumes for the third quarter increased 37% resulting from increased oil production associated with the successful well recompletion program executed on the Company’s Provost Viking light oil project
Total revenues increased 33% to $335,722 from $253,098 in the second quarter of 2011, due to a 48% increase in average oil production combined with a 11% decrease in the average realized price of oil
- Operating netbacks in the field increased to $3.25 per boe from $0.19 per boe as fixed operating and transportation costs were offset against higher production volumes realized through the successful well recompletion program executed on the Provost project
Included in the loss for the third quarter is $5,626,595 of impairment expense associated with the Company’s natural gas property in Pinedale, Wyoming. Low production volumes resulting from high water in-flow and low reservoir deliverability, coupled with historically low natural gas prices, have made this impairment necessary. The Company is currently evaluating alternatives to improve production volumes from the Pinedale property.
During the third quarter the Company completed its first horizontal well on its Viking light oil prospect in the area of Provost, Alberta. Production is expected to come on stream in the first quarter of 2012 after construction of a pipeline to tie-in the well that is completed.
The Company is disappointed with third quarter results, specifically relating to the Pinedale property and recognizes that future development of the property is not the appropriate manner to create shareholder value as the large scale and capital requirements of the project are beyond the realistic means of the Company at this time. Accordingly, the Company is shifting strategic direction to utilize Management’s experience in the Western Canadian oil industry. The Western Canadian Basin offers an attractive environment for junior oil and gas companies to acquire and develop projects of an appropriate scale. The future vision and direction of the Company will thus be:
Acquire land and assets where the Company can be Operator and in control of drilling schedules and operations
Focus on oil-weighted Canadian assets that provide attractive returns with an appropriate scale of investment
- Harness the knowledge and energy of a rejuvenated and dynamic management team to execute the business model
In alignment with the Company’s new Canadian oil focused strategy, the following changes to the Board and Management team have occurred:
After 30 years in the oil and gas industry, Mark Dolar has retired and accordingly has stepped down as President and CEO. Mr. Dolar, however, will remain a Director of the Company and will continue to act in an advisory role, particularly with respect to the realization of value from the Company’s non-core US assets.
Eric Carlson has been appointed Chairman of the Board
- Kent Edney, formerly Vice President of Operations, has been appointed President
Eric Carlson, Chairman, said “The Board is excited about the new focus and strategy of the Company and is fully supportive of Kent as he takes on his new leadership responsibilities. We are looking forward to finding more land, drilling more wells and making money for our shareholders. The Nextraction team expresses its appreciation to Mark for his contribution to the Company, particularly with respect to his initiating the transition of the Company to its new Canadian oil focused strategy and wishes him well.
Kent Edney, President, states: “I am excited about the new direction and vision of the Company and appreciate the support of the Board. Combining the skills of a Board highly experienced in the creation and operation of private and public companies, with a dynamic management team experienced in the Canadian oil industry, creates a foundation from which the Company can take bold steps towards its goal of becoming a high growth Canadian oil company.
For further information on behalf of Nextraction Energy Corp., please contact:
Kent Edney, President
Toll Free: 1-403-514-8276
Certain statements made and information contained herein may constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities legislation. These statements relate to future events or the Company’s future performance. Often, but not always, forward-looking statements or information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes” or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results “may”, “may have”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Although management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that a forward-looking statement or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements speak only as of the date of this Press Release and are expressly qualified, in their entirety, by this cautionary statement.
This press release contains the term “operating netback”. This term is not a recognized measure under IFRS. Nextraction’s management believes that in addition to net loss, it finds operating netback a useful supplemental measure. Operating netback is a benchmark used in the oil and natural gas industry to measure the contribution of petroleum and natural gas sales following the deduction of royalties, operating expenses and transportation costs. Users are cautioned, however, that this measure should not be construed as an alternative to net loss determined in accordance with IFRS as an indication of the Company’s performance.
BARRELS OF OIL EQUIVALENT PRESENTATION
Natural gas volumes have been converted to barrels of oil equivalent (“boe”) at a ratio of six thousand cubic feet (“mcf”) of natural gas to one barrel of oil equivalent. This conversion ratio is based upon an energy equivalent conversion method primarily at the burner tip and does not represent equivalence at the wellhead. Furthermore, this conversion ratio is not intended to represent monetary equivalents between natural gas and oil. Boe figures may be misleading, particularly if used in isolation.
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