Wednesday June 4, 8:15 am ET
Initial Completion at Orcutt 85A at 125 Barrels of Oil
HOUSTON, June 4 /PRNewswire-FirstCall/ -- Rock Energy Resources, Inc. (OTC BB: RCKE.OB), an independent domestic oil and natural gas company, today reported that during its scheduled conference call and webcast held yesterday afternoon, management reported that the initial steaming results at its Orcutt Diatomite project have meaningfully exceeded its expectations.
According to Tom Elliott, President and Chief Operating Officer of the Company, "During the first 16 hours of testing, we flowed back an estimated 125 barrels of oil. Bear in mind that we achieved this output using only temporary steaming facilities. At this time, our total steam injections into any one well are significantly below what we will be doing with permanent facilities, which we look to have up and running in the fourth quarter of this year. We have a lot to learn over the coming months, however, these results are certainly well above what we had expected."
Development drilling on the 800 proven acres would be vertically and directionally to achieve bottom hole locations for 5/16 acre drainage, with the possibility of an expansion of the Orcutt producing field boundaries by another 25-50% of the currently known limits of the proven results. Rock Energy reported that its internal estimates for proven reserves at Orcutt are 26.6 million barrels of proven undeveloped oil; future net revenues of $1.85 billion; and Sec 10% net present value of $676.9 million. These internal estimates contemplate a full scale drilling program providing for 1200 bottom hole locations, and are based on a per barrel price of $100 flat over the anticipated life of the resource base.
On the same call, Mark Harrington, Vice Chairman of the Company, responded to a question about economics saying, "Our steaming costs are estimated at $12 per barrel, assuming $11 gas; and lease operating costs are $9 per barrel. So, assuming $100 oil prices, and we are above that now, net operating cash flow is above $60 per barrel. If you allocate all the needed infrastructure costs, including steam generators, production batteries, steaming lines, well costs -- everything all in, our cost to get at each barrel of proven reserves, assuming only a 20% recovery rate, is under $10 per barrel."
Rock Emery, founder, Chairman and CEO of Rock Energy, added, "We are confident that our asset values, as indicated on the new PowerPoint posted to our website, will continue to increase for years to come. The proven resource base at Orcutt is $6.77 per share, and this is factoring only a 20% recovery rate and on only 800 acres. Future growth is from NW Casmalia, which we believe could prove as significant, if not more so, as Orcutt. Moreover, increasing our recovery rate from a conservative 20% to 35%+ will net straight to the bottom line. We can also add more reserves from the Escolle lease, which is contiguous to our projects in Santa Barbara. And, we can also double our recovery rates when we convert from cyclic steam recovery to line drive steam."
Concluding, Emery said, "We have endeavored to show our shareholders reasonable expectations on prospective results from our high quality resource base. These results, however, have more than significantly exceeded even our highest expectations. With an estimated 1.2 billion barrels of oil in place at Orcutt -- and room for expanding the geologic limits of the field -- we are excited about our accreting further value to our shareholders in the months and years to come."
A full replay of the conference call can be accessed on www.rockenergypartners.com for the next 90 days.
About Rock Energy Resources, Inc.
Originally formed in April of 2004 as Rock Energy Partners LP, Rock Energy Resources is an independent oil and gas company based in Houston, Texas. The Company is engaged in the exploration, drilling and recovery of onshore natural gas and crude oil resources using cutting-edge 3D technologies. Rock Energy currently produces and sells natural gas and crude oil from two locations: the Wilcox trend in Colorado County, Texas and the Monterey Formation in Santa Barbara County, California. For more information on the Company, please visit www.rockenergypartners.com
Safe Harbor Forward-Looking Statements
Forward-looking statements made in this release are made pursuant to the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements made herein are not a guarantee of future performance. This news release includes forward-looking statements, including with respect to the future level of business for the parties. These statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in these forward-looking statements as a result of certain risk factors that could cause results to differ materially from estimated results. Management cautions that all statements as to future results of operations are necessarily subject to risks, uncertainties and events that may be beyond the control of Rock Energy Resources, Inc., and no assurance can be given that such results will be achieved. Potential risks and uncertainties include, but are not limited to, the ability to procure, properly price, retain and successfully complete projects, and changes in products and competition.
For Further Information, Contact:
RedChip Companies, Inc.
500 Winderley Place, Suite 100, Maitland, FL 32751,
(800) 733-2447,Fax: (407) 644-0758,
info@redchip.com
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