Providing coverage of Alaska and northern Canada's oil and gas industry
June 2015

Vol. 1, No. 5 Week of June 14, 2015

PetroShale further boosts production and pro forma reserves

Following a series of acquisitions in 2014, Calgary-based Bakken non-operator PetroShale reported first quarter production of 757 barrels of oil equivalent per day, an increase of 46 percent over the fourth quarter and an increase of 356 percent over the first quarter of 2014. For the quarter, PetroShale participated in 47 gross (1.4 net) wells of which 16 gross (0.8 net) were put on production.

Looking ahead into the second and third quarters, PetroShale is expecting further production increases due to ongoing well completions and infrastructure tie-ins by its operating partners.

PetroShale also reports completing several transactions in the quarter including acquisition of additional working interest in existing spacing units as well as a lease extension in the company’s core area in the deep, thermally mature Bakken core in northeast McKenzie, southwest Mountrail and northern Dunn counties. The company also sold interests in five gross wells outside of its core area.

The transactions boosted PetroShale’s 2014 pro forma proved or 1P reserves to 7.6 million boe, a year-over-year increase of 15 percent. Those 1P reserves have an estimated 10 percent discounted net present value of US$116.3 million, up 14 percent. The company’s pro forma proved plus probable or 2P reserves were increased 10 percent to an estimated 11.3 billion boe with an NPV10 value of US$157.3 million, an 11 percent increase.

“During the first quarter of 2015, PetroShale continued to enhance our asset base with acquisitions of additional working interests in existing drilling spacing units situated within the heart of the North Dakota Bakken/Three Forks,” CEO and Executive Chairman Bruce Chernoff said in a message to shareholders. “As a result of benchmark oil prices falling significantly since early in the fourth quarter of 2014, netbacks and capital investment in the oil and gas industry in general have declined substantially. Challenging market periods help demonstrate the strength of PetroShale’s focused strategy.”

On the financial side, PetroShale’s revenue per boe averaged $44.07 in the quarter with an operating netback of $22.60 per barrel. In the first quarter 2014 revenue and netback averaged $92.57 and $53.68 per boe, and for full-year 2014 those two metrics averaged $82.21 and $47.66.

For the quarter, PetroShale reported earnings before interest, taxes, depreciation and amortization of $928,000, up from the 204,000 EBITDA in the same period of 2014 while reporting a net loss of C$2.6 million for the quarter.

- Mike Ellerd






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