The 2013 Capital Budget will encompass the continued, focused development of RMP”s 100%-owned, Montney light oil resource plays. At Waskahigan in West Central Alberta, the Company plans to drill eight wells with five wells planned at Ante Creek and one well at Grizzly, which is located to the southeast of the Company”s Waskahigan asset base. The drilling and completion expenditure component of RMP”s 2013 Capital Budget is projected to approximate $57 million, with remaining budgeted funds of approximately $28 million allocated towards investments in well-site equipment, field facilities, gathering lines and strategic undeveloped land expansion.
Based on the budgeted capital expenditures anticipated within the 2013 Capital Budget, average daily production for fiscal 2013 is projected to range 6,000 to 6,500 boe/d, weighted approximately 60% light crude oil and NGLs and 40% natural gas. This forecasted production range represents a 15% to 25% increase over the Company”s 2012 average daily production estimate. Notwithstanding strong budgeted production growth within a cash flow-based capital program, RMP”s forecast assumes limited gas processing capacity at Ante Creek of approximately 3.0 MMcf/d. Presently, the Company is facility limited for processing of associated solution gas at Ante Creek. The associated Montney solution gas is conserved and processed at an area operator”s gas plant. Oil production from Ante Creek is presently being trucked into RMP”s Waskahigan oil battery. The Company is presently evaluating numerous gas take-away alternatives in order to increase processing capacity for 2013. Additionally, the forecasted production assumes limited ability to truck oil during spring break-up surface conditions at Ante Creek. The Company is factoring into its 2013 forecast reduced oil trucking loads of 50% during the months of April and May.
Assuming the median of the forecasted average daily production range and utilizing the current forward 2013 pricing assumptions of US$88.50 per bbl for West Texas Intermediate (“WTI”) oil, an AECO gas price of C$3.05 per gigajoule, an oil differential of C$11.30 per bbl and an above par Canadian dollar exchange rate of $1.01 (US$/C$), the Company”s funds from operations for 2013 is estimated at $0.80 per basic share or approximately $83 million in aggregate, which represents a significant increase of 60% and 66%, respectively, over projected 2012 funds from operations. Field operating netbacks for 2013 are forecasted at approximately $40/boe, as compared to the estimated $30/boe netback for 2012, reflecting the Company”s successful ongoing transition to a low cost, light oil-weighted producer resulting in stronger internal cash flow generating capabilities. For calendar 2013, the Company has 1,000 bbls/d of crude oil hedged with a fixed weighted average price of C$100.17/bbl.
Based on the 2013 Capital Budget and projected funds from operations, RMP”s year-end 2013 net debt is estimated at $78 million or approximately 0.9 times forecasted 2013 funds from operations, with significant un-utilized credit capacity of approximately $32 million.
Abbreviations
| bbl | barrel | Mcf/d | thousand cubic feet per day |
| Mbbl | thousand barrels | NGLs | natural gas liquids |
| bbls/d | barrels per day | MMcf/d | million cubic feet per day |
| boe | barrels of oil equivalent | Bcf | billion cubic feet |
| Mboe | thousand barrels of oil equivalent | psi | pounds per square inch |
| boe/d | barrels of oil equivalent per day | kPa | kilopascals |
Reader Advisories
The Company anticipates remaining disciplined but flexible with its 2013 exploration and development capital expenditures as it monitors business conditions and commodity prices throughout fiscal 2013. Where deemed prudent, it may make adjustments to its 2013 Capital Budget. Actual spending may vary due to a variety of factors, including drilling results, crude oil and natural gas prices, economic conditions, prevailing debt and/or equity markets, field services and equipment availability, permitting and any future acquisitions. The timing of most capital expenditures is discretionary. Consequently, the Company has a significant degree of flexibility to adjust the level of its capital investments as circumstances warrant. Additionally, to enhance flexibility of RMP”s capital program, the Company typically does not enter into material long-term obligations with any of its drilling contractors or service providers with respect to its operated crude oil and natural gas properties.
The information in this news release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “budget”, “plan”, “continue”, “estimate”, “approximate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “would” and similar expressions. More particularly and without limitation, this new release contains forward looking information relating to: 2013 Capital Budget, forecasted average daily production rates for 2013 and 2012, funds from operations for 2013 and 2012, field operating netbacks for 2013 and 2012, 2013 drilling plans, sources of funds, production and funds from operations growth rate, liquids-weighting, and year-end 2013 estimated net debt and un-utilized credit capacity. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company”s control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry ; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. The Company”s actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that the Company will derive from them. The Company”s forward-looking statements are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
In this news release, reserves and production data are commonly stated in barrels of oil equivalent (“boe”) using a six to one conversion ratio when converting thousands of cubic feet of natural gas (“mcf”) to barrels of oil (“bbl”) and a one to one conversion ratio for natural gas liquids (“NGLs”). Such conversion may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
As an indicator of the Company”s performance, the term funds from operations contained within this news release should not be considered as an alternative to, or more meaningful than, cash flow from operating, financing or investing activities, as determined in accordance with International Financial Reporting Standards (“IFRS”). This term is not a recognized measure, does not have a standardized meaning nor is it a financial measure under IFRS. Funds from operations is widely accepted as a financial indicator of an exploration and production company”s ability to generate cash which is used to internally fund exploration and development activities and to service debt. This measure is widely used by shareholders and investors in the valuation, comparison and investment recommendations of companies within the natural gas and crude oil exploration and production industry. Funds from operations, as disclosed within this news release, represents cash flow from operating activities before: expensed corporate acquisition-related costs, decommissioning obligation cash expenditures and changes in non-cash working capital from operating activities. The Company presents funds from operations per share whereby per share amounts are calculated consistent with the calculation of earnings per share.
Net debt refers to outstanding bank debt plus working capital deficit (excludes current unrealized amounts pertaining to risk management commodity contracts). Net debt is not a recognized measure under IFRS. Field operating netbacks refer to realized wellhead revenue less royalties, operating expenses and transportation costs per barrel of oil equivalent (“boe”). Field operating netback is not a recognized measure under IFRS and does not have a standardized meaning.