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NOVUS ENERGY INC. ANNOUNCES STRONG VIKING LIGHT OIL PRODUCTION GROWTH IN 2010

^{Published on 2011-01-17 05:05:22 - Market Wire}
 

 HIGHLIGHTS - Estimated field level production at the end of 2010 was approximately 2,050 boe/d with approximately 66% of these volumes comprised of oil and liquids. - During 2010 Novus achieved a 100% success rate on its Dodsland area Viking oil drilling campaign. Novus operated the drilling of 33, 100% working interest wells, all using horizontal multi stage frac technology. 31 of these wells had been completed by year end and were contributing to estimated year end production figures. - At year end 2010, field level Viking oil production from the Dodsland area was estimated to be approximately 1,095 b/d. Novus is pleased with the volume increases it has achieved in its Dodsland Viking light oil assets from its highly successful 2010 drilling program. During the course of 2010, Novus was able to increase oil production in this area from approximately 30 b/d to 1,095 b/d. - Based on December field estimates, production for the fourth quarter of 2010 is estimated to be approximately 1,525 boe/d with oil and liquids comprising an estimated 62% of the total production levels. The majority of the Viking oil wells drilled by the Company in the latter part of 2010 were completed and placed on production very near to year end, and did not meaningfully contribute to production levels for the quarter. - Novus estimates that it ended the 2010 fiscal year with no debt, undrawn lines of credit of $28 million, and positive working capital. - Novus continued to expand its land base in the Dodsland Viking light oil resource throughout the year, and currently has approximately 110 net sections of land in the area. 575 high quality locations have been identified for drilling based upon 8 well per section spacing. - Novus obtained a Contingent Resource Assessment (the "Report") from Sproule Associates Limited effective November 30, 2010 (as previously disclosed in a press release issued by Novus Energy Inc. on December 6, 2010) which identified a "best estimate" of Discovered Petroleum Initially-In-Place ("DPIIP") of 559.5 Million Barrels of light Viking oil on the Company's working interest and option lands. The Report recognized approximately 54 net sections controlled by Novus as containing DPIIP. Novus believes that with its recent acquisitions, and highly successful fourth quarter 2010 drilling program in the area that it has successfully augmented the initial estimates contained in the Report. - Novus continued its focus on innovation and cost reduction throughout the course of 2010 and devoted substantial attention to fine tuning its completion techniques. Capital costs in the Dodsland area have been reduced to less than $850,000 per well employing Limited Entry fraccing. This technique was utilized with very favorable results on several of the Company's most recent wells, and Novus plans to employ this technique on all of its wells in the Dodsland area throughout 2011. The Limited Entry technique has allowed the Company to reduce capital costs from $975,000 to less than $850,000 per well, while maintaining very encouraging production results. The economic impact of the substantial cost savings materially increases the economic attractiveness of the Viking light oil resource. The Limited Entry fraccing technique is based on simultaneously fraccing several intervals at once through increased pumping rates. Novus will typically frac 12 to 14 intervals over two stages using cross linked water heated to 55 degrees Celsius in a 600 meter lateral section drilled using monobore technology. - The Company completed the construction during 2010 of two 100% owned oil batteries in the Dodsland area. One battery has fluid handling capacity of 2,500 barrels per day, and the other possesses fluid handling capacity of 3,500 barrels per day and the ability to conserve natural gas production. The Company believes that the investments it has made in this infrastructure will contribute to supporting stable, low operating cost production within the area. - Novus commenced the drilling of a Bakken oil well in the Roncott area of Saskatchewan, and two Halfway oil wells in the Wembley area of Alberta during the fourth quarter of 2010. It is expected that these wells will be completed during the first quarter of 2011.