In its fiscal year-end report, ReoStar Energy Corp., Fort Worth, Texas, (OTC BB: REOS) reports a 235% increase in reserves, 36% in production and 71% in revenue.
            The company reports that at the end of the fiscal year, March 31, the company’s proven reserves at $425 million net present value, which reflects an increase of about 235% from the previous year. Proven reserves increased 377% in the company's core producing properties of the Barnett shale.
            Production increased to 92,192 barrels of oil equivalent which represents about a 36% increase from the previous fully recorded year. The company reports revenues from the oil and gas increased about 71% to $4.9 million compared with the previous fully recorded year.
            In the Barnett shale, the company drilled and owns interests in 59 completed wells. The average working interest is 40%, and the average net revenue interest is 30% to the company. ReoStar has about 6,500 gross (5,800 net) acres under lease, the majority of which is not classified as proven. As of March 31, total proved developed reserves were 1.4 million barrels of oil equivalent and proved undeveloped reserves totaled 1.6 million barrels of oil equivalent.
             “Our Barnett shale properties are emerging as the focal point for generating cash flow for expanding our operations, while our Corsicana pilot project continues to show modest improvements,” says ReoStar Energy chief executive Mark Zouvas. “These combined improvements should help achieve a marked increase in production volumes as we expand and give us the ability to prove up larger future reserves.”
            ReoStar owns 4,000 net acres in the Corsicana Field in Navarro County, Texas, which includes 67 producing wells. Zouvas says the oil reserves in the field are fairly shallow with depths of less than 1,000 feet. While this field has been producing for more than 100 years, several engineering studies have estimated that more than 80% of the original reserves still remain in place or approximately 100 million barrels of oil. As of March 31, total proved developed reserves were 430,000 barrels of oil equivalent and proved undeveloped reserves totaled 10.3 million barrels of oil equivalent.
            The company has interests in four leases in eastern Texas and western Louisiana. The total proved developed reserves were 9,000 barrels of oil equivalent and proved undeveloped reserves were the same.
            In the Fayetteville shale, ReoStar owns 6,450 net acres in Arkansas. Zouvas says the leasehold interests are not contiguous and the company expects to sell the acreage during fiscal year 2009.  He adds that no wells have been drilled on this acreage and no reserve values have been assigned to the leasehold interests.
            “Our outlook for 2009 is very positive, we have built significant infrastructure and acquired valuable bolt-on acreage in our perspective target areas. We have a solid number of high quality prospects in Barnett to drill along with our pursuit of expanding our Corsicana project into a cash flow positive endeavor this year,” Zouvas says. “We are confident our risk-balanced approaches to drilling which mitigates shot-term risks, will greatly enhance the company's growth and shareholder value.” JAS