/NOT FOR DISTRIBUTION IN THE UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
CALGARY,
Nov. 14, 2013 /CNW/ - Palliser Oil
& Gas Corporation ("Palliser" or the
"Company") (TSX VENTURE:PXL) is pleased to announce
financial and operating results for the three and nine months ended
September 30, 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 on SEDAR at
www.sedar.com and will also be posted on the Company's website at
www.palliserogc.com on November 14,
2013.
Operating & Financial Highlights - Three
and Nine Months Ended September 30,
2013 and 2012 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30 |
|
Nine months ended
September 30 |
Operating |
|
|
2013 |
|
2012 |
% Change |
|
|
2013 |
|
2012 |
% Change |
Wells drilled, re-entered or reactivated (gross and net) |
|
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
|
3 |
|
6 |
-50% |
|
|
15 |
|
12 |
25% |
Salt water disposal |
|
|
1 |
|
1 |
0% |
|
|
2 |
|
3 |
-33% |
Total |
|
|
4 |
|
7 |
-43% |
|
|
17 |
|
15 |
13% |
Success (%) |
|
|
100% |
|
100% |
0% |
|
|
100% |
|
93% |
8% |
Undeveloped land Greater Lloydminster (net acres) |
|
|
36,007 |
|
29,760 |
21% |
|
|
36,007 |
|
29,760 |
21% |
Undeveloped land Medicine Hat (net acres) |
|
|
12,885 |
|
33,522 |
-62% |
|
|
12,885 |
|
33,522 |
-62% |
Total undeveloped land (net acres) |
|
|
48,892 |
|
63,282 |
-23% |
|
|
48,892 |
|
63,282 |
-23% |
Average daily production |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (bbl per day) |
|
|
2,302 |
|
2,185 |
5% |
|
|
2,400 |
|
1,936 |
24% |
Natural gas (Mcf per day) |
|
|
219 |
|
344 |
-36% |
|
|
257 |
|
370 |
-31% |
Barrels of oil equivalent (boe per day, 6:1) |
|
|
2,339 |
|
2,242 |
4% |
|
|
2,443 |
|
1,998 |
22% |
Crude oil production (%) |
|
|
98% |
|
97% |
1% |
|
|
98% |
|
97% |
1% |
Average sales prices |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil ($ per bbl) |
|
$ |
86.98 |
$ |
61.43 |
42% |
|
$ |
69.80 |
$ |
64.02 |
9% |
Natural gas ($ per Mcf) |
|
$ |
2.54 |
$ |
2.16 |
18% |
|
$ |
2.97 |
$ |
2.03 |
46% |
Barrels of oil equivalent ($ per boe, 6:1) |
|
$ |
85.85 |
$ |
60.19 |
43% |
|
$ |
68.90 |
$ |
62.43 |
10% |
Operating netback ($ per boe) |
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum and natural gas sales |
|
$ |
85.85 |
$ |
60.19 |
43% |
|
$ |
68.90 |
$ |
62.43 |
10% |
Realized gain (loss) on financial derivatives |
|
$ |
(11.34) |
$ |
7.92 |
-243% |
|
$ |
(0.99) |
$ |
3.43 |
-129% |
Royalties |
|
$ |
22.13 |
$ |
15.32 |
44% |
|
$ |
16.96 |
$ |
14.73 |
15% |
Production, operating & transportation expenses |
|
$ |
26.59 |
$ |
21.45 |
24% |
|
$ |
26.20 |
$ |
23.07 |
14% |
Operating netback (1) |
|
$ |
25.79 |
$ |
31.34 |
-18% |
|
$ |
24.75 |
$ |
28.06 |
-12% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial ($000's except per
share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30 |
|
Nine months ended
September 30 |
|
|
|
2013 |
|
2012 |
% Change |
|
|
2013 |
|
2012 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas sales |
|
$ |
18,473 |
$ |
12,417 |
49% |
|
|
45,942 |
$ |
34,174 |
|
34% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds flow from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operating activities (2) |
|
$ |
4,090 |
$ |
5,101 |
-20% |
|
$ |
11,876 |
$ |
11,468 |
|
4% |
Per share - basic and diluted |
|
$ |
0.06 |
$ |
0.09 |
-33% |
|
$ |
0.19 |
$ |
0.21 |
|
-10% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income (loss) |
|
$ |
(1,443) |
$ |
(3,087) |
-53% |
|
$ |
(6,541) |
$ |
2,052 |
|
-419% |
Per share - basic and diluted |
|
$ |
(0.02) |
$ |
(0.06) |
-67% |
|
$ |
(0.10) |
$ |
0.04 |
|
-350% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding |
|
|
63,915,979 |
|
54,708,261 |
17% |
|
|
63,348,213 |
|
54,324,392 |
|
17% |
Shares outstanding |
|
|
63,915,979 |
|
57,453,348 |
11% |
|
|
63,915,979 |
|
57,453,348 |
|
11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (3) |
|
$ |
6,132 |
$ |
12,873 |
-52% |
|
$ |
18,842 |
$ |
28,470 |
|
-34% |
Working capital (net debt) (4) |
|
$ |
(41,581) |
$ |
(35,884) |
16% |
|
$ |
(41,581) |
$ |
(35,884) |
|
16% |
Shareholders' equity |
|
$ |
42,319 |
$ |
44,945 |
-6% |
|
$ |
42,319 |
$ |
44,945 |
|
-6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
Third Quarter 2013 Highlights
- Achieved production of 2,339 boe per day. Production
rose 4% compared to the third quarter of 2012;
- Achieved production, operating, and transportation expenses
of $26.59 per boe. Production,
operating and transportation expenses increased 24% compared to the
third quarter of 2012;
- Achieved operating netback of $25.79 per boe. Operating netbacks decreased
18% compared to the third quarter of 2012;
- Recorded funds flow from operating activities of
$4.1 million, or $0.06 per share in the third quarter. Funds
flow from operating activities decreased 20% compared to
$5.1 million in the third quarter of
2012;
- Executed a $6.1 million
capital program in the third quarter. The third quarter capital
program included three wells completed for heavy oil production
with a 100% success rate;
- Increased undeveloped heavy oil land position. The
Company's undeveloped heavy oil land position at September 30, 2013 was 36,007 net acres, a 3%
increase from June 30, 2013;
- 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 in the third quarter to 1,112
barrels per day, or 48% of total sales volumes for the
quarter.
Operations
The third quarter of 2013 saw capital
expenditures totalling $6.1 million,
representing 25% of the budgeted yearly capital program of
$24 million. This 100% working
interest capital program included one new drill, one re-entry and
one heavy oil reactivation. The Company also drilled a salt water
disposal well and expanded its salt water disposal infrastructure
during the quarter. Year to date, capital expenditures of
$18.8 million include 15 wells
completed for heavy oil production with a 100% success rate. The
Company also increased its net undeveloped heavy oil land holdings
to 36,007 net acres as at September 30,
2013.
As anticipated and previously announced, the
third quarter of 2013 saw lower average production compared to the
record production achieved in the second quarter of 2013. A
prolonged spring breakup, which continued well into the third
quarter contributed to significant downtime on several wells and
delayed budgeted capital projects until late in the quarter. As a
result, production declines outpaced additions.
Palliser continues to expand crude shipments by
rail. The Company completed construction of a clean oil treating
facility in the third quarter, which is estimated to increase
capacity to ship crude by rail to 75% of total volumes, up from the
previous capacity of approximately 50%.
Production, operating and transportation
expenses in the third quarter were $26.59 per barrel, which represents a 24%
increase from the third quarter of 2012 and a 16% increase from the
second quarter of 2013. The transportation component increased from
$1.21 per boe in the third quarter of
2012 to $2.10 per boe in the third
quarter of 2013 as the Company intentionally incurred additional
trucking costs to deliver oil to more lucrative rail contracts,
which provide significantly higher netbacks. Production, operating
and transportation costs for the nine month period ended
September 30, 2013 were $26.20 per boe. The Company remains focused on
being a sustainable low operating cost heavy oil producer.
Financial
The third quarter of 2013 saw a significant
increase in West Texas
Intermediate ("WTI") crude oil pricing, which averaged $106 per barrel. Palliser's realized crude oil
sales price increased by 42% from $61
per barrel in the third quarter of 2012 to $87 per barrel in the third quarter of 2013.
Palliser had a significant portion of volumes hedged in the current
quarter at WTI CAD pricing of $96 per
barrel. As a result, the Company realized hedging losses in the
quarter that offset a portion of the increase in the realized crude
oil sales price. Operating netbacks in the third quarter were
$25.79 per boe which is an 18%
reduction from the prior year comparative quarter. Funds flow from
operating activities for the quarter amounted to $4.1 million, or $0.06 per share, compared to $5.1 million, or $0.09 per share in the third quarter last
year.
The Company's net debt at the end of the third
quarter was $42 million, relative to
a current total credit facility of $52
million. A reduction of funds flow in the third quarter
compared to the second quarter, resulted in a third quarter debt to
annualized funds flow from operating activities ratio of 2.5 times,
compared to 1.6 times in the second quarter. The remaining
$6 million capital program budgeted
for 2013 will be financed through funds flow from operating
activities and existing credit facilities with year-end net debt
forecast to be approximately $44
million.
Outlook
The majority of third quarter capital projects
were delayed until late in the third quarter and early fourth
quarter. As a result, production additions from these wells will
not be seen until the fourth quarter. In addition, the Company
experienced water breakthrough in a number of CHOPS wells in the
Manitou area, resulting in a loss
of approximately 250 barrels per day of oil production. The Company
has been installing a new salt water disposal facility and
pipelines, and anticipates that the new facility will be
operational by the end of November. This new salt water disposal
infrastructure will allow the affected wells to be optimized using
high volume lift.
The fourth quarter capital program has been very
busy thus far with approximately $5
million spent, leaving approximately $1 million of the 2013 capital budget remaining
to be spent. Production additions from the third and fourth quarter
capital program are anticipated to result in production gains
through the remainder of the year.
Based on field estimates, October production
averaged approximately 2,200 boe per day, and the Company is
forecasting fourth quarter production to average between 2,400 -
2,450 boe per day. Similarly, 2013 annual production is now
forecast to average between 2,400 - 2,450 boe per day,
approximately 100 boe per day lower than previously forecast.
To reduce funds flow risk from commodity price
volatility, Palliser has significant crude oil volumes hedged. The
Company currently has approximately 64% of forecasted fourth
quarter 2013 production volumes hedged at an average WTI CAD price
of approximately $96 per barrel and
approximately 14% of fourth quarter 2013 volumes hedged at an
average Western Canada Select (WCS) price of approximately
$72 per barrel. The Company also has
significant volumes hedged at WTI CAD fixed price swaps for
calendar 2014.
Palliser is currently shipping approximately 60%
of its oil production by rail to the Gulf Coast. The Company is
realizing a significant price premium on volumes shipped by rail.
The Company will look to continue to increase its oil shipments by
rail in light of the currently wide heavy oil differentials.
Management Changes
The Company announces the departure of Mr.
Brett Frostad, Vice President
Exploration. Mr. Frostad is leaving Palliser to pursue other
opportunities. Palliser would like to thank Brett for his
contributions to the Company. Palliser also announces the
appointment of Mr. Lamont Brooks as
Exploration Manager. Mr. Brooks has been a long standing employee
with the Company, most recently as Senior Explorationist.
On behalf of the Board of Directors,
"Signed"
Kevin J. Gibson
Chief Executive Officer
"Signed"
Allan B. Carswell
President and Chief Operating Officer
November 14, 2013
Calgary, Alberta
For further information regarding Palliser Oil
& Gas Corporation, the reader is invited to visit the Company's
website at www.palliserogc.com.
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.
Advisory Regarding 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;
expected transportation methods; development and acquisition 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. 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 Canada
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 ability to ship volumes by rail; 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. 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.
Barrels of Oil Equivalent Conversions
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.
Non-GAAP Measurements
The Company evaluates its performance using several criteria,
including funds flow from operating activities and funds flow from
operating activities per share. Funds flow from operating
activities is a non-GAAP measure that represents cash flow from
operating activities 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.
The Company also assesses its performance
utilizing operating netback. Operating netback represents the
profit margin associated with the production and sale of petroleum
and natural gas, and is calculated as petroleum and natural gas
revenue, less realized gain or loss on financial derivatives,
royalties and production, operating and transportation expenses, on
a barrel of oil equivalent basis.
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.
These non-GAAP measures are not standardized
and therefore may not be comparable to similar measures utilized by
other entities.
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