FINANCIAL AND OPERATIONAL HIGHLIGHTS
Financial and operational highlights for the year ended December 31, 2012 with comparative data for 2011 are as follows.
| Years Ended December 31, | 2012 | 2011 | Change | ||||
| (000s, except per share amounts) | ($) | ($) | (%) | ||||
| Financial | |||||||
| Oil and natural gas revenues | 85,112 | 32,747 | 160 | ||||
| Funds from operations (1) | 46,088 | 11,833 | 289 | ||||
| Per share – basic (1) | 0.69 | 0.21 | 229 | ||||
| Per share – diluted (1) | 0.68 | 0.21 | 224 | ||||
| Cash flow from operating activities | 62,292 | 7,100 | 777 | ||||
| Net income ( loss) | 7,181 | (12,573 | ) | 157 | |||
| Per share – basic | 0.11 | (0.22 | ) | 150 | |||
| Per share – diluted | 0.11 | (0.22 | ) | 150 | |||
| Capital expenditures (2) | 144,753 | 187,557 | (23 | ) | |||
| Working capital deficit (3) | 77,586 | 16,901 | (359 | ) | |||
| Shareholders’ equity | 212,090 | 167,568 | 27 | ||||
| (000s) | (#) | (#) | (%) | ||||
| Share Data | |||||||
| At year-end | 71,080 | 63,152 | 13 | ||||
| Weighted average – basic | 66,902 | 56,407 | 19 | ||||
| Weighted average – diluted | 68,130 | 56,407 | 21 | ||||
| Operating(4) | |||||||
| Production | |||||||
| Natural gas (mcf/d) | 8,902 | 6,974 | 28 | ||||
| Crude oil (bbls/d) | 2,472 | 561 | 341 | ||||
| NGLs (bbls/d) | 267 | 137 | 95 | ||||
| Total (boe/d) | 4,223 | 1,860 | 127 | ||||
| Average wellhead prices | |||||||
| Natural gas ($/mcf) | 2.51 | 3.71 | (32 | ) | |||
| Crude oil and NGLs ($/bbl) | 76.59 | 91.03 | (16 | ) | |||
| Total ($/boe) | 55.07 | 48.23 | 14 | ||||
| Netbacks | |||||||
| Operating netback ($/boe) | 32.66 | 23.41 | 40 | ||||
| Funds flow netback ($/boe)(1) | 29.75 | 17.36 | 71 | ||||
| Reserves | |||||||
| Proved (mboe) | 14,358 | 7,398 | 94 | ||||
| Proved plus probable (mboe) | 20,188 | 9,9694 | 108 | ||||
| Total net present value – proved plus probable | 373,009 | 175,804 | 112 | ||||
| (10% discount, before tax) ($000s) | |||||||
| Undeveloped land | |||||||
| Gross (acres) | 300,405 | 284,780 | 5 | ||||
| Net (acres) | 279,934 | 254,405 | 10 | ||||
| Gross (net) wells drilled | |||||||
| Gas (#) | — (– | ) | 1 (1.0 | ) | — | ||
| Oil (#) | 28 (26.8 | ) | 15 (13.0 | ) | 87 (106 | ) | |
| Standing (#) | 2 (2.0 | ) | 1 (0.4 | ) | 100 (400 | ) | |
| Dry and abandoned (#) | — (– | ) | 3 (3.0 | ) | — | ||
| Total (#) | 30 (28.8 | ) | 20 (17.4 | ) | 50 (66 | ) | |
| Average working interest (%) | 96 | 87 | 10 | ||||
(1) Funds from operations, funds from operations per share and funds flow netback are not recognized measures under Canadian generally accepted accounting principles. Refer to the commentary under “Reader Advisory – Non-GAAP Measures” for further discussion.
(2) Total capital expenditures, including acquisitions.
(3) Current assets less current liabilities, excluding current derivative financial instruments.
(4) For a description of the boe conversion ratio, refer to the commentary under “Reader Advisory – BOE Presentation” for further discussion.
Reader Advisory
Forward-Looking Statements. Certain statements contained in this press release may constitute forward-looking statements. These statements relate to future events or DeeThree’s 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”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. DeeThree believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon by investors. These statements speak only as of the date of this press release and are expressly qualified, in their entirety, by this cautionary statement.
In particular, this press release contains forward-looking statements, pertaining to the following: projections of market prices and costs, supply and demand for oil and natural gas, the quantity of reserves, oil and natural gas production levels, capital expenditure programs, treatment under governmental regulatory and taxation regimes, expectations regarding DeeThree’s ability to raise capital and to continually add to reserves through acquisitions and development, and projections of market prices and costs.
With respect to forward-looking statements contained in this press release, DeeThree has made assumptions regarding, among other things: the legislative and regulatory environments of the jurisdictions where DeeThree carries on business or has operations, the impact of increasing competition, and DeeThree’s ability to obtain additional financing on satisfactory terms.
DeeThree’s actual results could differ materially from those anticipated in these forward-looking statements as a result of risk factors that may include, but are not limited to: volatility in the market prices for oil and natural gas; uncertainties associated with estimating reserves; uncertainties associated with DeeThree’s ability to obtain additional financing on satisfactory terms; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; incorrect assessments of the value of acquisitions; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel.
This forward-looking information represents DeeThree’s views as of the date of this document and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. DeeThree has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. . Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
BOE Presentation. References herein to “boe” mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Non-GAAP Measures. The term cash flow does not have any standardized meaning as prescribed by GAAP and, therefore, is considered non-GAAP measures. Cash flow is calculated based on cash flow from continuing operating activities before changes in non-cash working capital. Management believes that cash flow is a supplemental measure and utilizes it as a key measure to assess the ability of the Company to finance operating activities, capital expenditures and debt repayments. Cash flow as presented is not intended to represent cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP and should not be construed as an alternative to cash flow from operations.
DeeThree Exploration Ltd.
Martin Cheyne
President and Chief Executive Officer
(403) 263-9130