VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/08/11 -- Bucking Horse Energy Inc. (TSX: BUC), along with all wholly owned subsidiaries, (collectively, the 'Company') is pleased to provide an update on the status of the 10 well in-fill development program announced November 22, 2010 that is ongoing at the Company's Mesa property situated in the Pinedale natural gas field in southwest Wyoming and announce its U.S. reserves evaluation results for the year ended December 31, 2010 prepared by independent petroleum consultants Netherland Sewell and Associates, Inc. All listed currencies are United States dollars ('US$') unless otherwise indicated.
-- Net Proved Pinedale reserves totalled 261 billion cubic feet of natural gas equivalent ('Bcfe') -- Net Proved plus Probable Pinedale reserves totalled 433 Bcfe -- Net Proved plus Probable plus Possible Pinedale reserves totalled 448 Bcfe
Mesa Development Activity
-- Two wells, Mesa 15B1-22D and Mesa 15C2-22D, have been successfully developed and turned to sales with peak 24 hour initial production rates of 6.75 million cubic feet ('MMcf') per day per well -- Two wells, Mesa 14D2-22D and Mesa 11C2-22D, are drilled, cased, and waiting on completion -- A fifth well, Mesa 14B2-22D is drilling ahead approaching total depth -- Surface casing has been set in one of five additional wells subject of the 10 well program
Well Density Authorization
-- State approval for development of 32 wells per quarter section, or one well per approximate 5 acres, was authorized February 8, 2011 for lands that include the Company's Mesa acreage under development
The Company owns a 23.12% working interest in the Mesa property under development and expects to invest approximately US$11.3 million to fund its share of the 10 new wells currently underway.
An additional 11 wells at Mesa are scheduled for development during the second half of 2011 utilizing a second rig. The additional rig would be positioned at a recently constructed second development pad located northwest of current drilling operations.
The Company benefits from operator efficiencies associated with simultaneous operations development pads, built for purpose self-moving rigs, and year round development. Individual well costs are forecast at a cost of US$4.9 million gross with estimated spud to total depth drilling periods of 15 to 16 days per well. The operator has enjoyed a 100% success rate in the project area.
The Company's current total net production is approximately 8.5 million cubic feet equivalent ('MMcfe') per day. Development of the 10 Mesa infill wells will increase the Company's production to an estimated 11.5 MMcfe per day by mid-year 2011. The Mesa infill wells target the prolific Pinedale natural gas field.
The reserves data set forth below are based upon an independent reserves assessment and evaluation by Netherland Sewell and Associates Inc. with an effective date of December 31, 2010 (the' NSA Report') in accordance with the standards set forth in the Canadian Oil and Gas Evaluation Handbook and reserve definitions contained in NI 51-101. This presentation summarizes the Company's natural gas and natural gas liquids reserves and net present values before income tax, of future net revenue for the Company's reserves using forecast prices and costs in the NSA Report.
The reserves for the year ended December 31, 2010 presented include Company working interests before and net after royalties using forecast price and cost assumptions. Where amounts and volumes are expressed on a gas equivalent basis, liquids volumes have been converted to cubic feet of gas at a ratio of 6,000 cubic feet of gas per barrel of oil ('6 Mcf/bbl'). A conversion ratio of 6 Mcf/bbl oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent equivalency at the wellhead.
The evaluations of future net cash flows do not include provisions for interest costs or general and administrative costs but do include estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimates of future net revenue presented represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery of the reserve estimates summarized herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.
Company Interest Pinedale Oil and Gas Reserves - Forecast Prices and Costs Associated and Natural Gas U.S. Non-Associated Natural Gas Equivalent PROPERTIES Gas Liquids (6 Mcf : 1 bbl) Gross Net Gross Net Gross Net Reserves Category (MMcf) (MMcf) (Mbbl) (Mbbl) (MMcfe) (MMcfe) Proved: Developed Producing 34,560 28,037 297 239 36,340 29,472 Developed Non-Producing 902 789 6.4 5.6 940 822 Undeveloped 278,309 219,836 2,301 1,814 292,115 230,723 Total proved 313,771 248,662 2,604 2,059 329,395 261,018 Probable 206,773 164,339 1,692 1,341 216,923 172,384 Total Proved + Probable 520,544 413,001 4,296 3,400 546,318 433,401 Possible 18,083 14,322 150 118 18,981 15,032 Total Proved + Probable + Possible 538,626 427,323 4,445 3,518 565,299 448,434
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Forecast product prices and inflation used in the evaluation of the Company's reserves are based on price forecasts published effective December 31, 2010 by Canadian petroleum consultants AJM Petroleum Consultants with adjustments for regional price differentials.
Net Present Value of Pinedale Reserves Forecast Prices and Costs U.S. PROPERTIES BEFORE INCOME TAXES (US$000s) Reserves Category Discounted at (%/year) 0% 5% 10% 15% 20% Proved Producing 128,018 77,368 53,210 40,015 32,000 Proved Non-producing 4,240 2,651 1,847 1,384 1,090 Proved Undeveloped 967,554 494,497 278,247 165,924 101,860 Total Proved 1,099,813 574,516 333,304 207,323 134,950 Probable 660,598 273,469 122,329 56,656 25,609 Proved + Probable 1,760,410 847,984 455,633 263,978 160,559 Possible 59,838 25,839 11,637 5,089 1,858 Proved + Probable + Possible 1,820,248 873,824 467,270 269,067 162,416 Note: Totals may not add exactly due to rounding.
Included in the Net Present Value determination are undiscounted well abandonment costs of US$11.9 million for Proved reserves, US$22.6 million for Proved plus Probable reserves, and US$23.5 million for Proved plus Probable plus Possible reserves.
The estimates of Future Net Revenue do not necessarily reflect fair market value.
INFORMATION REGARDING DISCLOSURE ON OIL AND GAS RESERVES AND OTHER OIL AND GAS INFORMATION
Our oil and gas reserves statement for the year ended December 31, 2010 which will include complete disclosure of our oil and gas reserves and other oil and gas information in accordance with NI 51-101, will be available on SEDAR by March 31, 2011 at www.sedar.com.
About Bucking Horse Energy Inc.
Bucking Horse Energy Inc. is an independent oil and gas exploration and production company focused exclusively on its Warbonnet and Mesa natural gas properties in the prolific Pinedale field, within the Green River Basin of southwestern Wyoming. The common shares of the Company are listed for trading on the Toronto Stock Exchange under the symbol 'BUC.' For more information on Bucking Horse Energy, please visit the Company's website, www.BuckingHorseEnergy.com.
On behalf of the Board of Directors:
Gordon Nielsen, President & CEO
Certain statements contained in this news release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as 'anticipate', 'plan', 'expect', 'may', 'will', 'intend', 'should', and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Forward looking statements in this news release include that: the Company expects to invest approximately $11.3 million to fund the initial 10 wells Mesa program; the Company expects to benefit from improving operator efficiencies associated with simultaneous operations development pads, built for purpose self-moving rigs, and year round development; individual well costs are forecast at $4.9 million gross with estimated spud to total depth periods of 15 to 16 days per well; an additional 11 well program at Mesa is contemplated during the second half of 2011 utilizing a second rig; the additional rig would be positioned at a recently constructed second simultaneous operations development pad located northwest of current drilling operations; development of the 10 Mesa infill wells will increase the Company's production to an estimated 11.5 MMcfe per day by mid-year 2011. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of regulatory decisions, competitive factors in the industries in which the Company operates, prevailing economic conditions, the market price of gas, our and our partners' ability to finance development and other factors, many of which are beyond the control of the Company.
The forward-looking statements contained in this news release represent the Company's expectations as of the date hereof, and are subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
Bucking Horse Energy Inc.
President & CEO