CALGARY, April 1, 2013 /CNW/ - TriOil Resources Ltd.
("TriOil" or the "Company" - TSXV:TOL) is pleased to announce that
it has filed its audited financial statements and related
Management's Discussion and Analysis ("MD&A") for the year
ended December 31, 2012 on
SEDAR. Selected financial and operational information is
outlined below and should be read in conjunction with TriOil's
audited financial statements and related MD&A and Annual
Information Form, available for review at www.trioilresources.com
and www.sedar.com.
Highlights
- Increased 2012 average production by 65% to 2,128 BOE/d
(73% oil and NGLs) from 1,287 BOE/d (52% oil and NGLs) in
2011. Increased fourth quarter average production volumes by
42% to 2,821 BOE/d (76% oil and natural gas liquids "NGLs") from
the third quarter of 2012;
- Increased the Company's oil and NGL weighting to 73% in 2012
from 52% in 2011;
- Increased funds from operations by 152% to $24.9 million ($0.46 per share) in 2012 from $9.9 million ($0.31
per share) in 2011. Increased funds from operations by 147%
to $8.8 million ($0.14 per share) in the fourth quarter of 2012
from $3.6 million ($0.10 per share) in the fourth quarter of
2011;
- Achieved record corporate net earnings in 2012 of $10.9 million ($0.20/share) compared to a loss of $15.4 million in 2011;
- Increased operating netback (before hedging) by 24% to
$37.57 per BOE in 2012 compared to
$30.41 in 2011. Operating netback
(before hedging) in the fourth quarter of 2012 increased by 12% to
$37.98 per BOE from $33.95 per BOE in the third quarter of 2012;
- Reduced operating costs in 2012 by 20% to $13.11 per BOE from $16.36 per BOE in 2011 and achieved a record low
$11.73 per BOE operating cost in the
fourth quarter of 2012;
- Executed a sizeable and successful $119
million capital program (net of dispositions), with
$95 million directed to organic
growth opportunities and $30.6
million directed to major production facilities, pipeline
infrastructure and undeveloped land acquisitions;
- Maintained a strong balance sheet exiting the year with
$23.3 million net debt on total bank
lines of $70 million. Based on strong
production and reserves growth, the Company's credit facilities
have been expanded by $20 million to $90
million;
- Increased proved reserves by 110% to 12.2 million BOE and
increased proved plus probable ("P+P") reserves by 97% to 20.2
million BOE;
- Increased total proved reserves per fully diluted share by 38%
and P+P reserves per fully diluted share by 30%;
- Proved plus probable reserve additions replaced 1,435% of 2012
production and proved reserves additions replaced 961% of 2012
production;
- Generated solid 2012 total P+P finding, development and
acquisition ("FD&A") costs of $16.62 per BOE, including future development
capital ("FDC") and $11.06 per BOE
excluding FDC. Utilizing capital expenditures directed to
organic growth opportunities of $95.0
million the Company's P+P FD&A cost is $13.85 per BOE, including FDC and $8.29 per BOE excluding FDC;
- Achieved a P+P recycle ratio of 3.4 times (excluding FDC) and
2.3 times (including FDC) based on 2012 operating netbacks (before
hedging);
- The Company's reserve life index expanded to 11.9 years on a
total proved reserve basis and 19.6 years on a P+P reserves basis
based on fourth quarter production;
- TriOil's net asset value is estimated at $4.24 per diluted share at December 31, 2012 based on 10% discount (before
tax) P+P reserves at December 31,
2012 and an independent land evaluation of our undeveloped
land.
Operational Update
TriOil executed a very active drilling program
during the first quarter of 2013 and we plan to continue active
field operations through the month of April. The Company drilled 13
(9.4 net) wells and completed 8 (5.6 net) wells with a 100% success
rate during the quarter. Our Lochend Cardium drilling and
completion operations were cut short by warm weather and road bans
that went into effect on March 1,
2012. As a result, we drilled 4 (2.7 net) wells and
completed 2 (1.5 net) wells at Lochend in the first 2 months of the
year and brought 2 (1.8 net) wells on production by the end of the
first quarter. One (0.5 net) well that was completed during the
quarter will be placed on production in July, while the additional
2 (1.4 net) wells drilled will be completed and placed on
production as soon as equipment can be moved onto the
locations.
We expanded our Kaybob Dunvegan drilling program
to offset the reduced Lochend activity and have had 2 drilling rigs
running at Kaybob plus a dedicated completion crew for the past
month. To date this year we have drilled 8 (6.1 net) wells and
completed 6 (4.3 net) wells at Kaybob. We expect to have a total of
9 (6.7 net) wells drilled and completed on our Kaybob Dunvegan
light oil project by the end of April. Three (2.2 net) Kaybob wells
were brought on production in late March and the remaining 6 (4.5
net) Kaybob wells are expected to be placed on production in the
April to mid May period.
On the facilities front, TriOil is participating
as to its 21 percent interest in the expansion of the Lochend oil
battery from its current 5,000 bbl per day capacity to 10,000 bbl
per day. Our budgeted capital for the expanded facility is
$1.7 million and we expect that the
expansion will be completed and operational by May.
Bank Lines Expanded
Based on the strong reserve additions achieved in 2012 and
increased production levels, the lender has agreed to expand the
Company's main revolving credit facility by $20 million from $55
million to $75 million.
Coupled with a development facility of $15
million, unchanged from the prior facility, the Company's
total credit facilities have been increased to $90 million from the previous $70 million.
Strategic Alternatives Update
TriOil's independent committee of directors (the
"Special Committee") continues to work with its financial advisors
in connection with the strategic alternatives process.
Specifically, under the direction of the Special Committee, the
financial advisors to the Special Committee and management have
commenced populating the virtual data room to be used in connection
with such process and continue their build out of the information
memorandum that will be provided to interested parties.
Following the completion of the virtual data room and information
memorandum, expected within the week, the Special Committee's
financial advisors will immediately begin contacting a broad
spectrum of parties to solicit interest in a possible strategic
transaction with the Company.
Annual General Meeting
The annual general and special meeting of the
holders of class A shares of the Company will be held at The
Metropolitan Conference Centre 333 - 4th Avenue S.W.
Calgary, Alberta, on Thursday, June 27, 2013, at 1:00pm (MST).
Outlook
TriOil posted strong growth across the board in
2012 as the Company transitioned toward a pure development growth
phase following 2 years focused primarily on resource capture, play
delineation and facilities/infrastructure construction at Lochend
and Kaybob. Our 2 key light oil resource plays generated top tier
results for the Company in 2012, highlighted by:
- 110% Proved reserve growth
- 97% P+P reserve growth
- 38% per fully diluted share Proved reserve growth
- 30% per share P+P reserve growth
- $16.62 per BOE P+P FD+A costs
(including FDC)
- 2.3 times P+P recycle ratio (including FDC)
- 1,435% production replacement with P+P reserves
additions
- 65% average annual production growth
- 152% growth in funds from operations
- 48% per share growth in funds from operations
- 23% growth in operating netbacks
- 20% reduction in operating costs
With a strong balance sheet, significant
undeveloped land positions, large scale de-risked development
drilling inventories and ownership/operatorship of key production
facilities on two proven light oil resource plays, TriOil is well
positioned to deliver strong, multi-year per share growth.
Drilling results to date from our 2013 capital
program are ahead of budgeted estimates and the Company is on track
to meet or exceed its 2013 guidance. As previously
released we are forecasting a capital expenditure program of
$93 million, average production of
3,900 - 4,100 BOE per day, exit production of 4,400 BOE per day,
cash flow from operations of $57
million and a year-end 2013 net debt of $60 million on current bank lines of $90 million.
Current production exceeds 4,000 BOE per day
(65% oil and NGLs) with 5 (3.5 net) wells completed and waiting on
production facility construction, 5 (3.7 net) wells drilled and
waiting on completion, 1(0.7 net) well currently drilling and an
active drilling program planned for the second half of the
year.
We wish to thank the very talented and dedicated
TriOil Team for the outstanding 2012 results and a great start to
2013.
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Financial and Operating Results |
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Three
months ended December 31, |
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Year
ended December 31, |
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2012 |
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2011 |
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% Change |
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2012 |
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2011 |
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% Change |
(000s, except per share numbers) |
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Financial |
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Total petroleum and natural gas sales |
17,080 |
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8,333 |
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105 |
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50,051 |
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26,580 |
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88 |
Funds from operations (1) |
8,812 |
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3,572 |
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147 |
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24,911 |
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9,897 |
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152 |
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Per share - diluted |
0.14 |
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0.10 |
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40 |
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0.46 |
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0.31 |
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48 |
Net income (loss) |
5,099 |
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(13,190) |
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- |
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10,895 |
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(15,400) |
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- |
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Per share - basic and diluted |
0.08 |
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(0.37) |
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- |
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0.20 |
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(0.48) |
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- |
Net debt (working capital) (2) |
23,302 |
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(10,108) |
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(331) |
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23,302 |
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(10,108) |
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(331) |
Total assets |
261,488 |
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157,254 |
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66 |
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261,488 |
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157,254 |
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66 |
Capital expenditures(3) |
25,933 |
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13,487 |
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92 |
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118,654 |
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30,059 |
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295 |
Weighted average shares outstanding |
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Basic |
63,631 |
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35,448 |
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80 |
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53,788 |
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32,359 |
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66 |
Diluted |
63,650 |
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35,704 |
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78 |
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53,852 |
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32,435 |
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66 |
Operating |
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Average daily production |
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Crude oil and NGLs (bbls/d) |
2,132 |
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850 |
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151 |
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1,563 |
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663 |
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136 |
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Natural gas (mcf/d) |
4,133 |
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3,346 |
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24 |
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3,393 |
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3,745 |
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(9) |
Total (boe/d) |
2,821 |
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1,408 |
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100 |
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2,128 |
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1,287 |
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65 |
Average sales prices |
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Crude oil and NGLs ($/bbl) |
80.21 |
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92.75 |
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(14) |
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81.73 |
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87.51 |
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(7) |
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Natural gas ($/mcf) |
3.54 |
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3.50 |
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1 |
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2.66 |
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3.95 |
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(33) |
Total ($/boe) |
65.80 |
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64.33 |
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2 |
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64.25 |
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56.57 |
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14 |
Wells drilled - gross (net) |
5(3.9) |
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5(2.5) |
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- |
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32(21.4) |
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13(6.9) |
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- |
Drilling success rate (%) |
100 |
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100 |
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- |
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100 |
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92 |
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- |
Operating netback ($/boe) |
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Oil and natural gas sales |
65.80 |
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64.33 |
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2 |
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64.25 |
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56.57 |
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14 |
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Royalties |
(14.74) |
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(8.06) |
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83 |
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(12.28) |
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(8.22) |
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49 |
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Operating costs |
(11.73) |
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(12.72) |
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(8) |
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(13.11) |
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(16.36) |
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(20) |
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Transportation |
(1.35) |
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(1.32) |
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2 |
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(1.29) |
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(1.58) |
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(18) |
Operating netback before hedging |
37.98 |
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42.23 |
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(10) |
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37.57 |
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30.41 |
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24 |
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Realized gain (loss) on financial derivative
contracts |
2.37 |
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(2.10) |
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(213) |
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0.23 |
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0.26 |
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(12) |
Operating netback |
40.35 |
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40.13 |
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1 |
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37.80 |
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30.67 |
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23 |
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Notes: |
(1) |
Funds from (used in) operations is a non-GAAP measure and is
calculated as cash flow from operating activities before the change
in non-cash working capital, abandonment expenditures and
transaction costs. |
(2) |
Net debt (working capital) is a non-GAAP measure and is
calculated as current assets less current liabilities and excludes
financial derivative contracts and flow through share
liability. |
(3) |
Capital expenditures include property acquisitions and are
presented net of proceeds of disposals. |
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Corporate Reserves Summary
Sproule Associated Limited ("Sproule") was
engaged to prepare evaluations of the Company's reserves as of
December 31, 2012. The evaluations of
petroleum and natural gas reserves were conducted pursuant to
National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities and the Canadian Oil and Gas Evaluation Handbook and
were based on Sproule's forecast price assumptions as at
December 31, 2012.
As at December 31,
2012, TriOil's P+P reserves were evaluated at 20,202 MBOE
and total proved ("TP") reserves were evaluated at 12,242
mBOE. On a BOE basis, TriOil replaced 1435% of production
with P+P reserve additions in 2012 and 961% of production with TP
reserve additions. The Company's reserve life indices are 19.6
years based on P+P reserves and 11.9 years based on TP reserves
based on fourth quarter 2012 production of 2,821 BOE/d.
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December 31, 2012 Summary
Reserves (Gross) |
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Total Oil
MBbl |
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Natural
Gas
Mmcf |
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Natural
Gas Liquids
MBbl |
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Oil
Equivalent
MBOE |
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Net Present
Values 10%
($000s, pretax) |
Proved Developed Producing |
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3,001.3 |
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11,850.0 |
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238.0 |
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5,214.3 |
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114,198.2 |
Proved Developed Non Producing |
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126.9 |
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1,296.0 |
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42.0 |
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384.9 |
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6,593.0 |
Total Proved Developed |
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3,128.2 |
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13,146.0 |
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280.0 |
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5,599.2 |
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120,791.2 |
Proved Undeveloped |
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2,991.4 |
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20,434.0 |
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245.8 |
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6,642.9 |
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53,090.3 |
Total Proved |
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6,119.5 |
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33,580.0 |
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525.8 |
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12,242.1 |
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173,881.5 |
Probable |
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3,599.0 |
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24,176.0 |
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331.9 |
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7,960.2 |
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74,061.9 |
Total Proved + Probable |
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9,718.5 |
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57,756.0 |
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857.7 |
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20,202.4 |
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247,943.4 |
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Corporate Gross Working Interest Reserves Reconciliation
(Forecast Prices and Costs)
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Oil Equivalent (Mboe)
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Total
Proved |
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Total Proved
+
Probable |
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Opening Balance |
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5,819 |
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10,249 |
Extensions/Discoveries/Infill drilling |
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6,482 |
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10,455 |
Technical
Revisions/Economic factors |
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1,010 |
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725 |
Dispositions |
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(289) |
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(449) |
Production
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(779) |
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(779) |
Closing Balance |
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12,242 |
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20,202 |
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Net Asset Value ("NAV") (1) |
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As at December 31, 2012 |
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P+P reserves (pretax 10% discount rate) |
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247,943 |
Undeveloped land (2) |
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52,226 |
Net debt |
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(23,302) |
Stock option proceeds (3) |
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7,560 |
Net asset value estimate, December 31, 2012 |
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284,427 |
Net asset value estimate per diluted share, December 31, 2012
(4) |
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$ |
4.24 |
(1) The NAV calculation
is based on the Company's December 31, 2012 reserves report
prepared by Sproule using |
forecast future prices and costs as at December 31,
2012. The value is a snapshot in time and is based on
various |
assumptions, including commodity
prices and foreign exchange rates that vary over time. It
should not be assumed |
that the NAV represents the fair market value
of TriOil shares. |
(2) Seaton Jordan evaluation using a
total net undeveloped acreage number of 91,978 at an average price
of $568 per acre. |
The Lochend portion of the total net
undeveloped acreage number is based on Cardium 'A' status
only. |
(3) Proceeds from 3,143,500 in the
money stock options based on a closing share price on December 31,
2012 of $2.99 per share. |
(4) Based on
67,125,564 outstanding shares on a fully diluted share
basis |
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Finding
Development and Acquisition (FD&A) Costs |
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2012 |
Three year
average |
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Total Proved |
Proved
plus
Probable |
Total Proved |
Proved
plus
Probable |
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($000s) |
($000s) |
($000s) |
($000s) |
2012 Capital Expenditures ($000s) |
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Land |
20,642 |
20,642 |
32,132 |
32,132 |
Exploration and development expenditures |
94,963 |
94,962 |
163,333 |
163,333 |
Major facilities/infrastructure |
9,062 |
9,062 |
9,062 |
9,062 |
Acquisitions net of dispositions |
(6,013) |
(6,013) |
2,952 |
2,952 |
Non cash acquisitions |
- |
- |
65,986 |
65,986 |
Total finding and development expenditures |
118,654 |
118,653 |
273,465 |
273,465 |
Change in FDC |
46,457 |
59,680 |
112,459 |
150,872 |
Change in FDC, excluding acquired/disposed |
51,120 |
64,343 |
96,350 |
119,478 |
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2012 Reserve Additions (mboe) |
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Additions/Revisions |
7,492 |
11,181 |
9,654 |
14,937 |
Acquisitions net of dispositions |
(289) |
(449) |
3,432 |
5,624 |
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7,203 |
10,732 |
13,086 |
20,561 |
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F&D Costs ($/boe) |
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Excluding FDC, land and major facilities |
12.68 |
8.49 |
16.92 |
10.93 |
Excluding FDC |
16.64 |
11.15 |
21.19 |
13.69 |
Including FDC, excluding land and major facilities |
19.50 |
14.25 |
26.90 |
18.93 |
Including FDC |
23.46 |
16.90 |
31.17 |
21.69 |
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FD&A Costs ($/boe) |
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Excluding FDC, land and major facilities |
12.35 |
8.29 |
17.75 |
11.30 |
Excluding FDC |
16.47 |
11.06 |
20.90 |
13.30 |
Including FDC, excluding land and major facilities |
18.80 |
13.85 |
26.34 |
18.63 |
Including FDC |
22.92 |
16.62 |
29.49 |
20.64 |
Notes
(1) F&D costs in 2011 were
$111.00 per BOE proven and
$36.86 per BOE P+P, including
technical revisions and change in FDC. Excluding technical
revisions and including change in FDC, F&D costs in 2011 were
$33.09 per BOE proven and
$21.37 per BOE P+P.
The following are summaries of Sproule's estimated FDC required
to bring proved and probable undeveloped reserves on
production.
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Future
Development Capital Costs |
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(amounts in $000s) |
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Total Proved |
|
Total Proved
+
Probable |
2013 |
|
58,962 |
|
76,197 |
2014 |
|
21,146 |
|
33,494 |
2015 |
|
19,186 |
|
20,930 |
2016 and subsequent |
|
14,329 |
|
23,420 |
Total undiscounted FDC |
|
113,623 |
|
154,041 |
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TriOil is a publicly traded junior oil resource player in
Western Canada. Substantial land
positions have been acquired on early stage light oil resource
opportunities to capitalize on improvements in horizontal drilling
and multi-stage fracture stimulation technologies, specifically
targeting opportunities in the emerging Cardium and Dunvegan oil trends in Alberta. TriOil has successfully executed its
business plan and has positioned the Company for solid growth in
production, reserves and shareholder value.
TriOil trades on the TSX Venture Exchange under
the symbol "TOL". As of April 1,
2013, there were approximately 64.0 million shares issued
and outstanding (70.0 million fully diluted).
Forward Looking Statements
This news release contains forward-looking
information and forward-looking statements within the meaning of
applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "believe", "plans",
"intends", "confident", "may", "objective", "ongoing", "will",
"should", "project", and similar expressions are intended to
identify forward-looking information. More particularly, this
document contains forward looking statements which include, but are
not limited to, expected future drilling and completion plans,
expected capital expenditures, expected production and reserves
growth, expectations of TriOil delivering strong, multi-year per
share growth, timing of completion of the Lochend oil Battery,
expectations of the effect of drilling and completion programs on
productivity, recoveries and costs and the future operations of
TriOil.
The forward-looking statements contained in this
document are based on certain key expectations and assumptions made
by TriOil, including with respect to the anticipated exploration
and development opportunities and the outlook for the fiscal year
ending December 31, 2012,
expectations and assumptions concerning the success of future
exploration and development activities, production guidance, the
performance of new wells and drilling and completion programs,
prevailing commodity prices and the availability of additional
capital if and when required by the Company.
Although TriOil believes that the expectations
and assumptions on which the forward-looking statements are based
are reasonable, undue reliance should not be placed on the
forward-looking statements because TriOil can give no assurance
that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, the failure to satisfy the conditions to closing the
transaction, risks associated with the oil and gas industry in
general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses, and health, safety and
environmental risks), commodity price and exchange rate
fluctuations and uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures. Certain of these risks are set
out in more detail in TriOil's Annual Information Form which has
been filed on SEDAR and can be accessed at www.sedar.com and
TriOil's other public disclosure documents which have been filed on
SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this
press release are made as of the date hereof and TriOil undertakes
no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise, unless so required by applicable
securities laws.
Finding and Development ("F&D") Costs
The aggregate of the exploration and development costs incurred
in the most recent financial year and the change during that year
in estimated future development costs generally will not reflect
total F&D costs related to reserve additions for that year.
Non-GAAP Measures
This document contains the terms "funds from
operations", "net debt" and "operating netback", which do not have
a standardized meaning prescribed by Canadian Generally Accepted
Accounting Principles ("GAAP") and therefore may not be comparable
with the calculation of similar measures by other companies.
Management uses funds from operations to analyze operating
performance and leverage. Management believes "net debt" is a
useful supplemental measure of the total amount of current and
long-term debt of the Company. Mark-to-market risk management
contracts are excluded from the net debt calculation. Management
believes "operating netback" is a useful supplemental measure of
the amount of revenues received after royalties and operating and
transportation costs. Additional information relating to these
non-GAAP measures, including the reconciliation between funds from
operations and cash flow from operating activities, can be found in
the MD&A.
Meaning of BOE
The term "BOE" may be misleading, particularly
if used in isolation. A BOE conversion of 6 Mcf:1 bbl is based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
from the energy equivalency of 6:1, utilizing a conversion on a 6:1
basis may be misleading as an indication of value. All BOE
conversions in this report are derived from converting gas to oil
in the ratio of six thousand cubic feet of gas to one barrel of
oil.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE TriOil Resources Ltd.