• Some 33k net acres total in the Williston Basin (as of Mar 31, 2012)
• 100% of acreage acquired in Q1 2012 has received authorization for expenditure
• Q1 2012 average production up 50% over Q4 2011, with some 600 BOEPD
• 5.03 net (120 gross) wells producing in the Bakken/Three Forks, up 68% from Dec 31, 2011, with an additional 2.05 net (42 gross) wells drilling or awaiting completion
• On track to meet 2012 guidance of adding 6 net wells and spudding 10 this year
• Form 10-Q quarterly financial/operational report to be filed Tuesday, May 8
An expected significant increase in second quarter production, charged by higher working interest wells coming into production, should please VOG shareholders, reaffirming confidence in management’s strategy. Assuming all active drilling/completion is successful, VOG will have 7.08 net (162 gross) producing wells in the Williston Basin, a very strong position.
With estimates of 95% of Q1 2012 BOE sales coming from crude oil and the company continuing to fund growth via operational cash flows, the existing Macquarie Bank credit facility back drop will prove all the more flexible. The Tranche B facility (LIBOR plus 7.5%) which is convertible to the lower cost Tranche A facility (LIBOR plus 3.25%) gives VOG a low capital cost to development funding ratio.
With full authorization for expenditure on all of the Q1 acquired acreage (899 net mineral acres at an average cost of $2,048/acre), all mineral right leaseholds obtained in Q1 are expected to be held by production, adding to production/cash flow over the next several months. As some 215 rigs currently operate in the Williston Basin (210 in North Dakota, 5-10 in Montana), VOG is confident that development of its mineral right leases into producing wells will be rapidly accelerated as the pace of drilling activity continues to mount.
VOG projects that 50% of the company’s acreage will be in held by production status by the end of 2012 and currently has some 29% held by production (wells which are producing, being drilled or awaiting completion). Zero lease expirations in Q1 2012, with roughly 5% (1,735 net acres) of total leasehold interests set to expire in 2012, offering VOG a very positive outlook as per taking this acreage into held by production status prior to expiration.
VOG participates as a minority or non-operator in most of these Williston Basin leasehold interests (representing less than controlling interests).
Additionally, proximal acreage which is on the development path (VOG has the option to develop or trade with other operators who seek controlling interests), like the 7,500 net acres in which the company holds a controlling interest (or the component equivalent thereof), is in play. Another example would be the majority working interest in at least four 1,280-acre units and one 640-acre unit held by VOG, in addition to interests in some 40% of sixteen 640-acre sections.
This is a very broad acreage position in one of the hottest petroleum regions in North America, and as oil prices rose last week in Asia on strength of Middle East supply chain disruptions, in conjunction with flagging U.S. jobs data, VOG shareholders will be eager to see upcoming production numbers. The company remains confident in its domestic exploration/development strategy, even as oil rounds out to $102 today, with Iranian nuclear talks ending on a positive note. Global demand retains dominant trend lines and the market for oil is only going to get more aggressive, with U.S. and North American sources taking a larger and larger slice of the global input pie, companies like VOG will see their growth aspirations met with ample consumption.
The company has developed an impressive 144k net acre footprint in addition to the 33k core net acres in the Bakken/Three Forks:
• 2.4k net acres targeting the Niobrara (Colorado/Wyoming)
• 800 net acres targeting a Red River prospect (Montana)
• 33.5k net acres via joint venture targeting the Heath Shale formation (Montana)
• 74.7k net acres via joint venture in and around the Tiger Ridge natural gas field (Montana)
For more information on Voyager Oil & Gas, Inc., or on to learn more about current and upcoming operations, please visit the company’s website at: www.VoyagerOil.com
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