Nextraction Energy Corporation (TSX: NE) has reported the financial and operating results for the year ended December 31, 2010 along with the 2010 year end reserves.

"2010 resulted in substantial advancement for our company as we accomplished all of the milestones we set out to achieve," said Mark S. Dolar, president and chief executive officer. "We are in commercial production, we have established our Calgary office, hired a dynamic management team for forward growth, and have acquired production and additional drilling opportunities for oil as we expect to advance our story even further in 2011."

Highlights:

  • Successfully completed a 13-stage frac in the lower productive zones of the Noble 6-24 well, testing at a 24 hour flow-back of 1 million cubic feet of gas and 30 barrels of condensate a day. The company entered commercial production in July of 2010, acquired 1,023 acre leaseholds in the North Pinedale Project and earned 100% of a 154 acre pooled area with the completion of the Noble 6-24 well.
  • Completed fracing the upper zones of the Noble 6-24 well with an eight-stage program that flowed 3 million cubic feet of gas per day on a 24 hour test using a ½ inch choke.
  • Entered into a Seismic Option and Farm-out Agreement with a joint venture partner, whereby Nextraction can earn an interest in 20,000 acres in the Saturn Prospect located in Daniels County, Montana. The property hosts the highly prospective Mission Canyon, McGowan, Bakken and Three Fork formations.
  • Closed a private placement whereby the company issued and sold 4,240,000 units at a price of $1.00 per unit for aggregate gross proceeds of $4,240,000. Each unit consisted of one common share and one-half of one common share purchase warrant.
  • Shareholders of Nextraction exercised a total of 3,458,713 warrants at an exercise price of $0.65 per warrant for aggregate gross proceeds to the Company of $2,248,163.
  • Exited the year ended December 31, 2010 with production of 104 boe/d, with average production for the year of 35 boe/d.
  • Established proved reserves of 564 Mboe and proved plus probable reserves of 1,175 Mboe effective at December 31, 2010.
  • The net present value of Nextraction's proved plus probable reserves at December 31, 2010, at 10% discounted value before tax, is $9.6 million.

Outlook

In the fourth quarter of 2010, the company advanced the development of its existing projects and entered into a Seismic Option and Farmout Agreement with a third party to develop the Bakken Shale in the Saturn Project located in the northwestern Williston Basin in Daniels County, Montana. Prior to year end, the company also successfully fraced and completed the upper eight zones in the Noble 6-24 well on the Pinedale Anticline in the Upper Lance and Tertiary formations, and conducted propellant fracing operations in two vertical wells in the Appalachian Basin Chattanooga Shale. The acquisition of the Saturn Project with light oil potential moved the company closer to its goal of producing both light oil and liquids-rich natural gas.

The company is excited about its future prospects, including its emerging Viking light oil play within the Provost Acquisition and Development Project.

Provost Viking Oil Acquisition and Development Project

In the first quarter of 2011, the company entered into a joint venture agreement to acquire properties located in the Provost Field of eastern Alberta. The Provost Field is known for its prolific Viking A formation.

The acquisition includes production of 30 barrels of oil per day (gross) from four producing wells and 3.25 sections of undeveloped leasehold with the potential to drill 12-21 horizontal wells in the defined pool.

The company plans to re-enter existing wellbores to frac and complete less productive wells in the field by applying advanced completion technologies, or to frac non-productive intervals in the Viking sand formation to establish new producing horizons. The company also plans to drill and complete two horizontal wells, the first well to commence before July 2011.