CALGARY, ALBERTA -- (Marketwire) -- 01/23/13 -- STORM RESOURCES LTD. ("Storm") (TSX VENTURE: SRX) has entered into a purchase and sale agreement in relation to the disposition of approximately 275 Boe per day in the Grande Prairie area of northwest Alberta. Details of the disposition are provided below.
-- Disposition price is $18 million.-- Closing date is February 12, 2013 with an effective date of January 1, 2013.-- In the third quarter of 2012, production averaged 275 Boe per day (80% light oil plus natural gas liquids) and the field netback approximated $32.00 per Boe.-- The asset contains an estimated 870 Mboe total proved and 1,140 MBoe of proved plus probable reserves based on an independent reserve report dated March 31, 2012 prepared by InSite Petroleum Consultants Ltd. in accordance with National Instrument 51-101. Future development capital assigned to the properties was $1.7 million.
In addition, on January 18, 2013, Storm closed the sale of a minor property, producing 30 Boe per day, for proceeds of $2.1 million. Total proceeds of $20.1 million from these two dispositions will initially be used to reduce Storm's bank debt. At December 31, 2012, Storm's adjusted net debt, which includes working capital deficiency, is forecast to be $40 million. This amount includes the value of Storm's public company investments. Giving pro forma effect to the dispositions above, adjusted net debt at December 31, 2012 would approximate $20 million. Storm's bank credit facility is expected to be reduced from $62 million to $52 million as a consequence of these dispositions.
These dispositions reflect Storm's commitment to maintaining debt levels at an acceptable multiple of cash flow and to preserve financial flexibility to pursue growth opportunities, or to accelerate capital investment on development activities at existing properties if results are supportive of so doing.
Storm Resources Ltd. began operations in August 2010. Storm is headquartered in Calgary, Alberta and is active in the Horn River Basin and Umbach areas of northeast British Columbia, and at Grande Prairie in northwest Alberta.
FirstEnergy Capital Corp. of Calgary, Alberta, acted as sole agent to Storm for these dispositions.
Boe Presentation - For the purpose of calculating unit revenues and costs, natural gas is converted to a barrel of oil equivalent ("Boe") using six thousand cubic feet ("Mcf") of natural gas equal to one barrel of oil unless otherwise stated. Boe may be misleading, particularly if used in isolation. A Boe conversion ratio of six Mcf to one barrel ("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. All Boe measurements and conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Mboe means 1,000 Boe.
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking statements and information concerning the company's working capital and bank facility, reserves, undeveloped land holdings and anticipated benefits from the disposition. The forward-looking statements and information are based on certain key expectations and assumptions made by Storm, including: expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates and reserve volumes; the timing of receipt of regulatory and shareholder approvals; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services.