Wild Stream Exploration Inc. (the "Company" or "Wild Stream") (TSX VENTURE:WSX)
is pleased to announce that it has filed on SEDAR its audited financial
statements and related Management's Discussion and Analysis ("MD&A") for the
three months and year ended December 31, 2009 and 2008. Certain selected
financial and operational information is set out below and should be read in
conjunction with Wild Stream's audited financial statements and related MD&A.
These filings will be available at www.wildsr.com and www.sedar.com.
In its first six months of operations, Wild Stream has established itself as a
premier oil focused exploration and development company. The acquisitions,
exploitation and development completed in our first six months of operations
have resulted in enviable production, reserves and drilling inventory. The
disciplined strategy followed to date has resulted in a resource drilling
inventory that exceeds 250 net wells of which 96% are unbooked in our current
independent engineering.
With the closing of the acquisition of Dorado Energy Inc. and the multiple
property acquisitions announced on January 18, 2010, Wild Stream's proven plus
probable reserves grew from 4.8 million BOE reported at December 31, 2009, to
proforma reserves of 6.4 million BOE comprised of 92% oil and natural gas
liquids. The acquisitions also increased the PVBT10 net asset value from $4.61
per share to an estimated $4.90 per diluted share.
Our capital focus within the first quarter of operations has been on beginning
to unlock the oil resource associated with our drilling inventory. The initial
results are outlined below.
2010 First quarter Operations Update
-- Achieved a 100% success rate on the first quarter drilling program in
which 11 gross (9.4 net) crude oil wells were drilled.
Shaunavon Area
-- Drilled 4 gross (3.2 net) Lower Shaunavon horizontal wells:
-- 2 gross (1.9 net) have been on production for multiple weeks with
rates in excess of 100 bbls/d of oil from each well.
-- 2 gross (1.3 net) wells are in various stages of completion.
-- Drilled 1 gross (0.93 net) Upper Shaunavon horizontal well. The well is
currently producing at rates exceeding 125 bbls/d of oil significantly
above initial expectations.
-- Implemented the first phase of our water flood in the Upper Shaunavon
formation which is expected to see positive results by the fourth
quarter of 2010.
-- Acquired 10,300 net acres of exploration acreage in the Upper and Lower
Shaunavon fairway.
Dodsland Area
-- Drilled 3 gross (3.0 net) Viking horizontal wells:
-- All wells have been placed on production with average initial
production rates exceeding 50 bbls/d of oil per well.
-- Acquired an additional 1,920 net acres of highly prospective Viking
lands in the Dodsland area.
Garrington Area
-- Drilled 1 gross (1.0 net) Cardium horizontal well:
-- This well is producing at a restricted rate exceeding 200 bbls/d of
oil.
-- Drilled 1 gross (0.75 net) Viking horizontal well:
-- Our first Viking horizontal well was operationally successful
however the well is producing at lower than expected rates.
-- A follow up Viking horizontal evaluation well will be drilled in the
third quarter.
Resource Oil Exploration Area
-- Drilled 1 gross (0.5 net) horizontal oil well:
-- This well has production capability in excess of 100 bbls/d of oil.
-- Wild stream has assembled 1,920 net acres on this play and continues
to pursue further acreage to expand this new area.
Increased 2010 Guidance
Based on several strategic acquisitions that occurred in the first quarter, in
addition to the better than budgeted drilling results Wild Stream is now
expanding its 2010 exploration and development capital budget to $60 - $65
million with increased drilling expected in all core areas.
Wild Stream now expects to average in excess of 1,700 boepd (90% oil) and
achieve a 2010 exit rate of 2,200 - 2,300 boepd, representing 280% growth from
our 2009 exit rate.
Based on current estimates the revised capital budget will see the following
wells drilled:
Area Gross wells Net wells
----------- ------------------------------
- Shaunavon (horizontals) 16 gross 14.4 net
- Dodsland (horizontals) 12 gross 12.0 net
- Garrington (horizontals) 6 gross 5.2 net
- Other 2 gross 1.5 net
- Total 36 gross 33.1 net
----------- ------------------------------
The operational parameters used in the increased guidance for 2010 are as
follows:
- Production
Average 1,750 Boe per day (90% oil)
Exit 2,200 - 2,300 Boe per day (90% oil)
- Average Crude Differential Edmonton Light less $6.50/bbl
- Royalty Rate 13.1 percent
- Operating Costs $14.50 per Boe
- Transportation Costs $2.00 per Boe
- G & A (expensed) $2.50 per Boe
- Corporate Netback $42.00 per Boe
- Fully Diluted Shares Outstanding 45.4 million
Based on our forecasted commodity price's we anticipate a 2010 cashflow of
approximately $27 million equating to $0.63 per diluted share. With the forecast
expenditures we anticipate exiting 2010 with net debt of approximately $14
million and a debt to trailing cashflow of 0.4 times.
Currently our credit facility is undrawn and we anticipate that it will be
significantly increased once the bank has completed its current review of the
first quarter acquisitions and drilling results.
2009 Financial Highlights
Please note that the numbers presented below are representative of the
operations of the Company prior to the material subsequent events including the
acquisition of Dorado Energy Inc and the multiple property acquisitions
announced on January 18, 2010.
Three months Year ended
ended December 31,
December 31,
Percent Percent
2009 2008 Change 2009 2008 Change
---------------------------------------------------
Financial (thousands of
dollars except share
data)
Petroleum and natural gas
revenue 3,796 2,513 51 11,264 15,210 (26)
Funds from operations-
before reorganization
costs(1) 1,802 1,077 67 6,459 8,058 (20)
Funds from operations-
after reorganization
costs (3) 201 1,077 (81) 4,858 8,058 (40)
Per share - basic (4) 0.01 0.59 (98) 0.76 4.46 (83)
- diluted 0.01 0.54 (98) 0.49 4.01 (88)
Net earnings (loss) (629) 354 278 (2,638) 2,073 227
Per share - basic (4) (0.03) 0.19 116 (0.41) 1.15 (136)
- diluted (0.03) 0.19 116 (0.41) 1.15 (136)
Capital expenditures, net 36,127 12,911 180 35,956 20,662 74
Net Debt (13,735) 22,333 (162)
Weighted average shares
(thousands)(4)
Basic 6,366 1,808 252
Diluted 6,366 1,808 252
Shares Outstanding
Diluted 34,205 2,000 1,610
Operating (6:1 boe
conversion)
Average daily production
Natural gas (mcf/d) 184 190 (3) 289 136 113
Liquids (bbls/d) 587 491 20 494 464 6
Barrels of oil
equivalent (2)(boe/d) 618 523 18 542 487 11
Average sales price
Natural gas ($/mcf) 4.25 6.42 (34) 3.98 7.90 (50)
Liquids ($/bbl) 68.97 52.99 30 60.13 87.18 (31)
Barrel of oil equivalent
($/boe) 66.81 52.17 28 56.91 85.33 (33)
Netbacks
Operating netback
($/boe) 37.27 27.85 34 31.23 57.14 (45)
Corporate netback
(3)($/boe)
- before reorganization
costs 31.72 22.38 42 32.64 45.21 (28)
- after reorganization
costs 3.54 22.38 (84) 24.55 45.21 (46)
Undeveloped land (net
acres) 50,493 40,997 23
(1) Management uses funds generated by operations to analyze operating
performance and leverage. Funds generated by operations as presented do
not have any standardized meaning prescribed by Canadian GAAP and
therefore it may not be comparable with the calculation of similar
measures for other entities. The reconciliation between funds flow from
operations and cash flow from operating activities can be found in the
"MD & A".
(2) Boe conversion ratio for natural gas of 1 Boe: 6 Mcf has been used,
which is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not necessarily represent a value
equivalency at the wellhead.
(3) Corporate netbacks are calculated as the operating netback less general
and administrative expenses and financial charges. Also included in the
three months ended December, 2009 and the year ended December 31 is the
corporate netbacks both before and after the affect of the
reorganization costs as more fully described below.
(4) All share and per share amounts reflect the approved share consolidation
on a thirty for one basis.
2009 Accomplishments
-- Recapitalized Eagle Rock Exploration including the change of management
and board of directors. Costs of the reorganization of $1.6 million have
been expensed in the fourth quarter. This one time event reduced
cashflow for the quarter from $31.72/boe to $3.54/boe.
-- Changed the name to Wild Stream Exploration and consolidated our shares
on a 30:1 basis.
-- Completed four financings raising a total of $70.7 million in common
share equity.
-- Completed four property acquisitions and one corporate acquisition for
total expenditures of $36.2 million.
-- Commenced a drilling program and drilled 3 gross (3.0 net) successful
oil wells at Red Coulee in addition to 1 gross (1.0 net) successful well
at Shaunavon.
-- Net asset value per share calculated on a present value before tax of
10% ("PVBT10") increased to an estimated $4.65 per share at December 31,
2009.
-- Total proved plus probable ("P+P") reserves of 4.8 million BOE, an
increase of 94% over December 2008 reserves of 2.5 million BOE.
-- PVBT10 of P+P reserves of $105.9 million, an increase of 114% over the
$49.5 million as at December 2008.
-- Oil and natural gas liquids comprise 96% of P+P reserves.
-- Reserves life index increased to 16.0 years based on our December 2009
exit production of 800 boepd.
-- Finding and development costs, including the change in future
development capital of $9.9 million are $16.94 per boe on a P+P basis
and $20.20 per boe including acquisitions.
-- Reserve additions replaced 2009 production by a factor of 9.7 times on a
proved basis and 12.7 times on a proved plus probable basis.
-- Wild Stream has in excess of 250 net resource oil wells in its inventory
with only 8.9 net undeveloped locations currently booked in the
independent engineering report as of December 31, 2009.
Reserves and Capital Efficiencies
The Company's reserves in the province of Saskatchewan and in the Garrington
area of Alberta were evaluated as at December 31, 2009 by the independent
engineering firm of Sproule Associates Limited ("Sproule") in accordance with
the rules provided by National Instrument 51-101 ("NI 51-101"). The Company's
reserves in the province of Alberta excluding the Garrington area were evaluated
as at December 31, 2009 by the independent engineering firm of GLJ Petroleum
Consultants Ltd. ("GLJ") (which were converted and recalculated by Sproule) in
accordance with the rules provided by NI 51-101. The following tables provide
summary information presented in the GLJ/Sproule report effective December 31,
2009 and based on the Sproule (2010-01) price forecast.
The December 31, 2009 reserve reports were prepared by Sproule and GLJ as
applicable utilizing the methodology and definitions as set out under NI 51-101.
The year end working interest reserves for 2009 include Wild Stream's working
interests excluding royalty interests received before royalties payable. Where
amounts and volumes are expressed on a barrel of oil equivalent basis ("boe"),
gas volumes have been converted to barrels of oil at 6,000 cubic feet per barrel
(6 mcf/bbl).
Summary of Reserves (forecast prices)
December 31, December 31,
2009 2008
------------------------------
Proved
Light and medium oil (mbbls) 2,885 1,200
Heavy oil (mbbls) 107 46
NGL's (mbbls) 19 7
Natural gas (mmcf) 858 1,349
BOE (mboe) 3,155 1,477
Proved plus probable
Light and medium oil (mbbls) 4,384 2,108
Heavy oil (mbbls) 198 115
NGL's (mbbls) 29 13
Natural gas (mmcf) 1,209 1,769
BOE (mboe) 4,811 2,531
Summary of Company Working Interest Oil and Gas Reserves - Forecasted Prices
and Costs
Future
Light and Natural Development
Medium Heavy Gas Natural Capital
Crude Oil Oil Liquids Gas BOE Costs
December 31, 2009 (mbbls) (mbbls) (mbbls) (mmcf) (mboe) ($000's)
---------- ------- --------- -------- -------- -----------
Proved
- Developed
Producing 2,262 107 19 858 2,532 464
- Developed Non-
Producing 50 - - - 50 200
- Undeveloped 573 - - - 573 12,951
---------- ------- --------- -------- -------- -----------
Total Proved 2,885 107 19 858 3,155 13,615
Probable 1,499 91 10 351 1,656 10,643
---------- ------- --------- -------- -------- -----------
Total Proved Plus
Probable 4,384 198 29 1,209 4,811 24,258
---------- ------- --------- -------- -------- -----------
---------- ------- --------- -------- -------- -----------
Net Present Value of Reserves - Before Income Taxes (Forecasted Prices and
Costs)
Discounted at
------------------------------------
Undiscounted 5% 8% 10% 15%
December 31, 2009(1) (2) (M$) (M$) (M$) (M$) (M$)
------------- --------- -------- -------- --------
Proved
- Developed Producing 115,876 79,758 67,734 61,764 51,082
- Developed Non-Producing 2,321 2,007 1,852 1,761 1,565
- Undeveloped 24,395 16,661 13,686 12,110 9,110
------------- --------- -------- -------- --------
Total Proved 142,593 98,425 83,272 75,636 61,757
Probable 95,549 49,024 36,184 30,334 20,750
------------- --------- -------- -------- --------
Total Proved Plus
Probable 238,142 147,449 119,456 105,970 82,507
------------- --------- -------- -------- --------
------------- --------- -------- -------- --------
1. Utilizing Sproule January 1, 2010 price forecast per below.
2. As required by NI 51-101, undiscounted well abandonment costs of $8.0
million for total proved reserves and $9.9 million for total proved plus
probable reserves are included in the Net Present Value determination.
Net Present Value of Reserves - After Income Taxes (Forecasted Prices and
Costs)
Discounted at
------------------------------------
Undiscounted 5% 8% 10% 15%
December 31, 2009(1) (2) (M$) (M$) (M$) (M$) (M$)
------------- --------- -------- -------- --------
Proved
- Developed Producing 102,711 73,515 63,361 58,224 48,854
- Developed Non-Producing 1,705 1,509 1,416 1,360 1,240
- Undeveloped 17,791 11,955 9,704 8,511 6,236
------------- --------- -------- -------- --------
Total Proved 122,207 86,979 74,480 68,095 56,330
Probable 69,772 35,752 26,233 21,882 14,742
------------- --------- -------- -------- --------
Total Proved Plus
Probable 191,979 122,731 100,713 89,977 71,072
------------- --------- -------- -------- --------
------------- --------- -------- -------- --------
1. Utilizing Sproule January 1, 2010 price forecast per below
2. As required by NI 51-101, undiscounted well abandonment costs of $8.0
million for total proved reserves and $9.9 million for total proved plus
probable reserves are included in the Net Present Value determination
Summary of Pricing Assumptions as of December 31, 2009 - Forecast Prices
Bow River Heavy
Crude Oil Crude Oil
Stream Proxy
Quality (12 API)
WTI Foreign AECO At At
Oil Exchange Rate Edmonton Oil Gas Hardisty Hardisty
(US$/bbl) (US$/Cdn$) (Cdn$/bbl) (Cdn$/mmbtu) $CDN/bbl $CDN/bbl
-----------------------------------------------------------------------
2010 79.17 0.92 84.25 5.36 76.67 69.93
2011 84.46 0.92 89.99 6.21 80.99 73.79
2012 86.89 0.92 92.61 6.44 81.49 74.08
2013 90.20 0.92 96.19 7.23 83.68 75.03
2014 92.01 0.92 98.13 7.98 84.39 74.58
2015 93.85 0.92 100.11 8.16 86.10 76.08
2016 95.72 0.92 102.13 8.34 87.83 77.62
2017 97.64 0.92 104.19 8.52 89.61 79.19
2018 99.59 0.92 106.30 8.71 91.42 80.79
2019 101.58 0.92 108.44 8.90 93.26 82.42
Annual escalation rate of 2%, thereafter
The following reconciliation of Company Interest (note 1) reserves compares
changes in the Company's reserves as at December 31, 2008 to the reserves as at
December 31, 2009, each evaluated following NI 51-101 definitions.
Total Proved
Total Proved Total Probable plus Probable
---------------------------------------------
(mboe) (mboe) (mboe)
Balance December 31, 2008 1,477 1,054 2,531
Technical revisions 79 (93) (14)
Exploration discoveries - - -
Acquisitions 1,858 703 2,561
Dispositions (85) (22) (107)
Drilling extensions and infill
drilling 25 15 40
Economic factors (1) (1) (2)
Improved recoveries - - (198)
Production (198) - -
---------------------------------------------
Balance December 31, 2009 (2) 3,155 1,656 4,811
---------------------------------------------
---------------------------------------------
Note:
1. Company Interest reserves means, our working interest (operating and
non-operating) share before deduction of royalties and including any
royalty interest of the Company.
2. May not add due to rounding.
Net Asset Value
At December 31, 2009, Wild Stream had a before tax net asset value of $4.61 per
diluted share at a 10 percent discount using total proved plus probable reserves
as evaluated by Sproule and GLJ under the standards of NI 51-101 and an internal
assessment of undeveloped land value. Forecast prices used in this assessment
were the Sproule price forecast as of January 1, 2010 for the Alberta properties
excluding Garrington and the Sproule price forecast as of January 1, 2010 for
the Saskatchewan and Garrington properties. No value was assigned for the
Company's proprietary seismic.
The calculation of net asset value per diluted share is outlined in the
following table:
($ thousands) 5% discount 10% discount 15% discount
----------------------------------------------------------------------------
Net present value of proved
plus probable reserves (1) 147,449 105,970 82,507
Undeveloped land (2) 23,750 23,750 23,750
Net (debt) surplus 13,735 13,735 13,735
Proceeds from exercise of stock
options & warrants 14,353 14,353 14,353
----------------------------------------------------------------------------
Total 199,287 157,808 134,345
Fully diluted shares at
December 31, 2009 (thousands) (3) 34,205 34,205 34,205
Net asset value per diluted
share $ 5.83 $ 4.61 $ 3.93
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. Net present value of reserves evaluated by Sproule and GLJ as of
December 31, 2009, in accordance with the standards of NI 51-101 using
forecasted prices and costs, discounted at five, ten and fifteen percent
before taxes.
2. Undeveloped lands were internally evaluated by management in accordance
with the standards of NI 51-101.
3. Fully diluted shares are calculated including outstanding warrants and
stock options.
Capital Program Efficiency
The efficiency of the Company's capital program for the year ended December
31, 2009 is summarized below:
Proved plus
Proved Probable
--------------- --------------
Capital expenditures ($ thousands)
Exploration and development 5,625 5,625
Acquisitions - corporate and property 34,943 34,943
Change in future development capital 8,499 9,860
--------------- --------------
Total costs 49,067 50,428
--------------- --------------
--------------- --------------
Reserve additions (mboe)
Exploration and development 557 919
Acquisitions - corporate and property 1,366 1,589
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finding and development costs ($/boe)
Finding and development costs without change
in future capital 10.10 6.12
Finding and development costs with change in
future capital 25.36 16.85
Acquisition costs ($/boe)
Finding and development costs without change
in future capital 25.58 21.99
Finding and development costs with change in
future capital 25.58 21.99
Finding, development and acquisition costs
($/boe)
Finding and development costs without change
in future capital 21.10 16.18
Finding and development costs with change in
future capital 25.52 20.11
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Recycle Ratio
Operating netback ($/boe) 31.23 31.23
Finding and development costs ($/boe) 25.52 20.11
Recycle ratio 1.22 1.55
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reserves
Reserves additions including revisions (mboe) 1,923 2,508
Total production 2008 (mboe) 198 198
Reserves replacement 9.7x 12.7x
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reserve Life Index
Total Company Interest reserves (mboe) 3,155 4,811
Fourth quarter 2009 production (mboe) 25 25
Annual 2009 production (mboe) 198 198
----------------------------------------------------------------------------
----------------------------------------------------------------------------
RLI based on December 2009 annualized
production (years) 10.8 16.5
RLI based on 2009 annual production (years) 15.9 24.3
Wild Stream is also pleased to announce that Mr. Jason Jaskela P. Eng. has been
promoted to the position of Vice President Production of the Company. Jason has
had increasingly senior roles in multiple capacities in engineering, operations
and management with numerous public Canadian companies. Jason has been with Wild
Stream since the appointment of the new management team in September of 2009.
The Wild Stream team has developed and began to unlock the potential of our
enviable drilling inventory. Our multi year inventory, proven execution
abilities combined with our commitment to prudent fiscal management will allow
your company to see meaningful per share growth for the foreseeable future. We
remain committed to increasing shareholder value through a combination of
exploration, strategic acquisitions and subsequent exploitation while
maintaining a conservative approach to balance sheet management.
FORWARD LOOKING STATEMENTS: This press release contains forward-looking
statements. More particularly, this press release contains statements concerning
Wild Stream's reserves and values attributable thereto, per share growth and
Wild Stream's growth strategy. In addition, the use of any of the words
"guidance", "initial, "scheduled", "will", "prior to", "estimate", "anticipate",
"believe", "potential", "should", "unaudited", "forecast", "future", "continue",
"may", "expect", "project", and similar expressions are intended to identify
forward-looking statements. The forward-looking statements contained herein are
based on certain key expectations and assumptions made by the Company, including
expectations and assumptions concerning the success of optimization and
efficiency improvement projects, the availability of capital, current
legislation, the success of future drilling and development activities, the
performance of existing wells, the performance of new wells, Wild Stream's
growth strategy, general economic conditions, availability of required equipment
and services and prevailing commodity prices. Although the Company 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 the Company 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, 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, changes in legislation affecting
the oil and gas industry 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 the Company's
Annual Information Form which has been filed on SEDAR and can be accessed at
www.sedar.com or Wild Stream's website www.wildsr.com.
The forward-looking statements contained in this press release are made as of
the date hereof and the Company 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.
Meaning of Boe: When used in this press release, Boe means a barrel of oil
equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe
per day means a barrel of oil equivalent per day. Boe's may be misleading,
particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6
thousand cubic feet of natural gas is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
This press release shall not constitute an offer to sell, nor the solicitation
of an offer to buy, any securities in the United States, nor shall there be any
sale of securities mentioned in this press release in any state in the United
States in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Wild Stream Exploration Inc. (TSXV:WSX)
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