Quarterly Report Highlights

Document Sample
Quarterly Report Highlights Powered By Docstoc
					 
     Quarterly Report
     Period ended September 30, 2009 


Red Fork Energy Limited
ACN 108 787 720
                                       Highlights
Level 2, 79 Hay Street
Subiaco Western Australia 6008            •   133% increase in net revenue as oil and gas sales
PO Box 1424                                   deliver record quarterly sales
West Perth WA 6872

Telephone +61 8 9200 4470
Facsimile +61 8 9200 4471
                                          •   Gross production of A$604,000 generating net
                                              income for the quarter of A$509,000
Contact
David Prentice                            •   Total 3P reserves increased by 24% to 106.5Bcfe,
Managing Director                             with 2P reserves increasing by 78% to 72.8Bcfe
david.prentice@redforkenergy.com.au

Website                                   •   Success with step out drilling at East Oklahoma
                                              and a commitment to increase land holdings in the
www.redforkenergy.com.au
                                              discovery area
Directors
Michael Fry (Chairman)
                                          •   Production tests at West Tulsa deliver initial rate of
David Prentice (Managing Director)            approximately 85 barrels of oil per day from
Perry Gilstrap (Director Operations)
Bruce Miller (Director Resources)
                                              Fuss#1-34 well and new wells (Fuss #3-33 and the
                                              Rosier #2-27) successfully intersect the target zone
ASX Code
RFE (Fully Paid Ordinary Shares)
                                          •   A$24,000,000 in working capital secured through
                                              an issue of new fully paid ordinary shares A$1.20
                                              per share

                                       Exploration and Development Activities
                                       Red Fork Energy Limited (“RFE”, “Red Fork” or the “Company”)
                                       is very well positioned to continue its growth and capitalize on
                                       the vast potential of its significant landholdings in highly
                                       prospective basins located in Oklahoma in the United States.

                                       East Oklahoma Project (RFE 100% owned and operated) 

                                       During the quarter the Company continued with the next phase
                                       of drilling and development at East Oklahoma.

                                       The Company drilled, cased and cemented the Couch #1-34
                                       and True #1-33 wells. These step-out wells were staked
                                       approximately 1.25 miles north of the first four wells drilled at
                                       East Oklahoma.
Importantly, both wells (the Couch #1-34 and True #1-33 wells) intersected the target shale at
the expected depth (approximately 600 feet to the top of the shale), with log characteristics
consistent with the previously drilled (and successfully tested) wells and both wells exhibited a
show of gas in the shale on drilling with no unusual drilling conditions encountered.

The Company also announced during the quarter that it had committed to a significant
expansion of its current land holdings at East Oklahoma by increasing its presence in an area
immediately to the north of its existing project, the Company will have the ability to more than
double its current acreage and its overall exposure to the large gas discovery in this proven and
productive region.

In this part of the discovery area, the Company is participating in a Joint Venture with a Dallas
based group of private oil and gas investors and Red Fork anticipates that 10 new wells will be
drilled and tested in the area by the end of the 2009 calendar year. Red Fork is carried for a
25% interest in these 10 wells through to completion as well as for an additional 60,000 acres in
the Joint Venture project. Under the terms of the Joint Venture, Red Fork can increase its
participation by contributing to the cost of acquiring and developing acreage. Red Fork is the
operator of the project.

The Company also announced its intention to pursue further strategic acquisition opportunities
at Eastern Oklahoma. 

West Tulsa Project (RFE 100% owned and operated)

During the quarter, the Company continued development of its conventional oil and gas project
at West Tulsa.

Production from the Fuss #1-34 well at the Pawnee Prospect was established at an initial rate of
approximately 85 barrels of oil per day (pumping and flowing), as the rate of total fluid
movement was increased. This represented an increase of more than 100% from earlier
production test results of approximately 40 barrels of oil per day from this well. On the back of
this continued success the Company completed a further review and identified additional
potential in the prospect, with the opportunity to establish up to 20 wells to further exploit these
high quality conventional oil zones in what appears to be a virgin reservoir at Pawnee.

In addition, the Rosier #2-27 well was spudded, with the primary target the Wilcox Sand
formation. The well successfully reached its target depth of 3,724 feet with no unusual drilling
conditions encountered. The Rosier #2-27 intersected a number of hydrocarbon bearing
formations including the Red Fork sand formation, a formation which is already being
successfully exploited at West Tulsa. Sample description and log analysis highlighted oil
bearing pay of approximately 70 feet in the Red Fork sand. Log analysis indicated that this
productive interval in this new well had increased, with apparently better developed hydrocarbon
bearing zones than those seen in logs from initial off-setting wells at the project. The well was
cased and cemented ahead of production testing.

During the quarter, the Company also announced the spudding of the Fuss #3-33 well. This
well successfully reached its target depth of 3,756 feet with no unusual drilling conditions
encountered. Sample description and log analysis highlighted oil bearing pay in three major
intervals with the Red Fork sand increasing to approx 90 feet in thickness. The well was cased
and cemented in preparation for completion and production testing.


 
                                    www.redforkenergy.com.au 
Annual Reserve Certification

During the quarter the Company announced its reserve position as at June 30, 2009 following
independent certification by petroleum engineers, Lee Keeling & Associates, Inc.

The Company increased its total reserve position with total 3P reserves moving up to 106.5
Billion cubic feet equivalent (Bcfe) which represents a 24% increase from the previous year and
2P reserves increasing by 78% to 72.8Bcfe.

The Company also established for the first time, an initial independently certified 2P reserve for
its shallow biogenic shale discovery at East Oklahoma approximately 0.3Bcf per well. This
independent certification validated the Company’s view that its current 50,000 acre holdings
within the East Oklahoma discovery area could host approximately 200Bcf of recoverable gas
reserves.

The table below outlines the oil and gas reserves now attributable to Red Fork’s Net Revenue
Interest (“NRI”) in its three project areas.
 
  Project                         Acres      1P Bcfe      2P Bcfe        3P Bcfe 

    Osage                                 5,000                 12.1                   32.5                    32.5 
    West Tulsa                          15,000                  10.3                   38.8                    50.4 
    East OK                             50,000                   0.0                    1.4                    23.6 

    Total                               70,000                  22.4                   72.8                  106.5 

    Net Revenue A$m                                                87.6                  280.6                  468.0  
    PV10 A$m                                                       20.4                  101.5                  189.2  

 
Notes: 
1. Osage reserves include oil reserves of 0.34 Mmbbls (1P) and 1.04 Mmbbls (2P) 
2. West Tulsa reserves include oil reserves of 0.48 Mmbbls (1P) and 1.84 Mmbbls (2P) 
3. Total oil reserves stand at 0.82 Mmbbls (1P) and 2.88 Mmbbls (2P) 
4. Bcfe is presented on a revenue equivalent basis using US$70 per Bbl and US$3.50 per Mcf gas 
5. All of these reserves are from coal bed methane, shale gas and conventional oil and gas accumulations, at 
   depths ranging from 400 to 5,000 feet.   The producing zones range in age from Pennsylvanian to Cambrian and 
   are located in the Arkoma and Cherokee basins of Oklahoma, in the United States. 
 
Competent Person’s Statement 
 
The  reserve  information  contained  in  the  announcement  was  compiled  for  the  Company  by  Lee  Keeling  and 
Associates, Inc.  Lee Keeling and Associates, Inc are engaged each year by the Company to review and prepare a 
report on the Company’s oil and gas reserves.   Lee Keeling and Associates, Inc are Petroleum Consultants based in 
the United States with Offices in Tulsa and Houston.  Lee Keeling and Associates, Inc provide specific engineering 
services to the oil and gas exploration and production industry, and consults on all aspects of petroleum geology 
and engineering for both domestic and international projects and companies.  Lee Keeling and Associates, Inc have 
consented in writing to the references to them in this announcement and to the estimates of oil and natural gas 
reserves. 



 
                                              www.redforkenergy.com.au 
Production and Cash flow
Red Fork continued selling gas and oil during the quarter with gross production of A$604,000
generating record net income for the quarter of A$509,000. Net revenue from sales increased
by 133% as production increases from West Tulsa oil production continued to flow through.
Revenue from gas production at Osage continued to be impacted by lower gas prices; however
the Company was able to maintain profitability at the operating level.

Corporate

During the quarter the Company announced a placement of new equity (20 million new ordinary
shares $1.20 per share to raise A$24 million, before costs). The issue was subject to
shareholder approval to be sort at a General Meeting of shareholders to be held on or about the
1st October, 2009. Chess Capital Partners Pty. Ltd. agreed to act as lead manager to this
placement.

This injection of equity, combined with the Company’s existing cash reserves and increasing
production revenue will enable Red Fork to pursue its strategy to expand its East Oklahoma
land holdings through strategic acquisitions and to accelerate the development at its West Tulsa
project.

We look forward to providing shareholders with updates on further exploration and development
activities as they occur.

Yours faithfully,




David Prentice
Managing Director
 




 
                                   www.redforkenergy.com.au 
                                                                                         Appendix 5B
                                                            Mining exploration entity quarterly report


                                                                                                        Rule 5.3

                                        Appendix 5B
                    Mining exploration entity quarterly report
  Name of entity
  RED FORK ENERGY LIMITED

  ABN                                                              Quarter ended (“current quarter”)
               15 108 787 720                                                30 September 2009


  Consolidated statement of cash flows
                                                                    Current quarter              Year to date
Cash flows related to operating activities                             $A’000                    (3.months)
                                                                                                   $A’000
1.1      Receipts from product sales and related debtors                  509                       509

1.2      Payments for           (a) exploration and evaluation           (564)                      (564)
                                (b) development                         (1,227)                    (1,227)
                                (c) production                           (153)                      (153)
                                (d) administration                       (699)                      (699)
1.3      Dividends received                                                 -                          -
1.4      Interest and other items of a similar nature received             20                         20
1.5      Interest and other costs of finance paid                           -                          -
1.6      Income taxes paid                                                  -                          -
1.7      Other (Management fee)                                             -                          -

         Net Operating Cash Flows                                       (2,114)                    (2,114)

         Cash flows related to investing activities
1.8      Payment for purchases of: (a) prospects                            -                           -
                                      (b) equity investments                -                           -
                                      (c) other fixed assets               (8)                         (8)
1.9      Proceeds from sale of:       (a) prospects                         -                           -
                                      (b) equity investments                -                           -
                                      (c) other fixed assets                -                           -
1.10     Loans to other entities                                            -                           -
1.11     Loans repaid by other entities                                     -                           -
1.12     Other (provide details if material)                                -                           -

         Net investing cash flows                                          (8)                         (8)
1.13     Total operating and investing cash flows (carried
         forward)                                                       (2,122)                    (2,122)




  + See chapter 19 for defined terms.

  30/9/2001                                                                                 Appendix 5B Page 1
  Appendix 5B
  Mining exploration entity quarterly report



1.13     Total operating and investing cash flows
         (brought forward)                                          (2,122)                    (2,122)

         Cash flows related to financing activities
1.14     Proceeds from issues of shares, options, etc.                90                         90
1.15     Proceeds from sale of forfeited shares                        -                          -
1.16     Proceeds from borrowings                                      -                          -
1.17     Repayment of borrowings                                       -                          -
1.18     Dividends paid                                                -                          -
1.19     Other – shareholder funds received for unissued
         securities re. placement                                     771                       771
         Other - payment of capital raising costs                     (29)                      (29)
                                                                      832                       832
         Net financing cash flows

         Net increase (decrease) in cash held                       (1,290)                    (1,290)

1.20     Cash at beginning of quarter/year to date                   7,398                     7,398
1.21     Exchange rate adjustments to item 1.20
                                                                     6,108                     6,108
1.22     Cash at end of quarter

  Payments to directors of the entity and associates of the directors
  Payments to related entities of the entity and associates of the related entities
                                                                                          Current quarter
                                                                                             $A'000

1.23      Aggregate amount of payments to the parties included in item 1.2                      222


1.24      Aggregate amount of loans to the parties included in item 1.10                         -


1.25      Explanation necessary for an understanding of the transactions

          Directors Fees for Australian and US based directors.



  Non-cash financing and investing activities
2.1    Details of financing and investing transactions which have had a material effect on consolidated
       assets and liabilities but did not involve cash flows
       None




2.2    Details of outlays made by other entities to establish or increase their share in projects in which the
       reporting entity has an interest
       None




  + See chapter 19 for defined terms.

  Appendix 5B Page 2                                                                                     30/9/2001
                                                                                              Appendix 5B
                                                                 Mining exploration entity quarterly report




  Financing facilities available
  Add notes as necessary for an understanding of the position.

                                                                    Amount available          Amount used
                                                                       $A’000                   $A’000
3.1    Loan facilities                                                    -                       -

3.2    Credit standby arrangements                                            -                        -



  Estimated cash outflows for next quarter
                                                                                          $A’000
4.1    Exploration and evaluation                                                          1,875

4.2    Development                                                                          625

                                                                                           2,500
       Total

  Reconciliation of cash
 Reconciliation of cash at the end of the quarter (as                Current quarter        Previous quarter
 shown in the consolidated statement of cash flows) to                  $A’000                  $A’000
 the related items in the accounts is as follows.
 5.1     Cash on hand and at bank                                        3,892                       5,398
                                                                         2,216                       2,000
 5.2     Deposits at call
                                                                              -                        -
 5.3     Bank overdraft
                                                                              -                        -
 5.4     Other (security bond)
                                                                         6,108                       7,398
         Total: cash at end of quarter (item 1.22)


  Changes in interests in mining tenements
                                         Tenement        Nature of interest            Interest at         Interest at
                                         reference       (note (2))                    beginning           end of
                                                                                       of quarter          quarter
 6.1     Interests in mining
         tenements relinquished,
         reduced or lapsed


 6.2     Interests in mining
         tenements acquired or
         increased




  + See chapter 19 for defined terms.

  30/9/2001                                                                                  Appendix 5B Page 3
Appendix 5B
Mining exploration entity quarterly report


Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.

                               Total number           Number quoted          Issue price per        Amount paid up per
                                                                             security (see note     security (see note 3)
                                                                             3) (cents)             (cents)
7.1      Preference
         +securities

         (description)
7.2      Changes during
         quarter
         (a) Increases
          through issues
         (b) Decreases
         through returns
         of capital, buy-
         backs,
         redemptions
7.3      +Ordinary                    116,968,000           116,968,000
         securities

7.4      Changes during
         quarter
         (a) Increases                    150,000                150,000            $0.60                 Fully Paid
          through issues
         (b) Decreases
         through returns
         of capital, buy-
         backs
7.5      +Convertible

         debt securities
         (description)
7.6      Changes during
         quarter
         (a) Increases
         through issues
         (b) Decreases
         through
         securities
         matured,
         converted
7.7      Options                                                             Exercise price              Expiry date
         (description and               1,501,000                        -         $0.25                  30/04/10
         conversion                       295,500                        -         $0.60                  30/04/10
         factor)                        6,812,034                        -         $0.30                  30/04/11
                                        1,800,000                        -         $0.40                  30/04/12
                                        1,800,000                        -         $0.50                  30/04/13
                                        1,800,000                        -         $0.65                  30/04/14
                                          520,833                        -         $0.35                  30/06/14
                                          520,833                        -         $0.45                  30/06/14
                                        1,800,000                        -         $0.80                  30/04/15
                                        1,800,000                        -         $1.00                  30/04/16

7.8      Issued during
         quarter
7.9      Exercised during                 150,000                150,000            $0.60                  30/04/10
         quarter



+ See chapter 19 for defined terms.

Appendix 5B Page 4                                                                                              30/9/2001
                                                                                   Appendix 5B
                                                      Mining exploration entity quarterly report


7.10     Expired during
         quarter
7.11     Debentures
         (totals only)
7.12     Unsecured
         notes (totals
         only)



Compliance statement
1           This statement has been prepared under accounting policies which comply with
            accounting standards as defined in the Corporations Act or other standards acceptable
            to ASX (see note 4).

2           This statement does give a true and fair view of the matters disclosed.


Sign here:

                       Date: 30 October 2009
                       (Company secretary)

Print name:            Suzie Foreman

Notes
1           The quarterly report provides a basis for informing the market how the entity’s
            activities have been financed for the past quarter and the effect on its cash position.
            An entity wanting to disclose additional information is encouraged to do so, in a note
            or notes attached to this report.

2           The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in
            mining tenements acquired, exercised or lapsed during the reporting period. If the
            entity is involved in a joint venture agreement and there are conditions precedent
            which will change its percentage interest in a mining tenement, it should disclose the
            change of percentage interest and conditions precedent in the list required for items
            6.1 and 6.2.

3           Issued and quoted securities The issue price and amount paid up is not required in
            items 7.1 and 7.3 for fully paid securities.

4           The definitions in, and provisions of, AASB 1022: Accounting for Extractive
            Industries and AASB 1026: Statement of Cash Flows apply to this report.

5           Accounting Standards ASX will accept, for example, the use of International
            Accounting Standards for foreign entities. If the standards used do not address a topic,
            the Australian standard on that topic (if any) must be complied with.

                                          == == == == ==




+ See chapter 19 for defined terms.

30/9/2001                                                                             Appendix 5B Page 5