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Monday, April 18, 2011

Skywest Energy Corp (OIl and Gas) 100% success in drilling results and increase in production.

Oil DrillerImage via WikipediaSkyWest Energy Corp.

TSX VENTURE: SKW

Apr 18, 2011 09:00 ET


CALGARY, ALBERTA--(Marketwire - April 18, 2011) - SkyWest Energy Corp ("SkyWest", "we", "us", "our" or the "Company") (TSX VENTURE:SKW) is pleased to announce we have filed on SEDAR our audited financial statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2010. Selected financial and operational information is outlined below and should be read in conjunction with our audited financial statements and the related MD&A which are available for review at www.sedar.com.

FINANCIAL AND OPERATING HIGHLIGHTS
Our 2010 year end results include approximately six months of production from the reverse take-over of EMM Energy Inc. and 15 days of production from the acquisition of Base Resources Inc. The year-end results also include 5 operated Cardium horizontal oil wells which were brought on production in 2010 with 4 of the 5 being brought on in December 2010.

($ CDN unless otherwise noted) For the three months ended
December 31, 2010
For the three month period ended
December 31, 2009
For the twelve months ended
December 31, 2010
FINANCIAL
Revenues 2,603,366 - 4,038,265
Funds from (used in) operations 178,461 (34,113 ) (517,393 )
Per share (basic) 0.00 (0.02 ) (0.01 )
Per share (diluted) 0.00 (0.02 ) (0.01 )
Net income (loss) (573,695 ) (34,113 ) (4,621,304 )
Per share (basic) (0.00 ) (0.02 ) (0.07 )
Per share (diluted) (0.00 ) (0.02 ) (0.07 )
Capital expenditures, net(1) 24,210,202 192,756 31,307,901
Total Assets 1,272,975 110,541,025
Shareholders equity 1,068,017 77,772,236
Working capital (deficiency) 687,871 (1,264,064 )
OPERATIONS
Production sales
Oil (bbls/d) 203 - 75
Natural gas (mcf/d) 2,608 - 1,147
NGL (bbls/d) 41 - 14
Total (boe/d @ 6 mcf: 1 bbl) 679 - 280
Average pricing
Natural gas ($/mcf) 3.44 - 3.52
Oil ($/bbl) 83.51 - 84.20
NGL ($/bbl) 54.76 - 51.45
Combined ($/boe) 42.23 - 39.46
Expenses
Operating expenses ($/boe) 17.06 - 18.89
Royalty expense ($/boe) 4.53 - 5.07
Netback Combined ($/boe) 20.64 - 15.50
Net Cardium sections 35 - 35
2P reserves (Mboe) 10,963 69 10,963
Basic Shares Outstanding 201,971,715 2,459,239 201,971,715
Diluted Shares Outstanding 201,971,715 2,459,239 201,971,715
Total shares, warrants and options issued 229,333,224 11,312,493 229,333,224

(1) Excludes corporate and asset acquisitions

Year in review
2010 was a very successful and exceptional year for us. We began the year with the new management team in June of 2010 with a focused, well-defined strategy to increase our exposure to light oil value and growth opportunities in the Cardium play. Our execution was purposeful and disciplined as we increased our leverage to oil production as well as assembling an inventory of oil opportunities for future growth.

As a result, SkyWest drilled nine out of nine successful Cardium wells (100% success), which had better than expected results, based on our typical type curves and economic forecast. We have had tremendous growth in both production and undeveloped acreage in the past 6 months. SkyWest has strategically focused on the Cardium play and has accumulated three core areas which we feel are some of the best lands geologically. The areas we are focused on are in the Willesden Green, Carrot Creek and Pembina areas located in west central Alberta. The Company has also insured that its product will not be restricted for production based upon the infrastructure we own or control in each area.

SkyWest started as a private company in December 2009 and completed our reverse take-over of EMM Energy Inc. on June 21, 2010. Historical production was approximately 300 boepd with a commodity blend of 75% gas and 25% oil and NGL's. SkyWest became a publically trading entity on June 22, 2010 and commenced its drilling operations in August of 2010. The Company has grown from 69 mboe to 10,963 mboe of reserves.

 SkyWest currently has 130 net Cardium locations in inventory in our core areas which provided us with a strong foundation from which to grow and our strong internal performance have provided us with a substantial amount of development and exploitation upside in areas that are accessible year round. 

Outlook

SkyWest drilled and completed 3 gross (3 net) Cardium horizontal oil wells in Q1 of 2011 which included 2 earning wells. The 3 wells were all completed with water based nitrogen foam fluid and averaged approximately 500 boepd per well over an initial five to seven day test period. SkyWest's current production is approximately 1,650 boepd (approximately 45% oil and NGLs resulting in 70-75% of the Company's revenues) and there is currently 900 boepd behind pipe awaiting tie-in.

We anticipate a portion of the behind pipe volumes to be on production in May and the remainder in July, adding approximately 500 boepd of stabilized production. SkyWest plans to drill the remainder of its 2011 capital budget on 5 to 6 net Cardium horizontal oil wells, the first of which will be spudded immediately after break-up with the related production coming on stream in late Q3 or early Q4 of 2011.

ANNUAL GENERAL MEETING
The Annual and General Meeting of our Shareholders will be held at Livingston Place, in the Second Floor Conference Centre, 250 – 2nd Street S.W., Calgary, Alberta on May 26 2011, at 3:00 p.m. (M.S.T.). All shareholders are cordially invited and encouraged to attend.

Information Regarding SkyWest
SkyWest Energy Corp. is a Cardium focused, public oil and gas exploration and development company, located in Calgary, Alberta with operations in Alberta. SkyWest currently trades on the TSX Venture Exchange (TSXV) under the Symbol "SKW".

Statements herein that are not historical facts may be considered forward looking statements including management's assessment of future plans and operations, growth expectations within the Company, expected initial production rates from certain new wells, timing of completion of wells and of production additions, expected size of various plays, construction or expansion of facilities and the timing thereof and expected costs and the effects thereof, drilling plans and the effects thereof. These forward-looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals or future plans are forward-looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties including, without limitation, risks associated with acquisitions, oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, SkyWest's actual results may differ materially from those expressed in, or implied by, the forward-looking statements.
Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although SkyWest believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because SkyWest can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the ability of SkyWest to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which SkyWest has an interest in to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility construction and expansion; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which SkyWest operates; and the ability of SkyWest to successfully market its oil and natural gas products.
Readers are cautioned that the foregoing list of factors and assumptions is not exhaustive. Additional information on these and other factors that could effect SkyWest's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and SkyWest does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
BOEs
Disclosure provided herein in respect of barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 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.
For more information, please contact
SkyWest Energy Corp.
Lawrence Urichuk
President & CEO
Main Phone (403) 265-0071
or
SkyWest Energy Corp.
Joel MacLeod
VP Finance and CFO
Main Phone (403) 265-0071
or
SkyWest Energy Corp.
Suite 480, 435 - 4th Ave S.W.
Calgary, Alberta T2P 3A8
(403) 265-0073 (FAX)

Articles:
The Cardium oil play - light sweet crude


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