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Novus Energy beats Q1 sales estimates, shrinks losses

Published: 11:29 15 Jun 2011 EDT

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Novus Energy (CVE:NVS) announced a huge increase in its first quarter revenue, beating Street estimates, as the company narrowed its losses.

The Canadian junior oil and gas company posted a net loss of $1.3 million in the first three months of the year, compared to a net loss of $1.8 million in the year-ago period. Earnings on a per share basis remain unchanged year-over-year at $0.01.

However, Novus nearly quadrupled its revenues, to $8.87 million, beating analysts' estimates of $7.6 million. A year earlier, the company made $2.99 million in sales.

The increased revenues stem from higher production and higher realized prices for oil and liquids, and oil equivalent.

Operations during the first quarter nearly tripled production of oil and liquids to 1,037 barrels per day (bbls/d) over last year's 273 bbls/d.

Natural gas production yielded 3,040 mcf/d, a 16% hike from the previous year's period of 2,620 mcf/d.

Oil equivalents more-than-doubled in production, rising to 1,544 barrels of oil equivalent per day (boe/d) from 710 boe/d in the first quarter of 2010.

Novus said it expects to show significant growth in its production rate in the second half of the year, expecting to meet its exit rate of 3,000 boe/d early in the fourth quarter. Novus also said it expects 83% of its annual volumes to be comprised of oil and liquids.

Quarterly average realized prices rose 16% and 37% for oil and liquids and oil equivalent, respectively, while natural gas saw a 24% drop in price.

Due mainly to weather restrictions, Novus was only able to drill three wells on its core Vikings oil play at the Dodsland property in Saskatchewan during the period. The company said it hopes to drill 21 wells on the property by the end of the second quarter.

To date, the Calgary, Alberta-based company has drilled nine wells at Viking, and has remained in line with its $850,000 per well budget, it added.

In other news, Novus, whose stock on the TSX Venture Exchange rose more than 4% on on Wednesday to trade at $0.99 as of 11:12am EST, acquired a 100% working interest in about 55 net sections of land at the Birdbear formation in Saskatchewan, located within the immediate vicinity of the Dodsland Viking property.

The oil-bearing Birdbear wells are a strong asset for Novus, due to their high deliverability rates, large oil reserves and low drilling and completion costs, the company said.

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