CALGARY, ALBERTA–(Marketwired – Aug. 23, 2016) – PetroShale Inc. (“PetroShale” or the “Company”) (TSX VENTURE:PSH)(OTCQX:PSHIF) is pleased to announce its financial and operating results for the second quarter ended June 30, 2016. The Company’s unaudited consolidated financial statements and corresponding Management’s Discussion and Analysis (MD&A) for the three and six month periods ended June 30, 2016 are available on SEDAR at www.sedar.com, on the OTCQX website at www.otcqx.com, and on PetroShale’s website at www.petroshaleinc.com. Copies of the materials can also be obtained upon request without charge by contacting the Company directly. Currency figures presented herein are reflected in Canadian dollars, unless otherwise noted.
Q2 2016 HIGHLIGHTS:
We achieved the following during the three months ended June 30, 2016:
- Quarterly production of 1,700 boe/d, an increase of 20% from the previous quarter and 27% over the same quarter in 2015.
- Participated in 49 gross (0.5 net) wells, of which nine gross (0.26 net) wells were brought onto production during the quarter for total drilling and completions capital expenditures of $1.9 million.
- Acquired additional acreage within PetroShale’s operated unit in our core focus area for $5.1 million.
- Generated 58% higher operating netbacks of $21.11/boe (Company interest, gross of royalty; $26.49/boe net of royalty) relative to the previous quarter, reflecting stronger WTI oil prices and a reduction in operating costs.
- Enhanced PetroShale’s financial flexibility with a US$20 million increase to our subordinated loan facility, resulting in total borrowing capacity of US$80 million, and re-affirmed the borrowing base of the Company’s existing senior loan facility at US$22.5 million.
- Subsequent to the end of the quarter, the Company commenced drilling activities on our first operated well located within the heart of our North Dakota Bakken acreage.
RESULTS OF OIL AND GAS ACTIVITIES
Three months ended | Six months ended | ||||||||||||
June 30, 2016 |
June 30, 2015 |
June 30, 2016 |
June 30, 2015 |
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Sales volumes | |||||||||||||
Crude Oil (Bbl/d) | 1,228 | 1,248 | 1,211 | 978 | |||||||||
Natural gas and NGLs (Mcf/d) | 2,832 | 551 | 2,098 | 431 | |||||||||
Barrel of oil equivalent (Boe/d) | 1,700 | 1,340 | 1,560 | 1,050 | |||||||||
Operating Netbacks ($/Boe) | |||||||||||||
Revenue | $ | 38.58 | $ | 56.39 | $ | 35.10 | $ | 51.97 | |||||
Royalties | (7.82 | ) | (12.51 | ) | (7.15 | ) | (11.57 | ) | |||||
Operating costs | (6.68 | ) | (7.66 | ) | (7.86 | ) | (7.85 | ) | |||||
Production taxes | (2.97 | ) | (4.14 | ) | (2.71 | ) | (3.88 | ) | |||||
Operating netback | $ | 21.11 | $ | 32.08 | $ | 17.38 | $ | 28.67 | |||||
Operating netback, on a net of royalty basis | $ | 26.49 | $ | 41.36 | $ | 21.86 | $ | 36.91 | |||||
Benchmark WTI price during the period (US$ / bbl) | $ | 45.46 | $ | 57.48 | $ | 39.55 | $ | 53.26 |
MESSAGE FROM THE CEO
During the second quarter of 2016, PetroShale continued to advance operations focused in the heart of the North Dakota Bakken, primarily in our core Antelope area. In addition, the Company took steps to secure ongoing financial flexibility to help support us through a period of continued commodity price volatility.
PetroShale achieved average production of 1,700 boe/d during the period. Through the quarter, the Company had more natural gas volumes tied into processing infrastructure which resulted in increased production of natural gas and natural gas liquids and also shifted our liquids weighting to approximately 81% from 87% in the prior quarter. In addition, several new wells that were completed and brought online late in the first quarter had a positive production impact, coupled with a resumption of production from wells that had been previously shut-in for maintenance or to facilitate adjacent drilling.
We commenced drilling activities on our first operated well, in which we have a 73% working interest, situated in the prolific Antelope area. We anticipate completing the well, installing production equipment and bringing the well into production in the fourth quarter. Despite the current weak oil price environment, we expect to achieve an economic risk-adjusted rate of return with this well, which demonstrates the attractive and high-quality nature of our acreage. In addition, the Company is participating in three gross (0.7 net) wells currently being drilled by another operator, also in the heart of the Antelope area. We anticipate these wells will add to our production and PDP reserves between now and the end of the year. PetroShale continued to demonstrate our ability to acquire high quality acreage within the heart of our focus areas with the successful purchase of incremental acreage in Antelope during the quarter.
In an effort to ensure PetroShale has ongoing liquidity needed to execute our business plan, we renewed and extended our lending facilities. With higher oil prices in the second quarter, we also took the opportunity to lock in oil price hedge contracts to provide some downside protection on a portion of our anticipated production through June of 2017, further supporting our sustainability.
PetroShale has actively taken steps to position the Company for success over the past three years, and advanced this strategy through a very challenging global commodity price environment. This continues to be possible due to our extremely high quality asset base and a clear ability to identify and close on attractive acquisition opportunities. We continue to believe that we are well situated to deliver strong returns for our shareholders across a variety of pricing environments.
We wish to take this opportunity to thank all of our employees, directors and shareholders for your continued support of PetroShale, and we look forward to updating you on our progress and results through the coming quarters.
M. Bruce Chernoff, Executive Chairman and CEO
About PetroShale
PetroShale is an oil company engaged in the acquisition, development and consolidation of interests in the North Dakota Bakken / Three Forks.