CALGARY, May 9, 2013 /CNW/ – Longview Oil Corp. (“Longview” or the “Corporation”) is pleased to announce the financial and operating results for the quarter ended March 31, 2013.
|Three months ended|
|March 31, 2013||December 31, 2012||March 31, 2012|
|Financial ($000, except as otherwise
|Sales including realized hedging||$||33,729||$||36,388||$||40,425|
|per share (1)||$||0.72||$||0.78||$||0.86|
|Funds from operations||$||14,813||$||15,639||$||19,572|
|per share (1)||$||0.32||$||0.33||$||0.42|
|Net income and comprehensive income||$||1,470||$||(21,466)||$||5,561|
|per share (1)||$||0.03||$||(0.46)||$||0.12|
|per share (2)||$||0.15||$||0.15||$||0.15|
|Expenditures on property, plant and equipment||$||14,080||$||11,763||$||18,596|
|Working capital deficit (3)||$||13,010||$||11,712||$||15,522|
|Shares outstanding at end of period (000)||46,858||46,837||46,774|
|Basic weighted average shares (000)||46,856||46,837||46,771|
|Crude oil and NGLs (bbls/d)||4,819||4,887||5,119|
|Natural gas (mcf/d)||7,706||8,526||9,713|
|Total boe/d @ 6:1||6,103||6,308||6,738|
|Average prices (including hedging)|
|Crude oil and NGLs ($/bbl)||$||72.45||$||74.94||$||82.44|
|Natural gas ($/mcf)||$||3.33||$||3.44||$||2.29|
|(1)||Based on basic weighted average shares outstanding.|
|(2)||Based on shares outstanding at each dividend record date.|
|(3)||Working capital deficit includes trade and other receivables, prepaid expenses and
deposits, trade and other accrued liabilities and due to parent.
Production and Funds from Operations
- Funds from operations for the first quarter of 2013 was $14.8 million or $0.32 per share, as compared to $15.6 million or $0.33 per share for the fourth quarter of 2012. Funds from operations decreased due mainly to hedging losses which more than offset cash expense reductions. Funds from operations are primarily supported by crude oil and liquids production that represents 93% of our total Q1 2013 sales revenue. Crude oil prices strengthened during the quarter with WTI and Canadian realized prices increasing by 7% and 5%, respectively.
- Production for the first quarter of 2013 averaged 6,103 boe/d (79% crude oil and liquids), a slight 3% decrease from 6,308 boe/d realized during the fourth quarter of 2012. The majority of production declines related to natural gas which fell by 10% compared to the fourth quarter of 2012 while oil and NGL volumes showed a slight decline slipping by 1% from Q4 2012.
- Operating expense for the three months ended March 31, 2013 declined by 8% to $11.3 millionfrom $12.2 million in Q4 2012. On a boe basis costs fell by 3% to $20.49/boe as compared to$21.04/boe during the fourth quarter of 2012.
- Our Q1 2013 capital program was delayed due to extreme winter conditions in SE Saskatchewan with the majority of new production additions brought on-stream at quarter end. We exited the quarter producing approximately 6,500 boe/d with oil and NGL comprising 80% of total volumes. We expect daily production to average approximately 6,200 to 6,300 boe/d for the 2013 calendar year.
- Total capital expenditures for the three months ended March 31, 2013 amounted to $14.1 million which included $8.9 million in Saskatchewan, $1.8 million at Sunset, and $1.5 million at Nevis. We drilled a total of 7.3 net (11 gross) wells at a 91% success rate and drilled one water injection well.
- As at March 31, 2013, Longview’s bank debt was $116.9 million on a credit facility of $200 million (58% drawn) resulting in an unutilized capacity of $83.1 million. Bank indebtedness has increased $5.0 million since December 31, 2012 as 39% of our 2013 capital expenditure program has been completed during the first quarter of 2013.
Commodity Hedging Program
- Longview’s hedging program for calendar 2013 includes crude oil hedges of 1,000 bbls/d at$90.29/bbl for January to December 2013 and 1,000 bbls/d at $93.00/bbl for February toDecember 2013.
- The Corporation will continue to hedge a portion of its production in the future in order to provide stable cash flow to fund dividend payments and our capital expenditure program.
- Longview’s business strategy is to provide shareholders with attractive long term returns that combine both income and moderate growth by exploiting our assets in a financially disciplined manner and by acquiring additional long-life oil and gas assets of a similar nature.
- Consistent with our business strategy, we will continue to focus on maintaining a strong balance sheet by funding our dividend payments and capital expenditure program primarily from funds from operations.
- The following table summarizes the operational and financial guidance for Longview for the year ending December 31, 2013:
|Average daily production||6,200 boe/d to 6,300 boe/d|
|Oil & liquids %||79%|
|Royalty rate||19% to 21%|
|Operating expenses||$19.00/boe to $20.00/boe|
|Funds from operations||$60 million (1)|
|Capital expenditures||$36 million|
|(1) Based on Edmonton light $82.00/bbl, WTI US$89.50/bbl, $US/$Canadian exchange rate $1.00, AECO $3.58/mcf.|
- The 2013 capital program is designed to maintain production at 2012 levels and is focused primarily on further development of the Midale formation in Southeast Saskatchewan where we have an extensive land base, high working interest and existing infrastructure. Longview has a base decline rate of approximately 19% which allows the Company to maintain production with a modest level of capital expenditures, as demonstrated during 2012 and 2011.
Interim Financial Statements and MD&A
- Longview’s unaudited interim financial statements for the three months ended March 31, 2013together with the notes thereto, and Management’s Discussion and Analysis for the three months ended March 31, 2013 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and posted on our website at www.longviewoil.com and filed under our profile on SEDAR at www.sedar.com.
Approval of Advance Notice By-Law
- Longview also announces the approval by its board of directors (the “Board”) of an advance notice by-law (the “By-Law”). The By-Law, among other things, includes a provision that requires advance notice to the Corporation in circumstances where nominations of persons for election to the Board are made by shareholders of the Corporation other than pursuant to: (i) a “proposal” made in accordance with section 136(1) of the Business Corporations Act (Alberta) (the “Act”); or (ii) a requisition of the shareholders made in accordance with section 142(1) of the Act.
- Among other things, the By-Law fixes a deadline by which holders of record of common shares of Longview must submit director nominations to the Chief Financial Officer of the Corporation prior to any annual or special meeting of shareholders and sets forth the specific information that a shareholder must include in the written notice to the Chief Financial Officer of the Corporation for an effective nomination to occur. No person will be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of the By-Law.
- In the case of an annual general meeting of shareholders, notice to the Chief Financial Officer of the Corporation must be made not less than 30 nor more than 65 days prior to the date of the annual general meeting of shareholders; provided, however, that in the event that the annual general meeting of shareholders is to be held on a date that, is less than 50 days after the date (the “Notice Date”) on which the first public announcement of the date of the annual meeting was made, notice by the nominating shareholder may be made not later than the close of business on the tenth (10th) day following the Notice Date. In the case of a special meeting (which is not also an annual general meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes), notice to the Chief Financial Officer of the Corporation must be made not later than the close of business on the fifteenth (15th) day following the day on which the first public announcement of the date of the special meeting of shareholders was made.
- The By-Law is effective and in full force and effect as of the date hereof. In accordance with the terms of the By-Law, the By-Law will be put to shareholders of the Corporation for approval at its upcoming annual general meeting of shareholders on June 20, 2013. If the By-Law is not confirmed at the meeting by ordinary resolution of shareholders, the By-Law will terminate and be of no further force and effect following the termination of the shareholders meeting.
- The full text of the By-Law is available via SEDAR at www.sedar.com or upon request by contacting the Chief Financial Officer of the Corporation at (403) 718-8005 or by email at[email protected].
Certain information regarding Longview set forth in this press release, including management’s assessment of the Corporation’s future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward looking statements. Such statements represent Longview’s internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Longview believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Longview’s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Longview.
In particular, forward-looking statements included in this press release include, but are not limited to, statements with respect to the Corporation’s dividend policy; Longview’s anticipated average daily production, product mix, royalty rates, operating expenses and capital expenditures for the year ended December 31, 2013; the Corporation’s 2013 capital program; the Corporation’s anticipated drilling and recompletion activities; anticipated growth in total corporate production related to crude oil and NGLs in 2013; crude oil and natural gas production levels; Longview’s business strategy; and the Corporation’s plans to monitor funds from operations, its dividend policy and capital expenditure commitments to ensure that are substantially balanced. In addition, statements relating to “reserves” are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future.
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the Corporation’s control, including the impact of general economic conditions; volatility in market prices for crude oil and natural gas; industry conditions; volatility of commodity prices; currency fluctuation; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition from other producers; the lack of availability of qualified personnel or management; changes in tax laws, royalty regimes and incentive programs relating to the oil and gas industry; changes to legislation and regulations and how they are interpreted and enforced; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; unexpected drilling results; changes or fluctuations in production levels; delays in anticipated timing of drilling and completion of wells; stock market volatility; ability to access sufficient capital from internal and external sources and the other risks considered under “Risk Factors” in Longview’s Annual Information Form, which is available on www.sedar.com and www.longviewoil.com.
With respect to forward-looking statements contained in this press release, Longview has made assumptions regarding: current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil and natural gas; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; royalty rates; future operating costs; that the Corporation will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that the Corporation’s conduct and results of operations will be consistent with its expectations; that the Corporation will have the ability to develop the Corporation’s properties in the manner currently contemplated; current or, where applicable, proposed assumed industry conditions, laws and regulations will continue in effect or as anticipated; and the estimates of the Corporation’s production and reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects.
Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on Longview’s future operations and such information may not be appropriate for other purposes. Longview’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Corporation will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and the Corporation disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
“boes” may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (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.
SOURCE: Longview Oil Corp.