Forent Announces Third Quarter 2012 Financial and Operating Results

Fri Nov 16, 2012 7:00am EST

* Reuters is not responsible for the content in this press release.

  CALGARY, ALBERTA, Nov 16 (MARKET WIRE) --
Forent Energy Ltd. (TSX VENTURE:FEN) ("Forent" or the "Company")
announced today its third quarter financial results, based on
International Financial reporting Standards ("IFRS").

    The following table provides a summary of Forent's financial and
operating results for the three and nine months ended September 30, 2012
with comparisons to the three and nine months ended September 30, 2011.
Forent's financial statements and Management Discussion and Analysis for
the three and nine months ended September 30, 2012 and 2011 have been
filed on SEDAR at www.sedar.com and are available on Forent's website at
www.forentenergy.com.

    All amounts referred to in the press release are in Canadian dollars
unless otherwise stated.

    Selected Financial Information


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                               Three months ended         Nine months ended 
                                    September 30,             September 30, 
                                2012         2011         2012         2011 
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                                  ($)          ($)          ($)          ($)
Revenues                     905,774      905,854    2,620,388    3,072,498 
Net earnings (loss)         (303,305)    (684,299)  (2,045,594)  (1,853,529)
Net earnings (loss) per                                                     
 share - basic and                                                          
 diluted                           -        (0.01)       (0.02)       (0.02)
Capital expenditures         479,213      741,361    3,293,765    2,217,178 
Total assets              13,557,844   15,161,949   13,557,844   15,161,949 
Working capital             (426,728)   1,604,379     (426,728)   1,604,379 
Funds provided by                                                           
 operations                   95,950      140,877      520,326      383,253 
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    Financial and Operating Results of the Third Quarter 2012 


--  the Company continued to generate positive cash flow in the period
    amounting to $95,950;  
--  annual average oil and gas production decreased by 12 percent compared
    to 2011; 
--  general and administrative expenses increased 42 percent overall and
    increased on a per boe basis $11.82 per boe, primarily due to a
    significant non-recurring professional fee; 
--  operating expenses decreased 1 percent to $30.19 per boe; and, 
--  operating netbacks for the period increased by 29% to $14.97 per boe. 


    Overview of the Third Quarter 2012 

    The Company spent considerable effort during the third quarter in the
successful conclusion of its search for a partner for the exploration of
its 29 section Montgomery AB, exploration opportunity. Forent enjoyed
relatively stable oil and gas production throughout most of the quarter,
although the Mervin heavy oil field was shut in in late September. Partly
as a result of the Mervin situation, cash flow in the third quarter
declined to $95,950 from the $238,269 achieved in the second quarter of
2012. 

    Nova Scotia 

    After drilling two exploration wells (Alton #1 and South Branch #1)
earlier in the year, the Company incorporated the information into its
geological model and has greatly improved its understanding of the
subsurface of the Alton Block. The Company believes it has identified the
key risks associated with the Gays River reef play and has been able to
determine a go forward strategy to explore the geophysical anomalies on
the Alton Block. It should be recognized that all of the 10 to 12
geophysical anomalies that have been identified on the Alton Block are
distinct exploration opportunities, such that a lack of success at any
one does not rule out the potential for success at a different location. 

    Montgomery, Alberta 

    During the second quarter the Company achieved a significant milestone
with the signing of a definitive farm-out agreement with BlackShale
Resources, Inc. ("BlackShale"), a wholly owned subsidiary of Houston
based Kerogen Exploration LLC. BlackShale is a private company that
specializes in identifying and exploiting unconventional oil and gas
opportunities in Canada. After extensive assessment of regional light oil
resource play opportunities in Western Canada, BlackShale chose Forent's
Montgomery lands as one of its initial projects for light oil
exploration.

    Under the terms of the Agreement, BlackShale has agreed to fund the cost
to drill and complete a vertical test well to the base of the Mannville
Formation, a depth of approximately 3,100 metres, to earn a 70% interest
in all PNG rights to the base of the deepest formation penetrated in four
contiguous sections of land, while Forent will retain 30% of its
pre-farmout interest in these four sections. Upon drilling the first well
and having evaluated all of the formations in the borehole, BlackShale
may exercise an option to drill additional vertical or horizontal wells
under similar earning conditions. 

    Mervin, Saskatchewan 

    During the third quarter of 2012 production averaged 145 bbls per day or
about 5 bbls per day greater than the second quarter of 2012. In
mid-September a neighboring operating company initiated a well re-entry
program on lands adjacent to Forent's Mervin oil field. During the
re-entry operations on the first well in this program, a deeper formation
was inadvertently penetrated containing quantities of water with hydrogen
sulfide ("H2S"). This H2S contaminated water flowed uncontrolled for a
number of days into the Waseca formation, from which Forent was
previously producing sweet oil, resulting in the Waseca formation
becoming contaminated. As a result of H2S in the produced water, Forent
shut in the Mervin field on September 22nd as a safety precaution. Upon
taking appropriate operating measures to remove the H2S from the produced
water, oilfield operations were restarted on October 4th. Forent
continues to ship most of its production to the US Gulf Coast via rail
car and experienced a premium of approximately $10 per bbl, as compared
to the Canadian pipeline price. 

    Outlook for the balance of 2012 

    The farm-out agreement with BlackShale Resources Inc. ("BlackShale") that
was announced on August 30, 2012 is moving forward with BlackShale
expected to commence drilling of the first well in November. This
vertical well will be drilled to the base of the Mannville Formation in
order to evaluate all geological zones encountered. In addition to a full
suite of well logs, BlackShale intends to take extensive core samples,
specifically over the Second White Speck Formation ("2WS"). All technical
data will be thoroughly evaluated over several months in order to
determine the best completion methodology for the 2WS horizontal well
that is expected to be drilled in 2013. Forent will also utilize the well
data in order to further evaluate its 23 section, proprietary 3D seismic
dataset. 

    At Mervin SK, the Company is seeing several positive indications such as
the return of casing gas, reduced fluid in the six well bores and a
modest return in oil production in the range of 20 to 30 bpd. The
Company's cash flow is expected to be materially impacted in the fourth
quarter of 2012, until normalized production resumes. Forent is in
discussions with the offsetting company in order to restore full
production as quickly as possible, address ongoing operational matters
and consider appropriate compensation for the impairment of the Company's
Mervin field. 

    In Nova Scotia, the Company is looking at all alternatives to continue
our exploration efforts in Nova Scotia, including bringing in a partner.
The next logical step would be a surface geochemical study that can be
conducted for approximately $200,000. It is believed this will measure
the differing levels of hydrocarbons encountered in our two exploration
wells and will allow high grading of a number of the geophysical
anomalies seen on the Alton Block.  

    Shares of Forent trade on the TSX Venture Exchange under the symbol
"FEN.V".

    Except for statements of historical fact, this news release contains
certain "forward-looking information" within the meaning of applicable
securities law. Forward-looking information is frequently characterized
by words such as "plan", "expect", "project", "intend", "believe",
"anticipate", "estimate" and other similar words, or statements that
certain events or conditions "may" or "will" occur. Forward-looking
statements such as the estimates of reserves, the references to Forent's
exploration program and drilling program and capital expenditures
relating to, and timing of, such programs are based on the opinions and
estimates at the date the statements are made, and are subject to a
variety of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those anticipated in
the forward-looking statements. There are uncertainties inherent in
forward-looking information, including factors beyond Forent's control,
and no assurance can be given that the programs will be completed on
time, on budget or at all. In addition, there are numerous uncertainties
inherent in estimating reserves, including many factors beyond Forent's
control, and no assurance can be given that the indicated level of
reserves or the recovery thereof will be realized. Forent undertakes no
obligation to update forward-looking information if circumstances or
management's estimates or opinions should change except as required by
law. The reader is cautioned not to place undue reliance on
forward-looking statements. Additional information identifying risks and
uncertainties that could affect financial results is contained in
Forent's filings with Canadian securities regulators, which filings are
available at www.sedar.com.

    The TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this press release.

Contacts:
Forent Energy Ltd.
Tom Lester
President, CEO & CFO
(403) 262-9444 #203
tlester@forentenergy.com
www.forentenergy.com

Copyright 2012, Market Wire, All rights reserved.

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