Growth Through Successful Exploration and Drilling Strategies
August 31 , 2009 NEWS RELEASE
NORDIC OIL AND GAS REVENUE INCREASES BY MORE THAN 25% DURING FIRST SIX MONTHS OF 2009
WINNIPEG, MB. (AUGUST 31, 2009) Nordic Oil and Gas Ltd. (TSXV: NOG) today
announced the Company's financial results from operations for its second quarter and six
months ended June 30, 2009. All amounts referenced herein are in Canadian dollars.Highlights from the Six Months Ended June 30, 2009
Revenue from oil, natural gas and Coal Bed Methane (“CBM”) sales for the six-month period (including liquids and transport revenue) totaled $616,795 up 25.8% from the $490,119 reported for same period in 2008. When adding interest income of $10,427, total revenue for the first six months of the year was $627,221, compared to $524,724 from the same period a year ago. The increase in the first half revenue totals was due to a rise in oil and gas revenue alone to $608,258 as compared to $473,376 a year ago – a 28.5% increase.
Cash, short term investments, accounts receivable, deposits and deferred costs for the first six months of the year totaled $866,860 compared to $3,255,500 at the end of December, 2008.Total assets as at June 30, 2009 were $12,410,364, on par with the $12,686,306 as at March 31, 2009, and down slightly from the 2008 year-end total of $14,113,291.
General and administrative expenses for the first half of 2009 totaled $131,157, down from the $218,080 reported for the same period in 2008. Overall expenses for the first half of 2009 were down approximately $259,000 at $670,857 compared to the first half of 2008 at $929,524. Total production costs plus expenses for the first half of 2009 were $1,280,109, on par with last year’s total of $1,245,758.
The Company recorded a net loss of $499,327, after applying the future income tax recovery of ($153,560) for the first six months of 2009, an increase of $227,000 over the same period a year ago ($272,233). The increase in the net loss for the six-month period can be attributed to a lower future income tax recovery totaling approximately $298,000.
Second Quarter ResultsRevenue from oil and natural gas sales (including liquids and transport revenue) during the second quarter of 2009 totaled $358,127, compared to $258,668 in Q1 2009 – a 38% increase – and a 4.1% increase over the $344,266 recorded during Q2 last year. When adding interest revenue, the Q2009 second quarter revenue totaled $366,001, up approximately $100,000 over the Q1 2009 total of $261,220, but down slightly from the Q2 2008 of $375,622. The increase from the first quarter is due to stronger oil and gas revenue (a result of higher oil prices during Q2), while the slight decrease from last year was due to the higher than normal interest revenue accrued during Q2 2008.
Overall expenses, not including production costs for the quarter under review, increased slightly to $395,999 from the $342,201 for the same period last year, and increased by approximately $110,000 over the first quarter of this year. The increase in expenses for the second quarter was due primarily to a rise in interest expenses to $32,233 from $13,402. General & Administration expenses for the quarter dropped 19% to $87,463, compared to $108,744 for the same period a year ago.
Total production costs plus expenses for the quarter were $735,467, compared to $576,175 during the same period in 2008. The reason for the increase was the rise in operating costs from $128,368 to $316,688, a direct result of the extensive well maintenance that took place at the Company’s Lloydminster heavy oil wells.
For the quarter, the Company recorded a net loss of $277,215 (after applying the future income tax recovery of $92,250), as opposed to the $135,730 loss reported in Q2 2008.
Average gas production volume for the three months ended June 30, 2009 was 7.36
10³m³/day (264.28 GigaJoules/day), as opposed to 8.95 10³M³/day (352.34 GJ/day)
during the second quarter of 2008. The Company received $3.86/GJ as an average gas price during the second quarter of 2009 compared to $7.58/GJ for the second quarter last year.Average heavy oil production volume for the three months ended June 30, 2009 was 53.57 Barrels of Oil per day (BOPD), compared to 37.04 BOPD during Q1 of this year. The Company received $33.28 as an average price per barrel during Q2, up from the $20.04 received during Q1.
Corporate Review
On June 1, the Company, in conjunction with its joint venture partner, Western Warner Oils Ltd acquired 3,856 hectares (9,528 acres) of coal leases located at Drumheller, Alberta.
Preliminary evaluation of the mining potential of this property conducted by Norwest Resource Consulting Ltd. historically concluded the total calculated in place coal was 95,951,031 tonnes with 53,905,623 tonnes potentially recoverable.
In conjunction with this acquisition, the Company announced in July that it was examining the possibility of using Underground Coal Gasification (“UCG”) as a means to convert the coal into product gas at its recently acquired Drumheller, Alberta property.
Nordic is currently making preparations to submit an application to the Province of Alberta for a UCG pilot project, only the second such project ever undertaken in Canada, and one of just a few in North America. In March of this year, the Alberta government, through the Alberta Energy Research Institute, announced that it was providing $8.83 million for a $30-million deep coal gasification project being undertaken by a Calgary-based company. It is expected the project will demonstrate the ability to produce environmentally clean synthetic gas from Alberta’s vast, deep, coal resources, with the future potential of utilizing the coal seams for carbon capture and storage.In July, the Company began marketing a new non-brokered private placement offering for up to 10,000,000 units at a price of $0.125 per Unit for gross proceeds of $1,250,000 to various subscribers.Each Unit will consist of one Class A common share of the Company issued as a “Flow-Through share” within the meaning of the Income Tax Act (Canada) and one-half of one Class A common share purchase Warrant (“a Warrant”). Each whole Warrant would entitle the holder thereof to purchase one regular Class A common share of the Company at a price of $0.13 for a period of one year from the date of issuance. On August 18, Nordic had its first closing, issuing 6,388,500 flow-through units (the “Units”) at a price of $0.125 per Unit for gross proceeds of $798,562.50 to various subscribers. Furthermore, on August 31, 2009, the Company announced its second closing on the afore-mentioned Flow-Through Offering, issuing and additional 1,758,000 flow-through units at a price of $0.125 per Unit for gross proceeds of $219,750.
Also in late July, the Company, along with its Joint Venture partner, Western Warner Oils Ltd., entered into a strategic development agreement with a private, major international oil company whereby Nordic has the opportunity to earn an interest in that company’s land in Preeceville, Saskatchewan. The ensuing exploration work on the lands will result in that company having the option to participate on a 50-50 go forward basis with Nordic, or allow Nordic to retain a 100% interest in the land with the other company earning a Gross Overriding Royalty.
Mr. Benson also stated that survey work has been completed for a multi-well drilling program for shale gas on the Nordic land in Preeceville. “We believe that with new drilling technology available to us, we will be successful in unlocking the enormous reserves of natural gas that consultants have confirmed is in the region.” Drilling is expected to begin in September of this year.
About Nordic Oil and Gas Ltd.
Nordic Oil and Gas Ltd. is a junior oil and gas company engaged in the exploration and development of oil, natural gas and Coal Bed Methane in Alberta and Saskatchewan. The Corporation is listed on the TSX Venture Exchange and trades under the symbol NOG.
Neither 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 the contents of this News Release.
This press release contains forward-looking statements with respect to Nordic Oil and Gas Ltd. and matters concerning the business, operations, strategy, and financial performance of Nordic. These statements generally can be identified by use of forward-looking words such as “may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue” or the negative thereof or similar variations. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are based on a number of assumptions which may prove to be incorrect. Unless otherwise stated, all forward looking statements speak only as of the date of this press release and Nordic does not undertake any obligation to update such statements except as required by law.
For additional information, contact:
Donald Benson Don Bain
Chairman & CEO Corporate Secretary
Nordic Oil and Gas Ltd. Nordic Oil and Gas Ltd.
Tel. 204-956-5042 Tel. 204-943-1810
Fax. 204-897-7154 Fax. 204-943-1829
E-mail: dbenson57@shaw.ca E-mail: donbain1@mts.net
