English: This graph shows the development of oil prices (Brent) over the past 10 years in Dollars and in Euros. The difference is caused by the weakening of the dollar relative to the euro. (Photo credit: Wikipedia)

Novus Energy ( NVS.v  Vancouver )   $ .69

July 25

Typical Junior Oil Story – Great Potential / Short Term Pain

( Hugh Ross President )

DP: When we go back to the good days of April, we see a report by TD Securities on Novus giving you an asset value of as much as $2.26 to $3.75 a share. With the difference in oil and gas prices, on the Viking play – which is your bread and butter, have the economics changed dramatically?

HR: The Viking play that we are in, is probably one of the top three most economic plays in Canada. We have a very large undeveloped land base in a large scale light oil resource play. We have grown this play organically with highly attractive economics. You saw last year we grew our production by 77% and grew our proved plus probable reserves by 58%. We also have discovered petroleum initially in place of over 644 million barrels on company controlled
lands with industry leading operating netbacks of $63/boe in our Viking oil play.

We continue to have industry leading on stream costs of just over $900,000.00 per well. As we have witnessed in the last two months oil prices
have fallen by approximately 10% to 15%, this will obviously impact our netbacks, however, we will still be top quartile compared to all of our peers. We have a recycle ratio in the Viking over 3 times and we are adding production at costs under $20,000.00 per barrel.
DP: Many people considering your Viking operation almost a manufacturing business in that there doesn’t seem to
be too many surprises. Any changes in what you expect production numbers to be for this year and exit rate?
HR: It was a little bit of a wet spring David in Saskatchewan. Saskatchewan got a huge abundance of rain in May
and June, so we were slightly hampered getting out into field. I would estimate we are behind a couple of weeks of
drilling time, which may have an effect of slightly reducing our overall average production numbers. We guided this
year for 3300 barrels a day as an average so we might be slightly underneath that guidance. But I don’t think we are
going to see much of a change from our exit rate which we guided to 4500 barrels. I will have better color on that in
the next couple of weeks as we are starting to complete an awful lot of wells as we speak. The Viking play is a
manufacturing play for us as we have drilled nearly 120 wells today in the play. We are one of the most active drillers
in the entire play; we have yet to drill a dry hole David.
DP: Your stock pick that last time we did an interview with you was Pinecrest Energy (PRY) and it’s been clobbered
like everyone else in the oil and gas business. Any thoughts on their economics and what next for them?
HR: No I don’t think my view on them has changed. They have been picked on like all of the other junior oils, but I
think they have a pretty strong fundamental play.

FINANCIAL HIGHLIGHTS

• For the three months ended March 31, 2012 , Novus’ gross revenue increased 109% to $18.54 million from $8.87 million recorded in the comparative period in 2011.
• Funds flow  from operations increased 232% to $10.66 million in the first quarter of 2012, versus $3.21 million for the comparative three month period of 2011.
• Net income for the three months ended March 31, 2012 , was $2.84 million , versus a loss of $1.33 million in the comparative three month period of 2011.
• Novus’ net capital program for the three months ended March 31, 2012 , increased 51% to $18.13 million from $12.00 million in the comparative period of 2011.
• At March 31, 2012 , the Company had net debt of $39.13 million and currently has credit facilities in place of $65 million .