Victory Energy Reports Third Quarter 2012 Financial And Operational Results

 Victory Energy Reports Third Quarter 2012 Financial And Operational Results

PR Newswire

AUSTIN, Texas, Nov. 14, 2012

AUSTIN, Texas, Nov. 14, 2012 /PRNewswire/ -- Victory Energy Corporation
(OTCQB: VYEY) announced today that financial and operational results for the
third quarter of 2012 have been filed with the Securities and Exchange
Commission (SEC). A more detailed Form 10-Q is available on the company web
site. 

Kenny Hill, Victory Energy's CEO, stated, "The Company entered 2012 with a 94%
gas-weighted, proved and developed (PDP) reserves of 121,080 barrels of oil
equivalent (BOE). Our primary goal this year was to shift our reserve focus
to a predominantly oil-centric development strategy while acquiring larger
land positions that offer multiple well locations capable of delivering a
rapid increase in reserves and an improvement in cash flow. After acquiring
new prospects during the first half of the year totaling 2,196 gross acres
with the potential to add over 477,066 BOE of future oil weighted reserves to
the Company's net interest, that goal is beginning to deliver its first
benefits. Our third quarter saw a 13% sequential growth in revenues and an
increase in oil production volumes that reflect the strategic shift toward
oil.

"As we continue to drill available locations on our current properties, and
add additional properties that are accessible to the Company, we anticipate a
continued acceleration toward an oil-weighted portfolio and the first addition
of proven undeveloped (PUD) and probable reserves by the time our reserves are
audited and reported for 2012"

Victory had $99,363 in cash on the balance sheet as of September 30, 2012.
Subsequent to the end of the third quarter, Navitus Energy Partners
contributed a further $600,000 in additional capital. Future funding is
expected to come from cash generated by operations, the sale of a 50% working
interest position in the Lightnin' prospect, capital raised from third party
institutions and through the Company's existing financing arrangement with the
Navitus Energy Group. Capital expenditures for oil and gas properties for the
first nine months of 2012 totaled $925,933 million, and the Company expects to
spend approximately $100,000 to $200,000 for the remainder of the year.

During the three months ended September 30, 2012, Victory generated revenues
of $77,035, compared to $90,570 in the third quarter of 2011 and $68,151 in
the second quarter of 2012.

Oil sales volumes increased to 406 barrels during the third quarter, compared
to 111 barrels in the year ago period, and 289 barrels in the second quarter
of 2012. The 40% sequential increase in oil production was due to completion
of the second development well at Bootleg Canyon. The Company's natural gas
production totaled 14,349 Mcf compared to 16,688 Mcf in the prior year period
and 13,935 Mcf in the second quarter of 2012.

Oil prices realized during the third quarter declined to $81.39 per barrel
from $87.75 in the prior year period and $90.90 in the second quarter. The
average realized price per Mcf declined to $4.03 compared to $7.10 in the
prior year period and increased from $3.51 in the second quarter.

The Company reported an after tax, combined net loss of $868,093, or $0.03 per
share, for the third quarter of 2012 compared to a loss of $765,134, or $0.10
per share, in the prior year period and $396,735, or $0.01 per share, in the
second quarter. Third quarter 2012 results included a non-cash charge for bad
debt expense of $200,000 related to the prior sale of oil and gas properties,
and a further charge of $162,703 associated with the impairment for the
non-commercial Uno Mas well and an undeveloped land prospect in New Mexico.
Third quarter 2011 results included non-cash G&A expense of $138,875. Second
quarter 2012 results included non-cash compensation expense of $258,110 and a
gain on the sale of oil and gas assets of $268,169 related to the sale of the
Atwood and Jones County projects.

OPERATIONS UPDATE

Below is a summary of the current status at the Company's most prominent oil
and gas prospects. Detail regarding other properties held by the Company can
be found on the web site or in the Company Fact Sheet. Please note that cash
revenue tends to trail initial production by 60-90 days due to the nature of
typical oil and gas purchasing agreements and logistics.

Ellenberger (Bootleg Canyon) – There are now two producing Ellenberger oil
wells on this 3D seismic controlled property with a third well tentatively
planned for December. Additional wells will be drilled throughout the 2013
calendar year. Since the completion of the original discovery well in June
2011, the operator has increased the gross acreage of this prospect from 1,607
gross acres to the over 5,000 gross acres held today. Well spacing on this
property is currently 160 acres.

Pinetop – As previously announced, the first of nine development wells was
successfully completed by the operator in August. First oil sales occurred in
October 2012, so production from this initial well is not reflected in third
quarter results. The well had initial flow rates of over 400 barrels of oil
per day (BOPD) and unmetered flow of 300 Mcf of natural gas per day. After
being put on production, the well naturally flowed over 3,000 barrels of oil
and 2,125 Mcf of natural gas during the first ten days of operation. The
well is now on pump. Once stabilized, this well is anticipated to flow
between 80 BOPD and 150 BOPD. Each of the nine development wells on this
property are anticipated to have gross Estimated Ultimate Recovery (EUR) rates
of 390,000 BOE (76% oil), delivering a net 8,599.5 BOE per well to the company
net interest. Reserves will be re-evaluated after three months of production
data becomes available. Victory holds a 4% Before Payout (BPO) working
interest at a 3.125% net revenue interest, and a 3% After Payout (APO) working
interest at a 2.344% net revenue interest in the initial well, with the
company's interest in subsequent wells being its APO working interest.

Lightnin' - This resource play is also referred to as the Wolfberry Play,
which is composed of the lower Spraberry, Dean, Wolfcamp, Cline Shale, into
the Pennsylvanian. The 320 acreage prospect is surrounded by existing
production and some of the nation's largest independent operators. The most
active operators in the area are Apache Corporation, Laredo Petroleum, Pioneer
Natural Resources, Energen Resources, Endeavor and Nadel and Gussman.

Base-case estimated gross EUR per well of 115,140 BOE, a mid-case of 175,000
BOE and a high case of 228,000 BOE (58.7% oil, 41.3% NGL). Our held acreage
currently provides 40 acre spacing and thus an opportunity to drill a minimum
of eight (8) vertical wells on the prospect acreage. Additional opportunities
to downsize the spacing to 20 acres and drill up to 16 total wells may be
available.

Utilizing an average EUR of 115,140 BOE, these wells could deliver a total EUR
of 1,842,240 BOE (72% oil, 19% NGL, 9% gas) or the equivalent of $115M in
future undiscounted cash flow to the 100% interest. The first well at this
prospect is expected to spud in with then next 60-90 days. Prior to the
commencement of drilling operations, the Company anticipates farming out a 50%
working interest in this prospect to a third party. When drilled, the Company
will hold a 25% working interest (18.75% NRI) in the prospect.

Other Projects - The first well at Chapman Ranch has been completed and is
currently undergoing evaluation. The drilling of a second well at that
prospect is contingent upon the outcome of that evaluation. Although the Uno
Mas well has been on production during the first three quarters of 2012, the
production rate dropped significantly in the third quarter. As a result, the
Company recorded a one-time impairment charge due to the non-commercial
economics the well now exhibits. No drilling is currently planned at the SRV
prospect during 2012.

Please note that Victory Energy intends to use its website, www.vyey.com, as a
means of disclosing material non-public information and for complying with its
disclosure obligations under Regulation FD. Such disclosures will be included
on the Victory Energy website in the "Investor Relations" section.
Accordingly, investors should monitor such portions of the Victory Energy
website in addition to following press releases, SEC filings and public
conference calls and webcasts.

To subscribe to our email news distribution service, please click the "E-News
Sign-Up" link on our website.

About Victory Energy Corporation

Victory Energy Corporation (OTCQB:VYEY) is a non-operating company engaged in
the exploration, acquisition, development, and production of domestic oil and
gas properties. Victory leverages both internal capabilities and strategic
industry relationships to acquire working interest positions in
low-to-moderate risk oil and gas prospects.

Future investment will focus primarily on oil or liquid-rich gas projects
within longer-life reservoirs that offer competitive F&D costs.

The Company had seventeen wells on production at the end of the calendar year
2011 and has an estimated forty-five (45) additional gross wells available to
pursue on its currently held ten-thousand eight hundred and fifty-nine
(10,859) acres.

Victory, through its partnership with Aurora Energy Partners, has acquired
four prospects this year totaling 2,196 gross acres with the potential to add
over 477,066 barrels of net oil equivalent to the Company's future cash flows.
The Company's current producing oil and gas assets are located onshore in
Texas and New Mexico.

The Company's objective is to create long term shareholder value by increasing
oil reserves, improving financial returns (higher production volumes, lower
costs), and managing the capital on our balance sheet.

Download theinvestor Fact Sheetfor current summary of projects and activity.
Victory Energy is current with its SEC filings and is a full reporting
company. The Company is traded under the ticker symbol VYEYon the OTCQB
tier, operated by OTC Markets Group.

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995

There are forward-looking statements contained in this news release. They use
such words as "intend," "will," "may," "expect," "believe," "plan," or other
similar terminology. These statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results to be
materially different than those expressed or implied in such statements.
These factors include, but are not limited to: risks associated with the
implementation of the Company's strategic growth plan; legislation and
government regulation including the ability to obtain satisfactory regulatory
approvals; conditions beyond the Company's control such as weather, natural
disasters, disease outbreaks, epidemics or pandemics impacting the Company's
customer base or acts of war or terrorism; availability and cost of materials
and labor; demand for natural gas; cost and availability of capital;
competition; the Company's overall marketing, operational and financial
performance; economic and political conditions; the continued service of the
Company's executive officer; adverse developments in and increased or
unforeseen legal costs related to the Company's litigation; the success of the
Company's strategic partnerships and joint venture relationships; the
Company's ability to pay certain debts; adoption of new, or changes in,
accounting policies and practices; adverse court rulings; results of other
litigation in which the company is involved; and other factors discussed from
time to time in the Company's news releases, public statements and/or filings
with the Securities and Exchange Commission. Forward-looking information is
provided by Victory Energy Corporation pursuant to the safe harbor established
under the Private Securities Litigation Reform Act of 1995 and should be
evaluated in the context of these factors. In addition, the Company disclaims
any intent or obligation to update these forward-looking statements.



CONTACTS: Victory Energy Corporation
          Kenny Hill, CEO
          Mark Biggers, CFO
          512-347-7300
          Investor Relations:
          Dennard Rupp Gray & Lascar, LLC
          Ken Dennard / Ben Burnham
          713-529-6600



~ Tables to Follow ~



VICTORY ENERGY CORPORATION AND SUBSIDIARY
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
                        For the Three Months Ended  For the Nine Months Ended
                        September 30,               September 30,
                        2012           2011         2012          2011
REVENUE                 $   77,035   $  90,570  $  209,151  $  253,794
COSTS AND EXPENSES
 Lease operating        21,285         18,384       64,695        90,385
 expenses
 Production taxes       3,630          12,829       15,780        22,093
 Exploration            52,290         69,426       199,236       131,699
 Exploration - non cash 10,125         43,875       30,375        43,875
 General and            486,045        306,216      1,459,710     1,370,822
 administrative expense
 General and
 administrative expense 221,831        138,875      784,291       174,075
 - non cash
 Depletion,
 depreciation, and      15,679         10,166       47,760        40,770
 accretion
 Total expenses         779,385        599,771      2,601,847     1,873,719
LOSS FROM OPERATIONS    (702,350)      (509,201)    (2,392,696)   (1,619,925)
OTHER INCOME AND
EXPENSE
 Gain on sale of oil    -              -            (268,169)     -
 and gas assets
 Impairment of assets   162,703        -            162,703       -
 Interest expense       3,040          332,604      3,987,381     1,511,019
 Total other income and 165,743        332,604      3,881,915     1,511,019
 expense
NET LOSS BEFORE TAX     (868,093)      (841,805)    (6,274,611)   (3,130,944)
BENEFIT
TAX BENEFIT             -              76,671       -             466,703
NET LOSS                $ (868,093)   $(765,134)   $(6,274,611)  $(2,664,241)
 Weighted average
shares, basic and       27,511,583     7,647,494    21,866,363    5,281,307
diluted
 Net loss per share,  $           $          $          $   
basic and diluted       (0.03)         (0.10)       (0.29)       (0.50)







VICTORY ENERGY CORPORATION AND SUBSIDIARY
COMBINED BALANCE SHEETS
                                              September 30,     December 31,
                                              2012              2011
                                              (Unaudited)
CURRENT ASSETS
 Cash                                        $    99,363   $   475,623
 Accounts receivable - net                   60,674            79,185
 Prepaid expenses                            4,209             29,555
 Total current assets                      164,246           584,363
FIXED ASSETS
Furniture and equipment                      20,982            10,623
Accumulated depreciation                     (4,771)           (3,550)
 Total furniture and fixtures, net          16,211            7,073
Producing oil and natural gas properties,    1,867,573         1,585,745
net of impairment
Accumulated depletion                        (1,210,165)       (1,026,900)
Drilling costs in process                    221,126           266,625
Undeveloped land                             636,383           101,259
Total oil and gas properties, net             1,514,917         926,729
TOTAL ASSETS                                  $  1,695,374    $  1,518,165
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES
Accounts payable                             $     1,269  $   170,317
Accrued interest                             -                 150,267
Accrued liabilities                          191,290           179,979
Accrued liabilities - related parties        28,040            156,656
Liability for unauthorized preferred stock   9,283             32,164
issued
 Total current liabilities                  229,882           689,383
OTHER LIABILITIES
Senior secured convertible debenture, net of -                 632,534
debt discount
Deferred tax liability                       -                 748,763
Asset retirement obligation                  30,004            30,004
TOTAL LIABILITIES                             259,886           2,100,684
STOCKHOLDERS' EQUITY (DEFICIT)
 Common Stock, $0.001 par value, 47,500,000
shares
 authorized, 27,510,418 and 7,647,494
issued
 and outstanding, respectively             402,172           382,308
Additional paid in capital                    43,399,217        35,126,462
Accumulated deficit                           (42,365,901)      (36,091,289)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)          1,435,488         (582,519)
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY (DEFICIT)           $  1,695,374    $  1,518,165



SOURCE Victory Energy Corporation

Website: http://www.vyey.com
 
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