Novus Energy Inc. is pleased to announce that it will be expanding its previously announced fall drilling program in the greater Dodsland area of Saskatchewan targeting its Viking light oil resource play. The Company is currently drilling the eighth well in the newly expanded 15 well drilling program, which will be composed of wells in the Company’s Dodsland, Flaxcombe and Kerrobert sub-regions. The Company anticipates that all 15 wells will be drilled and completed by the end of November, with production from these wells expected to be on stream prior to year end.
Pursuant to the past success the Company experienced in its first phase of drilling in the greater Dodsland area, Novus will be drilling the majority of its wells in the current program with approximately 600 meter horizontal lateral legs using monobore technology. Drilling operations are expected to take between three and four days per well. Novus will be completing the majority of its wells employing ported collars and 12–15 stage energized foam fracs of 12–14 tonnes of sand per stage. The Company anticipates that the wells in this program will be placed on production in approximately 35 days from the commencement of drilling.
With the expansion of the 2010 capital program, Novus now expects Capital Expenditures for fiscal 2010 to total approximately $53,000,000. The Company is forecasting an exit rate for 2010 of approximately 2,000 boe/d, with 70% of production to be comprised of oil and liquids.
Novus exited the third quarter of the year producing approximately 1,400 boe/d, with approximately 58% of production being comprised of oil and liquids. During the second quarter of 2010, the Company’s average production for the quarter was 774 boe/d, with approximately 42% of production coming from oil and liquids. Novus is pleased with both its increasing production levels and increased weighting of its production mix to oil. It is Novus’ intention to release full third quarter 2010 results prior to market opening on Monday, November 22, 2010.
Novus continues to actively expand its already significant land position in the Dodsland area. Through several recent crown sale purchases and farm-in transactions, the Company now controls in excess of 105.25 net sections (67,360 net acres) of prospective Viking oil acreage in its core area. Novus has now identified over 560 net Viking oil locations on its land base, and believes that it has amassed a significant recoverable light oil resource.
Novus continues to be pleased with the production growth it has achieved over the past year and a half, as well as its transformation to a light oil weighted producer. The Company has assembled a sizable inventory of repeatable, low risk, light oil drilling opportunities. During 2010, the Company has amassed considerable experience in drilling and producing its core Viking light oil resource play. Novus has been focused on continually lowering its drilling and
completions costs, building the necessary area infrastructure to support stable, low operating cost production, and employing new completion techniques to continually improve the economic performance of its wells. Novus believes that with further innovation, it may be able to diminish its well costs in next year’s drilling program, and provide for meaningful improvements in already robust economics.
Based upon Novus’ view of production rates, recoverable reserves, and drilling and completion costs in the greater Dodsland area, the Company will maintain an aggressive program on drilling its current acreage, and will continue its efforts to further consolidate and expand its position within the area through acquisitions.
The Company is not only pleased with the growth it has demonstrated in production and reserves, but also in its ability to attract and retain highly skilled, key employees. The Company has recently added to its technical team to ensure that the Company is properly prepared for the rapid growth it has been experiencing. With respect to this recent activity, 7,000,000 options have been granted to certain employees, officers and directors, including 5,750,000 to insiders of the Company. Each option entitles the holder to the right to acquire one common share of the Company at an exercise price of $0.85 per share and will expire five years from the date of issue. One quarter of the options vest every six months, with the first tranche vesting six months from the date of grant.
Novus Energy Inc. is a well positioned, junior oil and gas company with a proven management team committed to aggressive, cost-effective growth of high netback light oil reserves and production. Novus will continue to grow through a targeted acquisition and consolidation strategy coupled with development and exploration drilling. Novus’ current financial position of having $12 million of cash, no debt, and unused lines of credit will allow for the exploitation of its drilling inventory and expansion of the Company’s opportunity suite through internally generated prospects and strategic light oil acquisitions.
Novus Shares trade on the TSX Venture Exchange under the symbol NVS. Novus currently has approximately 166.4 million common shares outstanding.
