OKOTOKS, ALBERTA--(Marketwire - Aug. 23, 2012) - RedWater Energy Corp. ("RedWater" or the "Corporation") (TSX VENTURE:RED) is pleased to provide an operational update on its operational activity in its core properties. RedWater total production at July 31, 2012 increased to 132 boepd (83% oil/17% natural gas). The Corporation has approximately 1,200 mcf/d of tested natural gas production shut-in due to low commodity prices.
At Redwater, the Corporation completed battery construction and re-activated two (2) Mannville light oil wells (32° API). The wells began producing in late June and are currently producing at a restricted rate of 42 boepd (78% oil/22% natural gas). RedWater was successful in acquiring farm-in rights on 1,240 acres of development lands directly offsetting these wells and two surface leases have been negotiated for adjacent development drilling locations on two (2) identified light oil pools.
In the Redwater area, the Corporation has identified several additional oil pools, prospective for Mannville and Viking light oil, with a total of 15 initial drill locations on 16,000+ acres of primarily 100% W.I. land. The Company plans to test a shut-in natural gas well as a potential oil producer in September. The well previously tested at rates in excess of 1,000 mcf/d of natural gas. The Corporation also has several planned work-overs, well tests and fracture-stimulations on existing wells over the coming months.
RedWater has entered into a farm-out agreement with an industry partner to re-enter two (2) light oil wells on the Corporation's 6,480 net acres in the area. Work is scheduled for September 2012.
RedWater is acquiring additional seismic to develop its land holdings in Panny. The Corporation has identified two (2) initial drilling locations and a well re-entry targeting Keg River light oil. Currently light oil production at Panny is 22 bopd.
RedWater is planning a fracture-stimulation program to enhance production on the Wabamun medium density oil pool. The current pool produces 22 bopd of clean oil from 3 existing wells. Redwater has 3,520 acres of 100% W.I. land in the area.
FAIRYDELL/BON-ACCORD AND LEGAL:
Horizontal drilling at Fairydell/Bon-Accord and vertical drilling at Legal is planned to develop two (2) Leduc and Viking oil pools. Current Leduc production is 18 bopd.
On August 15, 2012, RedWater announced it had closed a private placement with a group of accredited investors. RedWater issued 2,200,000 common shares, issued on "flow-through" basis, at a price of $0.25 per share for aggregate gross proceeds of $550,000. Total shares outstanding post financing were 34,840,152.
Based on the Corporation's success at Redwater, the funds available under its Credit facility was increased to $2.9 million from $2.5 million. The total credit facility is approved up to $5.5 million with incremental increases available upon tie-in of tested production and projected drilling results.
The Corporation is currently evaluating numerous acquisition and exploration opportunities with a preference for shallow to medium depth light oil plays. The Corporation shut-in approximately 200 mcf/d of natural gas in the first quarter and an additional natural gas well, which tested 1,000 mcf/d has not been tied-in, due to lower commodity prices. Management continues to monitor the economics of each well to determine whether or not to re-activate and tie-in the wells.
Business of RedWater Energy Corp.
RedWater Energy Corp. is an emerging oil and gas exploration and development company. RedWater is engaged in the acquisition, enhancement and exploration of conventional oil and gas projects in Western Canada with a focus on developing high working interest light oil opportunities. RedWater's core properties are located in Redwater, Panny, Westlock, Fairydell-Bon Accord, and Long Coulee areas of Alberta. www.redwaterenergy.com.
Forward-looking information and statements
This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this news release contains forward-looking information and statements pertaining to the following; the timing for completion and equipping of wells; the volume and product mix of RedWater's oil and gas production and its ability to develop RedWater's oil resource properties, the use of the RedWater's cash flow from operations and expanded credit facilities; the number of wells to be drilled and potential development drilling and number of potential oil development locations.
In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of RedWater which have been used to develop such statements and information but which may prove to be incorrect. Although RedWater believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because RedWater can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: results from drilling and development activities consistent with past operations; the continued and timely development of infrastructure in areas of new production; continued availability of debt and equity financing and cash flow to fund RedWater's current and future plans and expenditures; the impact of increasing competition; the general stability of the economic and political environment in which RedWater operates; the timely receipt of any required regulatory approvals; the ability of RedWater to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which RedWater has an interest in to operate the field in a safe, efficient and effective manner; the ability of RedWater to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and cost of pipeline, storage and facility construction and expansion and the ability of RedWater to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which RedWater operates; the ability of RedWater to successfully market its oil and natural gas products that all necessary regulatory approvals will be obtained as and when required, that there will be no material adverse change in RedWater's affairs or laws, rules or regulations relating to RedWater, its securities or business, there will be no regulatory proceedings involving RedWater or any of its directors or officers, or any cease trade or other order prohibiting or restricting trading in RedWater's securities, no major national or international event will have occurred that has or would reasonably be expected to have a material adverse effect on financial markets or the business, operations or affairs of RedWater.
The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statement, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of RedWater's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of RedWater or by third party operators of RedWater's properties, increased debt levels or debt service requirements; inaccurate estimation of RedWater's oil and gas reserve and resource volumes; limited, unfavorable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in RedWater's public disclosure documents, (including, without limitation, those risks identified in this news release and RedWater's public company documents filed on SEDAR).
The forward-looking information and statements contained in this news release speak only as of the date of this news release, and RedWater does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
Barrel of oil equivalents or BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.