CALGARY, May 21, 2013 /CNW/ - TriOil Resources Ltd.
("TriOil" or the "Company" - TSXV:TOL) is pleased to announce that
it has filed its financial statements and related Management's
Discussion and Analysis ("MD&A") for the three months ended
March 31, 2013 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, available for review at
www.trioilresources.com and www.sedar.com.
Highlights
- Achieved record average production of 3,472 BOE per day in Q1
2013. This represents strong organic growth of 117 percent over Q1
2012 production of 1,602 BOE per day and a significant 23 percent
increase over Q4 2012 production of 2,821 BOE per day.
- Increased April average production to a record 4,000 BOE per
day (62 percent oil and NGL's) (based on field estimates), with
additional Kaybob wells brought on production during May and
additional Lochend wells waiting to be brought on production post
break-up. TriOil is on track to deliver a strong Q2 2013 and to
meet or exceed its 2013 guidance.
- Increased funds from operations by 149 percent to a record
$10.5 million in Q1 2013 from
$4.2 million in Q1 2012 and by 19
percent from the $8.8 million
generated in Q4 2012.
- Continued to deliver strong per share growth. Q1 2013 cash flow
of $0.16 per share is up 78 percent
from $0.09 per share in Q1 2012 and
up 14 percent from $0.14 per share in
Q4 2012.
- Achieved net earnings of $2.5
million ($0.04 per share) in
Q1 2013 compared to a net loss of $0.3
million ($0.01 per share) in
Q1 2012.
- Generated a strong operating netback of $38.65 per BOE in Q1 2013.
- Decreased operating expenses by 27 percent to $10.81 per BOE in Q1 2013 from $14.91 in Q1 2012 and by 8 percent from
$11.73 per BOE in Q4 2012.
- The Company's credit facilities were expanded by $20 million to $90 million during the
quarter.
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Financial and Operating
Results |
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Three
months ended March 31, |
|
2013 |
2012 |
% Change |
($000s, except per share
numbers) |
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Financial |
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|
Total petroleum and natural gas
sales |
18,064 |
9,587 |
88 |
Funds from operations
(1) |
10,486 |
4,219 |
149 |
|
Per share - diluted |
0.16 |
0.09 |
78 |
Net income (loss) |
2,513 |
(343) |
(833) |
|
Per share - basic and diluted |
0.04 |
(0.01) |
- |
Net debt (working capital)
(2) |
60,483 |
(15,637) |
- |
Total assets |
298,414 |
209,515 |
42 |
Capital
expenditures(3) |
47,276 |
32,142 |
47 |
Weighted average shares
outstanding |
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|
|
Basic |
63,982 |
45,090 |
42 |
Diluted |
64,034 |
45,263 |
41 |
Operating |
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Average daily production |
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Crude oil and NGLs
(bbls/d) |
2,040 |
1,114 |
83 |
|
Natural gas (mcf/d) |
8,593 |
2,926 |
194 |
Total (boe/d) |
3,472 |
1,602 |
117 |
Average sales prices |
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Crude oil and NGLs ($/bbl) |
83.69 |
88.45 |
(5) |
|
Natural gas ($/mcf) |
3.49 |
2.32 |
50 |
Total ($/boe) |
57.81 |
65.76 |
(12) |
Wells drilled - gross (net) |
13(9.1) |
9(5.5) |
- |
Drilling success rate (%) |
100 |
100 |
- |
Operating netback ($/boe) |
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Oil and natural gas sales |
57.81 |
65.76 |
(12) |
|
Realized gain (loss) on derivative
contracts |
1.70 |
(3.88) |
- |
|
Royalties |
(8.69) |
(10.62) |
(18) |
|
Operating costs |
(10.81) |
(14.91) |
(27) |
|
Transportation |
(1.36) |
(1.38) |
(1) |
Operating netback |
38.65 |
34.97 |
11 |
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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 and abandonment expenditures. |
(2) |
Net debt (working capital) excludes unrealized gains and losses
from financial derivative contracts and flow through share
liability. |
(3) |
Capital expenditures include additions to property, plant and
equipment and exploration and evaluation assets and property
acquisitions and are presented net of proceeds of disposals. |
OPERATIONS UPDATE
TriOil conducted a very successful light oil
development drilling program in the first quarter. Field activity
was focused at Kaybob where we drilled 8 (5.8 net) wells and
brought 3 (2.0 net) wells on production at the end of the quarter,
while Lochend operations were limited to drilling 4 (2.7 net) wells
with only 1 (1.0 net) well brought on production late in the
quarter due to very early March 1
road bans.
Kaybob Dunvegan
TriOil participated in the first modern
horizontal multi-stage completion well on the Kaybob Duvegan light
oil play in late 2011. To date we have drilled and completed a
total of 28 horizontal oil wells on the play and Kaybob has been a
major factor in the Company's strong per share reserve, production
and cash flow growth over the past 18 months. Results to date from
the first 20 Kaybob wells that TriOil drilled and brought on
production in 2011 and 2012 are set out below:
# wells |
|
IP15 (% Oil & NGLs) |
|
IP30 (% Oil & NGLs) |
|
IP60 (% Oil & NGLs) |
|
IP90 (% Oil & NGLs) |
20 |
|
394 BOE/d (85%) |
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336 BOE/d (82%) |
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274 BOE/d (79%) |
|
241 BOE/d (77%) |
Year to date TriOil drilled 9 (6.7 net) wells at
Kaybob, 8 (5.7 net) of which have been completed and brought on
production with the remaining 1 (1.0 net) well expected to be on
production after breakup. Of the 9 wells drilled and brought on
production in 2013, 7 (5.1 net) wells were booked as proved
undeveloped locations, 1 (0.6 net) well was assigned probable
reserves and 1 (1.0 net) well had no reserve booking in the
Company's year end 2012 reserve report.
TriOil is very pleased with the results of our
2013 Kaybob drilling program, the early results of which are set
out below:
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Well |
IP15 (%
Oil & NGLs) |
IP30 (%
Oil & NGLs) |
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4-23 |
344 BOE/d (84%) |
266 BOE/D (88%) |
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4-27 |
409 BOE/d (81%) |
299 BOE/D) (87%) |
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9-22 |
387 BOE/d (92%) |
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4-34 |
346 BOE/d (89%) |
304 BOE/d (89%) |
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12-27 |
448 BOE/d (88%) |
391 BOE/d (88%) |
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5-34 |
493 BOE/d (89%) |
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4-3 |
509 BOE/d (93%) |
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12-34 |
524 BOE/d
(87%) |
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Average |
432
BOE/d (88%) |
315
BOE/D (87%) |
Kaybob continues to deliver top tier capital
efficiencies with strong netbacks of $53.53 per BOE in Q1 2013, a 16 percent increase
from $45.98 per BOE in 2012. The
Company's drilling and completion costs have improved to
$3.4 million per well in 2013 from
$4.1 million for the first few wells
on the play.
Capital spending in the first quarter of 2013
was heavily weighted to Kaybob due to the March 1 road bans that curtailed field operations
at Lochend. Kaybob drilling activity in H2 2013 will be limited to
5 (3.1 net) wells as our capital program in the second half of the
year will be mainly focused at Lochend.
With a de-risked drilling inventory of 44 net
wells at 4 wells per section spacing, plus the added potential for
enhanced recovery and future downspacing, we expect that our Kaybob
Dunvegan asset will continue to deliver production growth for the
Company for a number of years.
Lochend Cardium
TriOil has built a significant land position,
strong operational presence and multi-year drilling inventory in
the Cardium light oil resource play at Lochend. The Company owns 98
(78 net) sections on the play and has a current de-risked drilling
inventory of approximately 90 net horizontal wells and a large
undeveloped acreage position on the expanding Lochend Cardium
trend. TriOil has a 55% working interest and operates a recently
expanded 20 mmcf per day gas facility and owns a 22% interest in
the recently expanded 7,000 bbl per day oil battery at Lochend.
The Company has drilled and executed slick-water
completions on a total of 21 horizontal wells at Lochend since 2011
with strong results, as set out below:
# wells |
|
IP30 (% Oil & NGLs) |
|
IP60 (% Oil & NGLs) |
|
IP90 (% Oil & NGLs) |
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Central/West |
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15 |
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302 BOE/d (76%) |
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268 BOE/d (73%) |
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237 BOE/d (70%) |
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East |
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6 |
|
180 BOE/d (89%) |
|
151 BOE/d (88%) |
|
135 BOE/d (84%) |
First quarter 2013 drilling and completion
activities were cut short by very early road bans that came into
effect March 1, 2013 due to
unseasonably mild weather. TriOil was limited to drilling 4 (2.7
net) wells at Lochend with only 1 (1.0 net) well brought on stream
late in the quarter. Field conditions are looking very favorable at
this time and we expect to be back in the field in June.
TriOil, together with area operators, has
invested significant capital on the play over the past 15 months to
expand the TriOil operated gas facility to 20 mmcf per day and to
construct and expand a 7,000 bbl per day oil battery.
We have an active drilling and completion
program planned for the second half of the year at Lochend and
expect to drill and complete 10 (5.2 net) horizontal wells prior to
year end.
Pouce Coupe Montney
TriOil owns approximately 15.5 net sections in
the Pouce Coupe/Gordondale area
that are prospective for both Upper and Lower Montney. The Company
drilled its first Lower Montney well on the play in late 2012 and
executed a newer multi-stage completion technique. Results to date
have exceeded our expectations as well as independent engineering
forecasts. The new well has produced at a stable rate of
approximately 3.8 mmcf per day and 30 bbls per mmcf of NGLs over
its initial 4 months of production and achieved an IP120 of 725 BOE
per day. To date the well has outperformed year end reserve
estimates by approximately 0.5 bcf and is producing at a higher
than expected liquids rate of approximately 30 bbls per mmcf.
We plan to monitor performance of our new
liquids-rich Lower Montney well together with the significant Lower
Montney oil results and drilling activity by a senior producer
directly offsetting our Pouce
Coupe/Gordondale land block, with a view to adding a Lower
Montney horizontal well to the budget in the second half of 2013.
TriOil has a substantial drilling inventory of 90 (40 net)
horizontal Montney development
wells at Pouce Coupe/Gordondale,
73 (30 net) of which are unbooked.
Financial
TriOil posted record financial results for the
first quarter of 2013, primarily due to a 117 percent increase in
production volumes over Q1 2012 and a 23 percent increase in
production volumes over Q4 2012. Funds from operations were
$10.5 million or $0.16 per share compared to $4.2 million or $0.09 per share Q1 2012 and $8.8 million or $0.14 per share in Q4 2012.
The Company's operating netback of $38.65 per BOE decreased 4% from $40.35 per BOE in Q4 2012 due to a 12 percent
decrease in average sales prices as a result of increased natural
gas production from a significant new gas well at Pouce Coupe, partially offset by an 8%
decrease in operating costs per BOE to $10.81 per BOE and a 41% decrease in royalties
per BOE.
In the first quarter of 2013, the Company spent
$32.5 million on drilling, completion
and tie-in operations at Lochend and Kaybob, $3.2 million on a production facility expansion
project at Lochend and major pipeline infrastructure at Lochend and
Kaybob and $10.9 million on a
strategic acquisition at Kaybob.
Outlook
TriOil has assembled a strong operating position
and multi-year growth platform on 3 proven resource plays that
provide predictable and sustainable growth for the Company. Our
Lochend Cardium and Kaybob Dunvegan light oil assets continue to
drive strong per share production, cash flow and reserve growth
with attractive capital efficiencies while our low risk
Montney liquids-rich gas asset
provides the Company with significant natural gas growth potential
and exposure to improving natural gas markets.
TriOil has established a strong commodity hedge
position to help stabilize forecast cash flow and to protect our
capital program. We currently have 1,700 bbls per day hedged at a
fixed average price of WTI Canadian $99.23 per bbl to year end 2013, 2,000 GJ per day
hedged at a fixed average price of AECO $3.46 per GJ to year end 2013 and 700 bbl per day
hedged at a fixed average price of WTI Canadian $94.95 per bbl for calendar 2014.
After posting record production of 3,472 BOE per
day in Q1 2013, TriOil reached a new high in April averaging 4,000
BOE per day (62 percent oil & NGLs) (based on April field
estimates) and is on track for a strong second quarter. The Company
is very well positioned to meet or exceed its current guidance of
3,900-4,100 annual average and 4,400 exit 2013 production.
Strategic Alternatives Process Update
The previously announced strategic alternatives
process is progressing on schedule and as planned. Further updates
in respect of the Company's strategic alternative process will be
made in due course. There can be no assurances or guarantees that
this process will result in an acceptable transaction.
Shareholder Rights Plan
The Board has adopted an amended and restated
shareholder rights plan effective May 21,
2013 (the "Amended Rights Plan"). The Amended
Rights Plan is substantially similar to the shareholder rights plan
adopted on effective February 22,
2013. The amendments were implemented to allow for
increased shareholder participation in the context of an
unsolicited bid and to comply with the requirements of "new
generation rights plans". The Amended Rights Plan was not
adopted in response to, or in anticipation of, any pending,
threatened or proposed acquisition or take-over bid.
The Amended Rights Plan remains designed to
provide shareholders and the Board with adequate time to consider
and evaluate any unsolicited bid made for the Company, to provide
the Board with adequate time to identify, develop and negotiate
value-enhancing alternatives, if considered appropriate, to any
such unsolicited bid, to encourage the fair treatment of
shareholders in connection with any take-over bid for the Company
and to ensure that any proposed transaction is in the best
interests of the Company.
Shareholders Meeting
The Shareholders Meeting has been scheduled to
be held on Tuesday, June 25, 2013 at
2:00 p.m. (Calgary time) at The Metropolitan Conference
Centre, 333 Fourth Ave S.W., Calgary,
Alberta. Additional details of the Shareholders Meeting,
including the matters to be considered, are included in the
management information circular to be mailed to shareholders and
filed on SEDAR at www.sedar.com.
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 May 21, 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",
"seek", "anticipate", "continue", "estimate", "approximate",
"believe", "plans", "intends", "confident", "may", "objective",
"ongoing", "will", "should", "project", "predict", "potential",
"targeting", "could", "would", 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, 2013,
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.
Any references in this news release to initial
day production rates ("IP"), including 30, 60, 90 and 120 day IP
rates, are useful in confirming the presence of hydrocarbons,
however, such rates are not necessarily indicative of long-term
performance or ultimate recovery and such rates are not
determinative of the rates at which such wells will continue
production and decline thereafter. Additionally, such rates may
also include recovered "load oil" fluids used in well completion
stimulation. While encouraging, readers are cautioned not to place
reliance on such rates in calculating the aggregate production for
the Company. Additional details of the performance of the wells can
be found in the corporate presentation on the Company's website at
www.trioilresources.com.
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.
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.