VANCOUVER, CANADA -- Doxa Energy Ltd. ("Doxa" or the
"Company") today announced the results of its 2012 drilling operations in the
Mississippian Lime Play and other areas.
Mississippian Lime Play
reports that it has participated in a total of twenty-one gross wells in the
Mississippian Lime Play of northern Oklahoma; sixteen in 2012 and five to date
in 2013. The majority of the wells are being operated by either SandRidge
Exploration and Production, LLC ("SandRidge") or Chesapeake Operating, Inc.,
both of Oklahoma City. Fifteen of the wells Doxa has participated in are
producing, one is shut-in and five are in the process of being either drilled or
completed at this time. Based on the current level of activity the Company
expects to participate in about thirty additional gross wells (one net well) in
2013, with an estimated drilling/completion capital requirement of US$3.7mil. To
date, the Company has invested approximately US$1.75mil in drilling and
completing the fifteen producing wells, which are currently collectively
generating approximately US$91,000 in net revenue per month after deduction for
royalty and taxes. Lease operating expenses on average account for approximately
16% of the revenue stream. Doxa's interests in these wells range from 1%-5% for
an average of 3.2% working interest in each well, for an equivalent total of
0.48 net wells. Estimated drilling and completion cost, net to Doxa's interest,
averages US$117,000 per well.
Doxa and other companies actively participating in the
Mississippian Lime Play often gauge early well performance on average 30 day
initial peak production rates. On this basis, the fifteen producing wells in
which Doxa participated in averaged 136 BOPD and 747 MCFD, for a total of 260
BOEPD based on a 6:1 gas/oil conversion ratio. These results compare favorably
with the initial published "type" well 30 day peak rate average of 244 BOEPD
reported by SandRidge. Also according to previous public disclosures by
SandRidge and other operators in the play, single well Estimated Ultimate
Recoveries ("EURs") are projected at 300-500 MBOE per well with individual well
drilling and completion cost estimated from US$3-4mil per well. These same
operators report expected internal rates of return in the range of 30%-100% on
average for "type" wells in this play, varying substantially with changing
product prices. Doxa is targeting a 50% or greater first year rate of return for
drilling in this play. With regard to the 15 wells Doxa has participated in so
far, 53% of the total BOE production is comprised of oil and 47% natural gas.
As previously reported, the Company owns a total of 3,600 net
acres of leasehold in the play, which it acquired at a total cost of US$2.7mil,
or US$760 per acre. Based on the manner in which the play developed throughout
2012, Doxa management expects that at least 1/2 of its acreage will warrant full
development at the generally accepted spacing of four wells per section. On this
basis, Doxa has the potential to participate in approximately 240 gross wells.
Conventional Play Update
In addition to the foregoing update on its Mississippian
operations, Doxa reports results of drilling operations with respect to three
additional conventional wells. On its Sarco Creek project in Goliad County,
Texas, as of this date the Company has participated (30%) in two out of four
planned initial test wells, both of which have been drilled to 5,300 feet and
evaluated. Neither well encountered commercial quantities of oil and gas, and
therefore both were plugged and abandoned. Even though the initial two wells
were not successful the information gained from these wells is important in the
process of further calibrating the seismic data previously acquired for this
project. Management expects to have more favorable results going forward, and in
this regard two additional test wells are planned for second quarter 2013.
Doxa's share of the drilling cost for each of the two wells drilled to date is
US$120,000 for its 30% share.
The Koehn Unit No. 2 well, located in Colorado County, Texas,
was also drilled and successfully completed in October, 2012. This well is
completed in the Wilcox formation and is producing from perforations at 9,618-68
feet. The well is currently producing 90 BOPD and 550 MCFD, flowing with 1900
psi tubing pressure on a 10/64" choke. Doxa participated for a 12.5% working
interest at a total estimated cost of US$212,000. The well is currently
generating approximately US$30,000 monthly cash flow net to the Company.
Currently, oil and gas revenues attributable to all of Doxa's
existing wells generate approximately US$200,000 per month in cash flow, net of
taxes and royalties.
About Doxa Energy Ltd.
Doxa Energy Ltd. develops and maintains a portfolio of
producing and developing conventional and unconventional assets, including the
Mississippian Oil Play in northern Oklahoma, the Frio, Wilcox and Eagle Ford
Shale trends in South Texas, and several others.
John D. Harvison
President, Chief Executive Officer
For further information contact:
Paul McKenzie, Director at 604.662.3692 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 news 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.