CALGARY, Aug. 30, 2016 /CNW/ – Toro Oil & Gas Ltd. (TSXV: TOO) (“Toro” or the “Company”) announces its financial and operating results for the three and six month period ended June 30, 2016. Selected financial and operational information is set out below and should be read in conjunction with Toro’s June 30, 2016 interim financial statements and the related management’s discussion and analysis, which are available for review at www.sedar.com or the Company’s website at www.torooil.com.
Second Quarter Financial and Operational Highlights
- Averaged 766 boe/d in production during Q2 2016, of which 62% represents oil and liquids compared to 574 boe/d of production in Q2 2015 and 873 boe/d in Q1 2016. During the quarter, Toro decided to shut-in approximately 70 boe/d of low economic production. Minor weather related operational constraints and normal production declines also affected the Company’s Q2 2016 production;
- Continued to materially reduce the cost structure of the business on both operational and corporate levels. Operating costs both on an absolute dollar and per unit basis continue to trend downwards evidenced by $17.50 per boe realized in Q2 2016 compared to $22.33 per boe in Q2 2015 (22% decrease), and $18.01 per boe in Q1 2016 (3% decrease). The operating month of June 2016 represented Toro’s lowest operating cost per unit since inception at $14.59 per boe. Similarly, corporate G&A costs towards the end of the quarter materially decreased as the full effects of certain personnel and office cost optimization initiatives were realized with per unit June 2016 G&A costs of $5.75 per boe;
- Successfully completed a bought deal equity financing, which together with the exercise of the underwriters’ option, raised approximately $12.6 million in gross proceeds. Proceeds received were directed to the complete elimination of bank debt outstanding resulting in a positive current cash balance in excess of $4 million providing Toro with sufficient liquidity to sustain future commodity price volatility and potentially commence a high-graded drilling program should commodity prices improve.
Financial Results
(CAD$ thousands unless otherwise specified) |
||||||||||
Three months ended June 30 |
Six months ended June 30 |
|||||||||
2016 |
2015 |
% Change |
2016 |
2015 |
% Change |
|||||
Operational Performance |
||||||||||
Production Volumes |
||||||||||
Oil and NGLs (bbls/d) |
476 |
275 |
73 |
515 |
270 |
91 |
||||
Natural gas (mcf/d) |
1,741 |
1,795 |
(3) |
1,827 |
1,784 |
2 |
||||
Oil equivalent (boe/d) |
766 |
574 |
34 |
820 |
568 |
44 |
||||
Financial Performance |
||||||||||
Production revenue (1) |
2,405 |
1,874 |
28 |
4,480 |
3,598 |
25 |
||||
Net comprehensive loss |
(8,976) |
(2,543) |
253 |
(10,844) |
(6,935) |
56 |
||||
Per share – basic and diluted |
(0.16) |
(0.05) |
245 |
(0.19) |
(0.13) |
51 |
||||
Cash deficiency from operations (2) |
(156) |
(373) |
(58) |
(572) |
(588) |
(3) |
||||
Per share – basic and diluted |
(0.00) |
(0.01) |
(59) |
(0.01) |
(0.01) |
(6) |
||||
Realized Sale Prices |
||||||||||
Oil and NGL’s ($/bbl) |
50.48 |
58.45 |
(14) |
41.99 |
55.28 |
(24) |
||||
Natural Gas ($/mcf) |
1.37 |
2.52 |
(46) |
1.63 |
2.77 |
(41) |
||||
Oil Equivalent ($/boe) |
34.47 |
35.87 |
(4) |
30.02 |
35.02 |
(14) |
||||
Netback ($/boe) |
||||||||||
Realized sales price |
34.47 |
35.87 |
(4) |
30.02 |
35.02 |
(14) |
||||
Royalties |
(5.35) |
(1.68) |
219 |
(4.97) |
(3.15) |
58 |
||||
Production expenses |
(17.50) |
(22.33) |
(22) |
(17.77) |
(20.82) |
(15) |
||||
Transportation expenses |
(2.79) |
(2.41) |
16 |
(2.88) |
(2.49) |
16 |
||||
Operating netback ($/boe) (2) |
8.83 |
9.45 |
(7) |
4.40 |
8.56 |
(49) |
||||
General and administrative |
(10.67) |
(16.01) |
(33) |
(9.64) |
(21.38) |
(55) |
||||
Interest and other income |
(0.41) |
(0.82) |
(50) |
0.07 |
(0.42) |
(116) |
||||
Cash netback ($/boe) |
(2.25) |
(7.38) |
(69) |
(5.17) |
(13.24) |
(61) |
||||
Capital expenditures |
||||||||||
Capital expenditures |
227 |
2,343 |
(90) |
706 |
3,243 |
(78) |
||||
Net acquisitions (dispositions) (3) |
(89) |
– |
nmf(4) |
(134) |
2,309 |
(106) |
||||
Total capital expenditures |
138 |
2,343 |
(94) |
572 |
5,552 |
(90) |
||||
Liquidity |
||||||||||
Net debt (surplus) (2) |
(4,122) |
(1,882) |
119 |
(4,122) |
(1,882) |
119 |
||||
Bank facility – undrawn portion |
7,000 |
25,000 |
(72) |
7,000 |
25,000 |
(72) |
||||
Weighted average shares outstanding (5) |
||||||||||
Basic |
57,607,968 |
56,238,709 |
2 |
57,267,400 |
55,326,021 |
4 |
||||
Diluted |
57,607,968 |
56,238,709 |
2 |
57,267,400 |
55,326,021 |
4 |
||||
(1) |
Production revenue is presented gross of royalties. |
|||||||||
(2) |
Cash deficiency in operations, operating netback and net debt (surplus) are non-IFRS measures. See “Non-IFRS Measures”. |
|||||||||
(3) |
Represents the cash expenditures (proceeds) from the acquisition (sale) of assets, as applicable. |
|||||||||
(4) |
No meaningful figure. |
|||||||||
(5) |
Current common shares outstanding totals 113,585,022 |
Operational and Corporate Update
During the second quarter of 2016, Toro concentrated on improving the liquidity position of the Company through operational and corporate efficiencies and enhancement of the overall cash reserves of the Company. The second quarter of 2016 continued to witness volatile and depressed commodity prices which afforded Toro the opportunity to more closely review internal operations. As a result, Toro successfully reduced the cost structure of the business and looks to attain further cost improvements over the coming quarters. With June 2016 operating costs per unit coming in at under $15 per boe, exclusive of transportation expenses, Toro believes it is becoming increasingly well positioned to take advantage of a return to better commodity prices and future drilling programs.
From a production perspective, Toro continues to be encouraged with results from its 2015 Hamilton Lake drilling program. With now close to one year of production history, actual production continues to correlate at or above the type curve developed both internally and used by Toro’s independent reserve evaluator. The Hamilton Lake Viking type curve exceeds certain other Viking horizons both in initial production rates and estimated ultimate recovery. With 140 net sections of Alberta Viking acreage, the Company believes that it has a drilling inventory of over 600 potential horizontal infill locations which supports Toro’s value proposition.
Amended Bank Facility
As disclosed in Toro’s recent short-form prospectus dated June 22, 2016, Toro was working with its lender to amend the terms of its bank facility. The Company and its lender have since finalized a new agreement with the following material provisions:
- Toro’s demand operating line has been reduced from $7 million to $4 million and will be further reduced on October 1, 2016 to a combined level of $2 million plus amounts, if any, as determined using the bank’s standard reserve based lending practices;
- Toro’s $18 million demand development line has been withdrawn by the bank;
- Pricing on drawn amounts will be the bank’s prime lending rate plus four percent;
- All covenants and security documents essentially remain unchanged with the next scheduled semi-annual review on December 1, 2016.
Post equity financing, Toro’s balance sheet strengthened as evidenced by no bank debt outstanding and sufficient cash reserves to conduct operations inclusive of a high-graded drilling program should, in the Company’s opinion, there be a sustained recovery of commodity prices.
Capital Budget and Other Corporate Matters
The Company’s Board of Directors approved a small capital program totaling $750 thousand for the balance of 2016, exclusive of future drilling programs. The focus of the modest budget is to replace remaining rental equipment and undertake pipeline optimization projects, the objectives of which will be to further reduce operating costs and enhance production from existing wells. Funds for the program will be sourced from existing cash reserves.
Toro also announces that it has granted a total of 5,610,800 share options to officers, directors, employees and various contractors under the Company’s share option plan, including an aggregate of 4,418,300 share options to directors and officers. The options are exercisable at $0.22 per share for a period of five years from the date of grant and vest equally over three years.
About Toro Oil & Gas Ltd.
Toro is a junior oil and gas energy company listed on the TSX Venture Exchange. Toro is focused on acquiring, developing and exploiting large oil in place pools within the Alberta-Saskatchewan Viking light oil fairway. Toro intends to grow by way of organic development and strategic acquisitions while maintaining strict financial discipline to maximize shareholder return.
Abbreviations
bbls |
barrels |
bbls/d |
barrels per day |
boe |
barrels of oil equivalent |
boe/d |
barrels of oil equivalent per day |
mcf |
thousand cubic feet |
mcf/d |
thousand cubic feet per day |