Investor Relations
Toll free: 1-855-813-0313
LONGVIEW OIL CORP.
700, 400 -3rd Avenue SW
Calgary, Alberta
T2P 4H2
Phone: (403) 718-8000
Fax: (403) 718-8300
Web Site: www.longviewoil.com
E-mail: ir@longviewoil.com
CALGARY, March 27, 2013 /CNW/ – Longview Oil Corp. (“Longview” or the “Corporation”) is pleased to announce the financial and operating results for the year ended December 31, 2012 and the accompanying reserves as of December 31, 2012.
Three months ended | Year ended | |||||||||||
December 31, | December 31, | |||||||||||
2012 | 2011 | 2012 | 2011 (1) | |||||||||
Financial ($000, except as otherwise indicated) | ||||||||||||
Sales including realized hedging | $ | 36,388 | $ | 43,303 | $ | 141,186 | $ | 112,778 | ||||
per share (2) | $ | 0.78 | $ | 0.93 | $ | 3.02 | $ | 3.37 | ||||
per boe | $ | 62.70 | $ | 68.99 | $ | 61.87 | $ | 68.60 | ||||
Funds from operations | $ | 15,639 | $ | 21,047 | $ | 60,420 | $ | 53,736 | ||||
per share (2) | $ | 0.33 | $ | 0.45 | $ | 1.29 | $ | 1.61 | ||||
per boe | $ | 26.95 | $ | 33.53 | $ | 26.47 | $ | 32.69 | ||||
Net income (loss) and comprehensive income (loss) | $ | (21,466) | $ | 4,320 | $ | (8,268) | $ | 20,529 | ||||
per share (2) | $ | (0.46) | $ | 0.09 | $ | (0.18) | $ | 0.61 | ||||
Dividends declared | $ | 7,025 | $ | 7,012 | $ | 20,085 | $ | 18,695 | ||||
per share (3) | $ | 0.15 | $ | 0.15 | $ | 0.60 | $ | 0.40 | ||||
Total capital expenditures | $ | 11,763 | $ | 25,645 | $ | 44,491 | $ | 55,033 | ||||
Working capital deficit (4) | $ | 11,712 | $ | 20,074 | $ | 11,712 | $ | 20,074 | ||||
Bank indebtedness | $ | 111,895 | $ | 90,979 | $ | 111,895 | $ | 90,979 | ||||
Shares outstanding at end of period (000) | 46,837 | 46,750 | 46,837 | 46,750 | ||||||||
Basic weighted average shares (000) | 46,837 | 46,750 | 46,807 | 33,459 | ||||||||
Operating | ||||||||||||
Daily Production | ||||||||||||
Crude oil and NGLs (bbls/d) | 4,887 | 5,120 | 4,745 | 4,690 | ||||||||
Natural gas (mcf/d) | 8,526 | 10,215 | 8,938 | 9,514 | ||||||||
Total boe/d @ 6:1 | 6,308 | 6,823 | 6,235 | 6,276 | ||||||||
Average prices (including hedging) | ||||||||||||
Crude oil and NGLs ($/bbl) | $ | 74.94 | $ | 85.01 | $ | 76.47 | $ | 84.06 | ||||
Natural gas ($/mcf) | $ | 3.44 | $ | 3.47 | $ | 2.56 | $ | 3.81 | ||||
Proved plus probable reserves | ||||||||||||
Crude oil & NGLs (mbbls) | 30,204 | 29,897 | ||||||||||
Natural gas (bcf) | 48.4 | 47.7 | ||||||||||
Total mboe | 38,263 | 37,853 | ||||||||||
Reserve life index (years) (5) | 16.6 | 15.2 | ||||||||||
(1) | Longview’s operations commenced on April 14, 2011 and the year ended December 31, 2011 includes financial and operational results for only 262 days. |
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(2) | Based on basic weighted average shares outstanding. | |||||||
(3) | Based on shares outstanding at each dividend record date. | |||||||
(4) | Working capital deficit includes trade and other receivables, prepaid expenses and deposits, trade and other accrued liabilities and due to parent. |
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(5) | Based on fourth quarter average production rates. |
Stable Production and Funds from Operations Sustains Dividends
Reserve Additions Replace 118% of Production
Commodity Hedging Program
Looking Forward
Average daily production | 6,200 boe/d to 6,300 boe/d | |||||||||||||
Oil & liquids % | 79% | |||||||||||||
Royalty rate | 19% to 21% | |||||||||||||
Operating expense | $19.00/boe to $20.00/boe | |||||||||||||
Capital expenditures | $36 million |
Financial Statements and MD&A
APPENDIX 1 – Reserves Summary
Longview engaged our independent qualified reserves evaluator Sproule Associates Ltd. (“Sproule”) to update the reserves analysis for the Company in accordance with National Instrument 51-101 and the COGE Handbook. Reserves and production information included herein is stated on a Company Interest basis (before royalty burdens and including royalty interests receivable) unless noted otherwise. This summary contains several cautionary statements that are specifically required by NI 51-101. In addition to the detailed information disclosed in this press release, more detailed information on a net interest basis (after royalty burdens and including royalty interests) and on a gross interest basis (before royalty burdens and excluding royalty interests) will be included in Longview’s Annual Information Form (“AIF”) and will be available at www.longviewoil.com and www.sedar.com.
Highlights – Company Interest Reserves (Working Interests plus Royalty Interests Receivable)
December 31, 2012 | December 31, 2011 | |
Proved plus probable reserves (mboe) | 38,263 | 37,853 |
Present Value of 2P reserves discounted at 10%, before tax ($000)(1) | $609,507 | $728,401 |
Net Asset Value per Share discounted at 10%, before tax (2) | $11.40 | $15.12 |
Reserve Life Index (proved plus probable – years) (3) | 16.6 | 15.2 |
Reserves per Share (proved plus probable) (2) | 0.81 | 0.80 |
Bank debt per boe of reserves (4) | $3.29 | $3.03 |
(1) | Assumes that development of each property will occur, without regard to the likely availability to the Company of funding required for that development. |
(2) | Based on 46.84 million shares outstanding at December 31, 2012 and 46.75 million shares outstanding at December 31, 2011. |
(3) | Based on Q4 average production and company interest reserves. |
(4) | Using boe’s may be misleading, particularly if used in isolation. In accordance with NI 51-101, a boe conversion ratio for natural gas of 6 mcf: 1 bbl has been used which 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. |
Company Interest Reserves (Working Interests plus Royalty Interests Receivable)
Summary as at December 31, 2012
Light & Medium Oil (mbbl) |
Heavy Oil (mbbl) |
Natural Gas Liquids (mbbl) |
Natural Gas (mmcf) |
Oil Equivalent (mboe) |
|
Proved | |||||
Developed Producing | 9,082 | 1,349 | 1,181 | 17,753 | 14,571 |
Developed Non-producing | 430 | 136 | 12 | 210 | 613 |
Undeveloped | 3,901 | 297 | 416 | 9,565 | 6,208 |
Total Proved | 13,413 | 1,782 | 1,609 | 27,529 | 21,392 |
Probable | 9,490 | 2,852 | 1,060 | 20,825 | 16,872 |
Total Proved + Probable | 22,902 | 4,633 | 2,669 | 48,354 | 38,263 |
Proved plus Probable reserve additions for Company Interest Reserves were 2,693 mboe in 2012 which replaced 118% of annual production of 2,282 mboe.
Gross Working Interest Reserves (Working Interest only)
Summary as at December 31, 2012
Light & Medium Oil (mbbl) |
Heavy Oil (mbbl) |
Natural Gas Liquids (mbbl) |
Natural Gas (mmcf) |
Oil Equivalent (mboe) |
|
Proved | |||||
Developed Producing | 8,928 | 1,341 | 1,164 | 17,669 | 14,378 |
Developed Non-producing | 409 | 133 | 7 | 193 | 580 |
Undeveloped | 3,901 | 292 | 416 | 9,565 | 6,204 |
Total Proved | 13,238 | 1,766 | 1,587 | 27,427 | 21,162 |
Probable | 9,372 | 2,836 | 1,045 | 20,762 | 16,714 |
Total Proved + Probable | 22,610 | 4,602 | 2,632 | 48,189 | 37,876 |
Present Value of Future Net Revenue using Sproule price and cost forecasts (1)(2)
($000)
Before Income Taxes Discounted at | ||||
0% | 10% | 15% | ||
Proved | ||||
Developed Producing | $ 458,765 | $ 280,167 | $ 237,724 | |
Developed Non-producing | 21,783 | 14,436 | 12,326 | |
Undeveloped | 147,088 | 66,250 | 45,504 | |
Total Proved | 627,636 | 360,853 | 295,554 | |
Probable | 683,735 | 248,654 | 173,426 | |
Total Proved + Probable | $ 1,311,371 | $ 609,507 | $ 468,980 |
(1) | Longview’s crude oil, natural gas and natural gas liquid reserves were evaluated using Sproule’s product price forecast effective December 31, 2012 prior to the provision for income taxes, interests, debt services charges and general and administrative expenses. It should not be assumed that the discounted future revenue estimated by Sproule represents the fair market value of the reserves. | ||||||||
(2) | Assumes that development of each property will occur, without regard to the likely availability to the Company of funding required for that development. |
Sproule Price Forecasts
The present value of future net revenue at December 31, 2012 was based upon crude oil and natural gas pricing assumptions prepared by Sproule effective December 31, 2012. These forecasts are adjusted for reserve quality, transportation charges and the provision of any applicable sales contracts. The price assumptions used over the next seven years are summarized in the table below:
Year |
WTI Crude Oil ($US/bbl) |
Edmonton Light Crude Oil ($Cdn/bbl) |
Alberta AECO-C Natural Gas ($Cdn/mmbtu) |
Henry Hub Natural Gas ($US/mmbtu) |
Exchange Rate ($US/$Cdn) |
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2013 | 89.63 | 84.55 | 3.31 | 3.65 | 1.001 | ||||||
2014 | 89.93 | 89.84 | 3.72 | 4.06 | 1.001 | ||||||
2015 | 88.29 | 88.21 | 3.91 | 4.24 | 1.001 | ||||||
2016 | 95.52 | 95.43 | 4.70 | 5.04 | 1.001 | ||||||
2017 | 96.96 | 96.87 | 5.32 | 5.66 | 1.001 | ||||||
2018 | 98.41 | 98.32 | 5.40 | 5.74 | 1.001 | ||||||
2019 | 99.89 | 99.79 | 5.49 | 5.83 | 1.001 |
Net Asset Value using Sproule price and cost forecasts (before income taxes)
The following net asset value (“NAV”) table shows what is normally referred to as a “produce-out” NAV calculation under which the current value of the Company’s reserves would be produced at forecast future prices and costs. The value is a snapshot in time and is based on various assumptions including commodity prices and foreign exchange rates that vary over time.
Before Income Taxes Discounted at | |||||||||
($000, except per share amounts) | 0% | 10% | 15% | ||||||
Net asset value per share- December 31, 2011 | $ | 31.09 | $ | 15.12 | $ | 11.84 | |||
Present value proved and probable reserves | $ | 1,311,371 | $ | 609,507 | $ | 468,980 | |||
Undeveloped acreage and seismic (2) | 48,886 | 48,886 | 48,886 | ||||||
Working capital (deficit) and other | (12,764) | (12,764) | (12,764) | ||||||
Bank debt | (111,895) | (111,895) | (111,895) | ||||||
Net asset value – December 31, 2012 | $ | 1,235,598 | $ | 533,734 | $ | 393,207 | |||
Net asset value per share (1) – December 31, 2012 | $ | 26.38 | $ | 11.40 | $ | 8.40 |
(1) | Based on 46.84 million shares outstanding at December 31, 2012. | |||||
(2) | Internal estimate. |
Gross Working Interest Reserves Reconciliation
Proved | Light & Medium Oil (mbbl) |
Heavy Oil (mbbl) |
Natural Gas Liquids (mbbl) |
Natural Gas (mmcf) |
Oil Equivalent (mboe) |
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Opening balance Dec. 31, 2011 | 12,691 | 2,060 | 1,495 | 26,741 | 20,703 | |||||
Extensions | 120 | 143 | 178 | 4,227 | 1,145 | |||||
Improved recovery | – | – | – | – | – | |||||
Infill drilling | 869 | 31 | 65 | 594 | 1,064 | |||||
Discoveries | – | – | – | – | – | |||||
Economic factors | 2 | (1) | (18) | (496) | (100) | |||||
Technical revisions | 835 | (219) | 77 | (368) | 632 | |||||
Acquisitions | – | – | – | – | – | |||||
Dispositions | – | – | – | – | – | |||||
Production | (1,279) | (248) | (210) | (3,271) | (2,282) | |||||
Closing balance at Dec. 31, 2012 | 13,238 | 1,766 | 1,587 | 27,427 | 21,162 | |||||
Proved + Probable | Light & Medium Oil (mbbl) |
Heavy Oil (mbbl) |
Natural Gas Liquids (mbbl) |
Natural Gas (mmcf) |
Oil Equivalent (mboe) |
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Opening balance Dec. 31, 2011 | 22,115 | 5,055 | 2,464 | 47,677 | 37,580 | |||||
Extensions | 333 | 300 | 266 | 6,342 | 1,956 | |||||
Improved recovery | – | – | – | – | – | |||||
Infill drilling | 1,460 | 26 | 99 | 898 | 1,736 | |||||
Discoveries | – | – | – | – | – | |||||
Economic factors | 37 | (1) | (6) | (161) | 4 | |||||
Technical revisions | (56) | (530) | 19 | (3,296) | (1,118) | |||||
Acquisitions | – | – | – | – | – | |||||
Dispositions | – | – | – | – | – | |||||
Production | (1,279) | (248) | (210) | (3,271) | (2,282) | |||||
Closing balance at Dec. 31, 2012 | 22,610 | 4,602 | 2,632 | 48,189 | 37,876 |
Finding, Development & Acquisitions Costs (“FD&A”) (1)(2)(3)
2012 FD&A Costs – Gross Working Interest Reserves excluding Future Development Capital
Proved | Proved + Probable | |||||
Capital expenditures ($000) | $ | 44,491 | $ | 44,491 | ||
Acquisitions net of dispositions ($000) | – | – | ||||
Total capital ($000) | $ | 44,491 | $ | 44,491 | ||
Total mboe, end of year | 21,162 | 37,876 | ||||
Total mboe, beginning of year | 20,703 | 37,580 | ||||
Production, mboe | 2,282 | 2,282 | ||||
Reserve additions, mboe | 2,741 | 2,578 | ||||
FD&A costs ($/boe) | ||||||
2012 | $ | 16.23 | $ | 17.26 | ||
2011 | $ | 26.14 | $ | 15.07 | ||
Three year average (4) | $ | 25.08 | $ | 15.21 | ||
F&D costs ($/boe) | ||||||
2012 | $ | 16.23 | $ | 17.26 | ||
2011 | $ | 17.40 | $ | 16.48 | ||
Three year average (4) | $ | 16.86 | $ | 16.82 |
NI 51-101
2012 FD&A Costs – Gross Working Interest Reserves including Future Development Capital
Proved | Proved + Probable | ||||
Capital expenditures ($000) | $ | 44,491 | $ | 44,491 | |
Acquisitions net of dispositions ($000) | – | – | |||
Net change in Future Development Capital ($000) | 22,455 | 30,531 | |||
Total capital ($000) | $ | 66,946 | $ | 75,022 | |
Reserve additions, mboe | 2,741 | 2,578 | |||
FD&A costs ($/boe) | |||||
2012 | $ | 24.42 | $ | 29.10 | |
2011 | $ | 27.81 | $ | 16.43 | |
Three year average (4) | $ | 27.45 | $ | 17.20 | |
F&D costs ($/boe) | |||||
2012 | $ | 24.42 | $ | 29.10 | |
2011 | $ | 29.56 | $ | 32.63 | |
Three year average (4) | $ | 27.18 | $ | 31.09 |
(1) | Under NI 51-101, the methodology to be used to calculate FD&A costs includes incorporating changes in future development capital (“FDC”) required to bring the proved undeveloped and probable reserves to production. For continuity, Longview has presented herein FD&A costs calculated both excluding and including FDC. |
(2) | The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. Changes in forecast FDC occur annually as a result of development activities, acquisition and disposition activities and capital cost estimates that reflect Sproule’s best estimate of what it will cost to bring the proved undeveloped and probable reserves on production. |
(3) | In all cases, the FD&A number is calculated by dividing the identified capital expenditures by the applicable reserve additions. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 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. |
(4) | Longview commenced operations on April 14, 2011 with the acquisition of certain oil-weighted assets from Advantage Oil & Gas Ltd. Therefore, the three year average figures are calculated beginning April 14, 2011. |
Forward-Looking Statements
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.
Investor Relations
Toll free: 1-855-813-0313
LONGVIEW OIL CORP.
700, 400 -3rd Avenue SW
Calgary, Alberta
T2P 4H2
Phone: (403) 718-8000
Fax: (403) 718-8300
Web Site: www.longviewoil.com
E-mail: ir@longviewoil.com