/NOT FOR DISTRIBUTION IN THE UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
CALGARY,
May 16, 2013 /CNW/ - Palliser Oil
& Gas Corporation ("Palliser" or the
"Company") (TSXV: PXL) is pleased to announce
financial and operating results for the three months ended
March 31, 2013. Certain selected
financial and operational information is set out below and should
be read in conjunction with Palliser's unaudited condensed
financial statements complete with the notes to the financial
statements and related MD&A which will be available at
www.sedar.com and the Company's website at www.palliserogc.com.
Operating & Financial Highlights - Three
months ended March 31, 2013 and 2012
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31 |
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
2012 |
|
|
|
% Change |
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wells drilled, re-entered or reactivated (gross and
net) |
|
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
|
|
|
|
|
|
|
10 |
|
|
|
2 |
|
|
|
400% |
Salt water disposal |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
0% |
Total |
|
|
|
|
|
|
|
|
11 |
|
|
|
3 |
|
|
|
267% |
Success (%) |
|
|
|
|
|
|
|
100% |
|
|
|
67% |
|
|
|
49% |
Undeveloped land Greater Lloydminster (net
acres) |
|
|
|
33,988 |
|
|
|
19,618 |
|
|
|
73% |
Undeveloped land Medicine Hat (net acres) |
|
|
|
|
|
25,850 |
|
|
|
29,042 |
|
|
|
-11% |
Total undeveloped land (net acres) |
|
|
|
|
|
59,838 |
|
|
|
48,660 |
|
|
|
23% |
Average daily production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (bbl per day) |
|
|
|
|
|
|
2,166 |
|
|
|
1,743 |
|
|
|
24% |
Natural gas (Mcf per day) |
|
|
|
|
|
|
295 |
|
|
|
376 |
|
|
|
-22% |
Barrels of oil equivalent (boe per day, 6:1) |
|
|
|
|
|
2,215 |
|
|
|
1,806 |
|
|
|
23% |
Crude oil production (%) |
|
|
|
|
|
|
98% |
|
|
|
97% |
|
|
|
1% |
Average sales prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil ($ per bbl) |
|
|
|
|
|
|
$ |
51.76 |
|
|
$ |
70.93 |
|
|
|
-27% |
Natural gas ($ per Mcf) |
|
|
|
|
|
$ |
2.92 |
|
|
$ |
2.15 |
|
|
|
36% |
Barrels of oil equivalent ($ per boe, 6:1) |
|
|
|
|
$ |
51.04 |
|
|
$ |
68.94 |
|
|
|
-26% |
Operating netback ($ per boe) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum and natural gas sales |
|
|
|
|
|
$ |
51.04 |
|
|
$ |
68.94 |
|
|
|
-26% |
Realized gain (loss) on financial derivatives |
|
|
|
|
$ |
6.13 |
|
|
$ |
(2.31) |
|
|
|
- |
Royalties |
|
|
|
|
|
|
|
$ |
11.48 |
|
|
$ |
16.18 |
|
|
|
-29% |
Production, operating & transportation
expenses |
|
|
|
$ |
29.90 |
|
|
$ |
26.52 |
|
|
|
13% |
Operating netback (1) |
|
|
|
|
|
$ |
15.79 |
|
|
$ |
23.93 |
|
|
|
-34% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial ($000's except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31 |
|
|
|
|
|
2013 |
|
|
|
|
2012 |
|
|
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas sales |
|
|
|
$ |
10,175 |
|
|
|
$ |
11,329 |
|
|
|
|
-10% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds flow from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operating activities (2) |
|
|
|
$ |
1,682 |
|
|
|
$ |
2,701 |
|
|
|
|
-38% |
Per share - basic and diluted |
|
|
|
$ |
0.03 |
|
|
|
$ |
0.05 |
|
|
|
|
-40% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income (loss) |
|
|
|
$ |
(4,486) |
|
|
|
$ |
600 |
|
|
|
|
- |
Per share - basic and diluted |
|
|
|
$ |
(0.07) |
|
|
|
$ |
0.01 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding |
|
|
|
|
62,193,757 |
|
|
|
|
54,130,348 |
|
|
|
|
15% |
Shares outstanding |
|
|
|
|
63,915,979 |
|
|
|
|
54,130,348 |
|
|
|
|
18% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (3) |
|
|
|
|
8,724 |
|
|
|
$ |
9,106 |
|
|
|
|
-4% |
Working capital (net debt) (4) |
|
|
|
|
(41,655) |
|
|
|
$ |
(27,269) |
|
|
|
|
53% |
Shareholders' equity |
|
|
|
|
43,993 |
|
|
|
$ |
40,755 |
|
|
|
|
8% |
|
|
|
|
|
|
(1) Operating netback is a non-GAAP measure
and is the net of petroleum and natural gas sales, realized gain or
loss on financial
derivatives, royalties and production, operating and transportation
expenses. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Funds flow from operating activities is a
non-GAAP measure that represents cash flow from operations less
decommissioning
expenditures and changes in non-cash working capital related to
operating activities. Funds flow per share amounts are
calculated
using weighted average shares outstanding consistent with the
calculation of net income per share. Funds flow from operating
activities is a key measure as it demonstrates the Company's
ability to generate the funds necessary to achieve future
growth
through capital investment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Capital expenditures exclude
decommissioning liability costs and capitalized share-based
compensation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Working capital (net debt) is a non-GAAP
measure representing the total bank loan, accounts payable and
accrued liabilities,
less accounts receivable, deposits and prepaid expenses. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Management believes these are useful supplemental measures of,
firstly, the total net position of current assets and current
liabilities of the Company and secondly, the profitability relative
to commodity prices. Other entities may calculate these
figures
differently than Palliser. |
|
|
|
|
|
|
|
First Quarter 2013 Highlights
- Achieved production of 2,215 boe/d. Production increased
23% compared to the prior year;
- Executed an $8.7 million capital
program. The capital program included 10 wells completed for heavy
oil production with a 100% success rate, expansion of the Company's
salt water disposal infrastructure, and three strategic property
acquisitions;
- Increased undeveloped heavy oil land position. The Company's
undeveloped heavy oil land position at March
31, 2013 was 33,988 net acres, a 4% increase from year
end;
- Maintained a significant prospect inventory. The Company's
prospect inventory stands at 140 locations, none of which are
included in the 2012 independent reserves report; and
- Increased rail shipments to improve operating netbacks.
Palliser increased rail shipments to 729 boe/d, or 34% of the
Company's production.
Operations
The first quarter of 2013 was a very active
quarter for Palliser, with capital expenditures totalling
$8.7 million, representing 36% of the
budgeted yearly capital program of $24
million. This 100% working interest capital program included
11 wells, which resulted in 10 heavy oil wells and one salt water
disposal well, for a 100% success rate. These wells were all
brought on production late in the quarter, and thus had no impact
on first quarter production. The Company also expanded its net
undeveloped heavy oil land holdings to 33,988 net acres and closed
three strategic property acquisitions during the quarter.
As previously announced, first quarter 2013
production was below budget, largely due to offset drilling, which
necessitated the temporary shut in of approximately 300 bbl/d.
First quarter 2013 production averaged 2,215 boe/d (98% oil
weighting) which represents a 23% increase over the first quarter
of 2012. These lower production volumes, combined with unusually
harsh winter operating conditions, resulted in production,
operating and transportation expenses of $29.90 per barrel in the first quarter of 2013,
which represents a 13% increase from the same quarter in 2012.
Financial
The first quarter of 2013 saw a dramatic
widening of heavy oil differentials between West Texas Intermediate
"WTI" and Western Canadian Select "WCS" pricing. This unusually
wide differential resulted in a 26% reduction in net sales price
from the first quarter of the previous year and a 38% reduction in
funds flow from operating activities over the same time period.
Operating netback was also reduced by 34% compared to the prior
year comparative quarter.
The Company's net debt at quarter end was
$41.7 million, relative to an
existing total credit facility of $52.0
million, which was renewed in May
2013. The remaining $15.3
million capital program budgeted for 2013 will be financed
through cash flow and existing credit facilities with year-end net
debt budgeted to be approximately $39
million. The Company also closed an equity financing during
the first quarter of 2013 with gross proceeds of $3.15 million.
Outlook
The first quarter of 2013 presented several
challenges to the Company, however, we are on track and well
positioned to deliver continued strong results in 2013.
Production continues to ramp up from the first quarter, with
current production of approximately 2,600 boe/d based on field
estimates. In anticipation of a harsh spring breakup, Palliser
proactively increased the operating budget for snow removal, road
enhancements, and well and facility maintenance. Although this
resulted in increased operating expenditures during the first
quarter, we are benefiting from this expenditure and are well
positioned to see production continue to increase and operating
costs decrease through the second quarter of 2013. As a result, we
believe the Company is on track to achieve its 2013 production
guidance of 2700 - 2800 boe/d. With production, operating and
transportation costs expected to return to approximately
$23/boe, the Company remains on track
to be a sustainable low operating cost heavy oil producer.
The dramatic widening in heavy oil
differentials, seen during the first quarter of 2013, have narrowed
favorably with the second quarter differentials expected to return
to more historic averages near the $20 per barrel level. Funds flow from operating
activities in the second quarter continues to increase favorably
due to improved current heavy oil pricing, growing production, and
the return to lower production, operating, and transportation
expenses. We believe this keeps us on track to achieve our 2013
budget: funds flow from operating activities of approximately
$20 million, operating netbacks of
$26/boe, and year-end net debt of
$39 million.
To reduce funds flow risk from commodity price
volatility, Palliser currently has approximately 33% of budgeted
2013 production volumes hedged at an average WTI CAD price of
$100 per barrel and approximately 14%
of budgeted volumes hedged at an average WCS price of $78 per barrel. This should provide the Company
with greater certainty and funds flow support.
Palliser has continued to increase its shipment
of oil by rail, and is currently shipping approximately 40% of
total production to the Gulf Coast. The Company is realizing a
significant price premium on volumes shipped by rail. By year end,
we will have the ability to increase our rail shipments to in
excess of 50% of production, if pricing conditions make it
favourable to do so, with minimal incremental capital expenditure
required.
Our original $24
million capital budget for 2013 assumed US$93.00 WTI per barrel and CAD$63.00 WCS per barrel pricing. Our internally
driven capital program is to be funded by cash flow and credit
facilities. As previously noted, the heavy oil differential has
narrowed favourably, and WCS pricing for the second quarter is
forecast to be higher than the budgeted $63.00 WCS per barrel. If heavy oil differentials
continue to remain favourable, the Company will be well positioned
with flexibility to deploy any excess funds flow to the most
prudent use of funds.
Palliser is a Calgary-based emerging junior oil and gas
company currently focused on high netback heavy oil production in
the greater Lloydminster area of
both Alberta and Saskatchewan. For further information
regarding Palliser Oil & Gas Corporation, the reader is invited
to visit the Company's website at www.palliserogc.com.
Forward-Looking Statements
Certain statements contained herein
constitute forward-looking statements or information (collectively
"forward-looking statements") within the meaning of
applicable securities legislation, including, but not limited to
management's assessment of future plans and operations, including:
commodity focus; drilling plans and potential locations; expected
production levels; development plans; reserves growth; production
and operating sales and expenses; reservoir characteristics; the
results of applying certain operational development techniques;
certain economic factors; and capital expenditures.
Forward-looking statements are typically identified by words such
as "anticipate", "estimate", "expect", "forecast", "may", "will",
"project" and similar words suggesting future events or performance
or may be identified by reference to a future date. In addition,
statements relating to oil and gas reserves and resources are
deemed to be forward-looking statements as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves or resources described, as the case may be, exist in the
quantities predicted or estimated and can be profitably produced in
the future. With respect to forward-looking statements
herein, Palliser has made assumptions regarding, among other
things; future capital expenditure levels; future oil and natural
gas prices; "differentials" between West Texas Intermediate and
Western Canadian Select benchmark pricing; future oil and natural
gas production levels; future water disposal capacity; future
exchange rates and interest rates; ability to obtain equipment and
services in a timely manner to carry out development activities;
ability to market oil and natural gas successfully to current and
new customers; the impact of increasing competition; the ability to
obtain financing on acceptable terms; and the ability to add
production and reserves through development and exploitation
activities. Although Palliser believes that the expectations
reflected in the forward-looking statements contained herein, and
the assumptions on which such forward-looking statements are made,
are reasonable, there can be no assurance that such expectations
will prove to be correct. Readers are cautioned not to place undue
reliance on forward-looking statements included herein, as there
can be no assurance that the plans, intentions or expectations upon
which the forward-looking statements are based will occur. By their
nature, forward-looking statements involve numerous risks and
uncertainties that contribute to the possibility that the
forward-looking statements will not occur, which may cause
Palliser's actual performance and financial results in future
periods to differ materially from any estimates or
projections. Additional information on these and other
factors that could affect Palliser's results are included in
reports on file with Canadian securities regulatory authorities,
including the Company's Annual Information Form, and may be
accessed through the SEDAR website at www.sedar.com.
The forward-looking statements contained
herein speak only as of the date hereof. Except as expressly
required by applicable securities laws, Palliser does not undertake
any obligation to, nor does it intend to, publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. The forward-looking
statements contained herein are expressly qualified by this
cautionary statement. In addition, readers are cautioned that
historical results are not necessarily indicative of future
performance.
Production volumes are commonly expressed on
a barrel of equivalent ("BOE") basis whereby natural gas volumes
are converted at a ratio of six thousand cubic feet to one barrel
of oil. The intention is to convert oil and natural gas
measurement units into one basis for improved analysis of results
and comparisons with other industry participants. The term BOE may
be misleading, particularly if used in isolation. The
conversion ratio is based on an energy equivalent method and does
not represent an economic value equivalency at the
wellhead.
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 Press release.
SOURCE Palliser Oil & Gas Corporation