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Press Release - EnerJex Resources, Inc. (EJXR-OTC: BB)
“As of a couple years ago, the state of Kansas was the fifth largest oil producer in the country, yet there are 23,000 independent producers of which 5,000 account for 30% of the production. It is a very fragmented business and in the instance of this part of the country, you had folks who have 500 to 10,000 acres, and have only drilled a few wells. Therefore, it is primarily the local landowners who have made money over the years... - Steve Cochennet (EJXR) (Interview published October 26, 2007)
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ENERJEX RESOURCES REPORTS OPERATING INCOME FOR THE FIRST QUARTER AND INCREASED PRODUCTION
With new development wells now online, total gross production in August has reached more than 300 barrels of oil per day
OVERLAND PARK, KAN. (August 28, 2008) – EnerJex Resources, Inc. (OTCBB: ENRJ) is pleased to announce financial results from its first quarter ended June 30, fiscal 2009. The Company, which first began acquiring oil leases in April 2007, has delivered its first positive income from operations of $24,710. For the three months ended June 30, 2008, oil and natural gas revenues were $1.69 million.
Oil sales volumes on a net revenue basis were 17,875 barrels compared to 2,304 barrels for the same period in 2007. The average commodity price, adjusted for hedges, received by EnerJex in the quarter, net of transportation costs, was $101.51 per barrel of oil as compared to $58.77 for the quarter ended June 30, 2007. The net loss for the quarter was $631,800, which included non-cash charges for stock-based compensation, depletion, accretion and certain loan costs totaling $831,286. Cash flow provided by operations was also positive, totaling $351,045.
EnerJex’s CFO, Dede Jones commented, “EnerJex has gone from a
start-up to a company with positive operating income and cash flows
from operations in a very short time frame. Staying focused on our
growth strategy and ensuring cautious implementation is producing
OPERATIONAL UPDATE BY PROJECT:
Since May of 2008, EnerJex has drilled 55 new wells (26 producer and 29 injector wells) on the Voigts lease, which consists of 200 gross acres in Johnson County , Kansas . The Company has completed 18 of these producer wells and is in the process of completing the remaining 37 wells. On August 26, 2008, the Voigts lease produced approximately 53 gross barrels of oil, up from 12 barrels of oil per day (BOPD) when it was acquired in September 2007.
Gross production of DD Energy Project at purchase approximated 45 BOPD. On August 26, 2008, total gross production for DD Energy was approximately 92 barrels.
Since its acquisition in April 2007, our operating partner, Haas Petroleum, LLC, has drilled a total of 44 wells on Black Oaks. Thirteen of the wells are enhanced oil recovery (EOR) injector wells that are now operational and 29 are producing wells, of which all but one are completed.
Black Oaks encompasses approximately 2,400 gross acres in Woodson and Greenwood Counties in Kansas . For the quarter, gross average production at Black Oaks was approximately 100 BOPD. Production was down for the quarter, primarily due to eight of the better-producing wells being converted to injector wells to optimize our long-term waterflood distribution pattern. In addition, electrical storms shut down a number of wells for a number of days in the quarter. On August 26, 2008, gross production was approximately 106 barrels.
We have drilled and completed a total of 31 wells on the Thoren Project since it was acquired in April 2007. Twenty are producing wells and 11 are EOR injector wells. We have acquired an additional 165 acres of producing leases with 2.5 BOPD in Douglas County, Kansas, and expect to begin developing them shortly. The Thoren Project encompasses 747 gross acres. Gross production on August 26, 2008, was approximately 48 barrels.
We have drilled a total of 22 wells since signing a development agreement for Gas City with Euramerica Energy. We have completed six of the 22 wells, four for gas testing purposes and two for conventional oil and gas. Gas City encompasses approximately 6,600 gross acres, primarily in Allen County, Kansas. On August 26, 2008, gross production on Gas City ’s two oil wells was approximately 17 barrels and seven gas wells was approximately 100,000 cubic feet.
The Tri-County Project consists of approximately 1,300 gross acres of leaseholds in Miami , Johnson and Franklin Counties in Kansas , with over 170 identified drilling locations. We have drilled and completed four producer wells on the Tri-County leases to-date. For the month of July, Tri-County had gross production of approximately 46 BOPD. That volume had increased to approximately 62 barrels on August 26, 2008.
EnerJex’s CEO, Steve Cochennet, commented, “We are extremely pleased with the increase in production this quarter and the progress we have made since May in developing the Voigts lease. Our March 31, 2008, Reserve Report included seven proved undeveloped (PUD) locations on the Voigts lease. As highlighted above, since our last Reserve Report, we have drilled and are in the process of completing 55 new wells with zero dry holes within that project. Based on these results, we plan to completely drill out the additional 15 locations on this lease before moving on to any of our other 30-plus leases, which cover over 13,500 gross acres. We anticipate the total capital cost to fully develop the Voigts lease will approximate $2.0 million. We also plan to continue to implement our strategy of prudent acquisitions and development as capital becomes available.”
About EnerJex Resources, Inc.
EnerJex is an oil and natural gas acquisition, exploration and development company. EnerJex’s principal strategy is to focus on the acquisition of oil and natural gas mineral leases that have existing production and cash flow. Once such leases are acquired, EnerJex implements an accelerated development program utilizing capital resources, a regional operating focus, an experienced management and technical team, and enhanced recovery technologies to attempt to increase production and increase returns for its stockholders. EnerJex’s oil and natural gas acquisition and development activities are currently focused in Eastern Kansas .
More information on EnerJex and its operations can be found on its website: www.EnerJexResources.com.
The statements in this press release regarding the operational successes, including the BOPD from EnerJex wells, number of current and anticipated wells, well success rate, current operations, future outlook, and any other effects resulting from any of the above forward-looking statements involve risks and uncertainties. Such risks and uncertainties, include, but are not limited to: the continued production of oil at historical rates; costs of operations and development; delays, and any other difficulties related to producing oil; rig availability; price of oil; exploitation and exploration successes; potential day-to-day fluctuations in production for a number of reasons, including weather, equipment failure, and normal operating cycles; marketing and sales of produced minerals; risks and effects of legal and administrative proceedings and governmental regulation; actions taken and to be taken by the government as a result of political and economic conditions; future financial and operational results; competition; general economic, market or business conditions; and the ability to manage and continue growth. Although EnerJex believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. Important factors that could cause actual results to differ materially from the forward-looking statements EnerJex makes in this news release include market conditions and those set forth in reports or documents EnerJex files from time to time with the Securities and Exchange Commission (SEC). EnerJex undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Dede Jones, Chief Financial Officer
EnerJex Resources, Inc.
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