Vanguard Energy Corp. (VNGE) Continues to Increase Proven Reserves, Plans to Keep Drilling

Vanguard Energy continues to rack up the proven oil reserves each year in east Texas over at their Batson Dome field in Hardin County, leapfrogging the previous year’s tally via calculations done by the company’s independent reservoir engineering firm. VNGE is reporting a hearty 13% jump today in the value of its proven oil reserves from the previous year’s total (as of Sept 30), clocking in at some $35.8M.

Today’s news is a clear, empirical endorsement of the VNGE business model and growth strategy, which is continuing to move substantial oil volume into the Proved category. It is through the efforts of company’s like Vanguard that the U.S. is now looking at potential total independence from oil imports in the future, something at one time hard to be believed but now increasingly within reach as a re-ignited domestic hydrocarbon sector, powered by cutting-edge recovery technologies, not only is producing more and more oil, but finding more as well. Such is the case at Vanguard anyhow, with this exceptionally agile little E&P able to boast of a production and successful discovery track record that sets them apart as a shining example of industry leadership.

President of VNGE, Warren Dillard, cited how new discoveries on existing acreage throw a spotlight on the company’s high valuation when measured against industry-wide standards and, pointing to their growth of proven reserves by 125% of annual production, assured markets that Vanguard’s commitment to creating shareholder ROI was indeed adamant. The new discoveries have offered clear demonstrable evidence of how extensive the presence of oil is on the company’s existing 500 strategic acres in Hardin County and Dillard affirmed VNGE would double down drilling efforts both at the Batson Dome acreage (50 miles north east of Houston) and the recently acquired Hull-Daisetta field lease (10 miles south of Batson), with successes further contributing to forthcoming increased reserve totals.

Having recently put three more new wells into production at Batson Dome, VNGE set a new record with the breaking of the 6k bbls mark for October production (6.3k total) and is making money hand over fist with the renegotiation of the SUNOCO contract bringing in an $11 premium to the posted WTI price. The exemplary growth in proved reserves amid mounting production increases shows how viable the Batson Dome position is, as well as validating the drilling program’s design/strategy. The plan for the remainder of the 2012 calendar year is to put in another well at Batson (3-4k feet into the Frio formation) and another on the new Hull-Daisetta field lease, both of which should show up on the next reserve report.

The calculation for this industry standard report (created for SEC reporting purposes) is based on 620k bbls (30% proved developed producing, 12% proved developed non-producing or “behind-pipe”, and 58% proved un-developed) of proven reserves (up 3% from 2011), after sucking 48.5k bbls out of the Batson this year (125% reserve replacement rate) and nearly doubling production from the 3.35k bbls per month being done back in 2011. Vanguard has found a lot of new oil and has also handsomely ramped up production levels over the same interval. This simultaneous increase of the two central baseline metrics for an E&P’s health, set against a backdrop of sizeable proved un-developed category reserves, gives investors a clear picture of VNGE’s short-term and long-term value. Future increases will be driven by low-cost and low-risk development as well, reinforced by a track record showing $550-600k per well and 10 days to drill/complete, and VNGE has a 90% working interest (63%-67.5% net revenue interest) in any wells put into the Batson.

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