Doxa Energy Ltd. Releases 2011 Reserve Report & Financial Results
VANCOUVER, BRITISH COLUMBIA -- Doxa Energy Ltd. ("Doxa" or the "Company") today released the Company's NI 51-101 Statement of Reserves Data and Other Oil & Gas Information along with the audited consolidated financial statements and related Management Discussion and Analysis for the year ended December 31, 2011. The audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. All documents are available at
As of December 31, 2011 Doxa owned interests in 9 wells in production or in the
process of being placed in production, and was receiving revenue from 5 wells.
The Company anticipates that by the end of May, 2012 it will be receiving
revenue from all 9 wells. The producing wells include 3 Eagle Ford Shale
producers, 3 conventional Wilcox discoveries, and 3 completions within the
Mississippian Oil Play of northern Oklahoma. For the three months ending
December 31, 2011, Doxa received oil and gas revenues, net of royalties, taxes
and production expenses totaling $263,800, as compared with $43,600 for the same
period in 2010.
The Company also reports that as of December 31, 2011 it had acquired interests
in 25,708 gross undeveloped acres of leasehold, being 4,993 net, as compared
with 7,156 gross and 1,212 net at December 31, 2010.
Overall, Doxa management expects to participate in a total of 20 gross wells
during 2012. The plans include 2 wells within the Eagle Ford Shale Play of south
Texas, 12 wells within the Mississippian Oil Play of northern Oklahoma, 4 wells
within the Sarco Creek 3-D Project, and 2 conventional vertical wells targeting
Wilcox formation targets on the Texas Gulf Coast.
Production, Reserves and Financial Results - Year-End
For the year ended December 31, 2011, the Company reported
that its net production of oil and natural gas was 22.7 MBOE and 1.95 MBOE for
the twelve months ending December 31, 2011 and 2010 respectively. In addition,
during 2011 Doxa increased proved reserves 57% to 234.2 MBOE, over year-end
2010. The net present value of Doxa's proved reserves, before tax and using a
10% discount rate, increased 88% to $7.107 million, as compared with $3.782
million at the end of fiscal year 2010.
The Company's December 31, 2011 reserves were evaluated in accordance with
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities by
Cawley, Gillespie and Associates, Inc., ("Cawley") Petroleum Consultants of Fort
Worth, Texas. The report prepared by Cawley is dated March 13, 2012 and
effective December 31, 2011.
Doxa recorded revenues attributable to oil and natural gas sales totaling
$1,313,123 for the year 2011 as compared with $136,208 for the year of 2010. The
Company reported a net loss for the twelve months ended December 31, 2011 of
$3.675 million or ($0.12) per share, compared to a net loss of $3.548 million,
or ($0.22) per share for the twelve months ended December 31, 2010. Significant
factors in the loss recorded in 2011 include an impairment expense of $2.204
million for the Company's oil and gas properties, and a depletion, depreciation
and amortization ("DD&A) expense of $468,949. Impairment and DD&A expenses
recorded for fiscal year 2010 was $1.950 million, and $28,866 respectively.
Notable Project Updates
Mississippian Oil Play - The Company is
actively participating in exploratory drilling activity within the Mississippian
Oil Play. Six wells, all located in Alfalfa and Grant Counties, Oklahoma, are in
various stages of drilling, completion or initial flowback, and Doxa's net
working interest in each ranges from 1.67% to 5.0%. According to recent public
disclosures by the leading operators in this play, including Chesapeake Energy
Corp., SandRidge Energy and Eagle Energy, single well EURs are projected at
300-500 MBOE with drilling and completion costs estimated at US$3.2mil per well.
Doxa management will report results of these exploratory activities when this
information is available. SandRidge Energy, Inc. has recently reported that on
average it estimates over 98% rate of return on this play, and expects to
realize a net present value per well of approximately US$5.67mil (NPV10 based on
3/12/12 Nymex strip pricing).
Sarco Creek 3-D Project - As previously reported (see Doxa news
February 22, 2012), Doxa has participated in a proprietary 3-D seismic survey
covering more than 35 square miles in Goliad and Bee Counties, Texas. The
company now reports that all Sarco Creek 3-D operations, as well as processing
of field data by Geotrace Technologies of Houston has been completed.
Geophysical evaluation and prospect generation is ongoing and the company plans
to commence the drilling of initial exploratory wells this summer, and further
expects to participate in 3-4 wells on this project during 2012. All of the
planned wells will be targeting Miocene and Frio formation reservoirs above
On February 1, 2012, Doxa entered into an Acquisition and Assumption Agreement
("Agreement") covering 10% out of its 30% interest in the Sarco Creek 3-D
Project (the "Sale"). The Agreement between Doxa, Armada Energy Inc. ("Armada")
and The Harvey Group, LLC ("Harvey") provides for total cash proceeds payable to
Doxa of US$568,552, in exchange for an assignment of 10% (in equal 5% shares to
Armada and Harvey), subject to a reversion of 25% of such interest in favor of
Doxa upon the occurrence of payout. In addition, Doxa is afforded the
opportunity to repurchase the subject interest for a limited period by repayment
of the original purchase price plus interest accrued at 10% per annum. As Armada
and Harvey are owned and controlled by the Chairman (Arnold Armstrong) and
President (John D. Harvison) of Doxa, respectively, the Sale is a 'related party
transaction' within the meaning of Multilateral Instrument 61-101 (MI 61-101)
(incorporated by reference into TSX-V policy 5-9). Doxa is relying on an
exemption from the minority approval and formal valuation requirements of MI
61-101 due to the fact that the value of the portion of the property sold does
not represent greater than 25% of the market capitalization of Doxa. The sale
was approved by the TSX-V as well as the board of directors of Doxa. Proceeds of
this sale will be used to fund ongoing operations.
Eagle Ford Shale Oil Play - On February 2, 2012, the Company
agreed to sell 10.52% out of its 20% interest in the Peeler Ranch No. 2H well to
third parties in an arm's length transaction. Proceeds from the transaction
total $847,497, which funds have been used to fund ongoing operations. The third
party buyers will have an option to purchase similar interests in subsequent
proposed wells under the specified terms. The Peeler Ranch No. 2-H was completed
and recently put on-line and Doxa expects to release details of its initial
production rates in the near future.
Conventional Projects - As previously reported, during 2011 Doxa
participated in 2 separate Wilcox discoveries, both located in southern McMullen
County, Texas. The first of these, being the Martin-State Gas Unit No. 1 well
was put on-line in June, 2011 and the Kynette Unit No. 1 well was put on-line in
October, 2011. Together these wells are producing approximately 5,000 MCFD and
95 BCPD (barrels of condensate per day). Doxa owns a 14.0625% working interest
in the Martin-State Gas Unit No. 1 well with a respective 10.4867% net revenue
interest. As for the Kynette Unit No. 1 well, Doxa owns 16.70625% working
interest BPO (12.5% net revenue) reverting to an estimated 12.5% working
interest APO (est. 8.94% net revenue percent).
In order to meet its current cash obligations Doxa Energy has several financing
(including non-equity financing) opportunities under review. The Company is also
considering additional asset divestment opportunities. These steps would allow
the Company to advance its oil & gas assets more expeditiously through the
remainder of 2012.
About Doxa Energy Ltd.
Doxa Energy Ltd. develops and maintains a portfolio of producing and developing conventional and unconventional assets, including the Eagle Ford Shale Oil Play in South Texas, and the recently announced acreage acquisition in the Mississippian Oil Play of northern Oklahoma.
John D. Harvison
President, Chief Executive Officer
For further information contact:
Paul McKenzie, Director at 604.642.2625 or visit www.doxaenergy.com
Neither TSX Venture Exchange nor its Regulation Services providers (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Statements in this press release other than purely historical information, including statements relating to the Company's future plans, objectives or expected results, constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to the risks and uncertainties inherent in the Company's business, including risks inherent in oil and gas exploration and development, and uncertainties in connection with anticipated commodity prices for oil and natural gas, growth of worldwide market demand, exploration capital requirements, length of asset life and availability of qualified personnel, among others As a result, actual results may vary materially from those described in the forward-looking statements.
All references in this press release to BOE are based on a 6 Mcf to 1 Bbl conversion ratio. BOE's may be misleading particularly if used in isolation. A BOE conversion of 6 Mcf to 1 Bbl is based on the energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
This new release does not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company in the United States. The securities of Doxa have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States or to or for the account or benefit of a U.S. person unless so registered or pursuant to an available exemption from the registration requirements of such Act or laws.