CALGARY, April 1, 2013 /CNW/ – TriOil Resources Ltd. (“TriOil” or the “Company” – TSXV:TOL) is pleased to announce that it has filed its audited financial statements and related Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2012 on SEDAR. Selected financial and operational information is outlined below and should be read in conjunction with TriOil’s audited financial statements and related MD&A and Annual Information Form, available for review at www.trioilresources.com and www.sedar.com.
- Increased 2012 average production by 65% to 2,128 BOE/d (73% oil and NGLs) from 1,287 BOE/d (52% oil and NGLs) in 2011. Increased fourth quarter average production volumes by 42% to 2,821 BOE/d (76% oil and natural gas liquids “NGLs”) from the third quarter of 2012;
- Increased the Company’s oil and NGL weighting to 73% in 2012 from 52% in 2011;
- Increased funds from operations by 152% to $24.9 million ($0.46 per share) in 2012 from $9.9 million ($0.31 per share) in 2011. Increased funds from operations by 147% to $8.8 million ($0.14 per share) in the fourth quarter of 2012 from $3.6 million ($0.10 per share) in the fourth quarter of 2011;
- Achieved record corporate net earnings in 2012 of $10.9 million ($0.20/share) compared to a loss of $15.4 million in 2011;
- Increased operating netback (before hedging) by 24% to $37.57 per BOE in 2012 compared to $30.41 in 2011. Operating netback (before hedging) in the fourth quarter of 2012 increased by 12% to $37.98 per BOE from $33.95 per BOE in the third quarter of 2012;
- Reduced operating costs in 2012 by 20% to $13.11 per BOE from $16.36 per BOE in 2011 and achieved a record low $11.73 per BOE operating cost in the fourth quarter of 2012;
- Executed a sizeable and successful $119 million capital program (net of dispositions), with $95 million directed to organic growth opportunities and $30.6 million directed to major production facilities, pipeline infrastructure and undeveloped land acquisitions;
- Maintained a strong balance sheet exiting the year with $23.3 million net debt on total bank lines of $70 million. Based on strong production and reserves growth, the Company’s credit facilities have been expanded by $20 million to $90 million;
- Increased proved reserves by 110% to 12.2 million BOE and increased proved plus probable (“P+P”) reserves by 97% to 20.2 million BOE;
- Increased total proved reserves per fully diluted share by 38% and P+P reserves per fully diluted share by 30%;
- Proved plus probable reserve additions replaced 1,435% of 2012 production and proved reserves additions replaced 961% of 2012 production;
- Generated solid 2012 total P+P finding, development and acquisition (“FD&A”) costs of $16.62 per BOE, including future development capital (“FDC”) and $11.06 per BOE excluding FDC. Utilizing capital expenditures directed to organic growth opportunities of $95.0 million the Company’s P+P FD&A cost is $13.85 per BOE, including FDC and $8.29 per BOE excluding FDC;
- Achieved a P+P recycle ratio of 3.4 times (excluding FDC) and 2.3 times (including FDC) based on 2012 operating netbacks (before hedging);
- The Company’s reserve life index expanded to 11.9 years on a total proved reserve basis and 19.6 years on a P+P reserves basis based on fourth quarter production;
- TriOil’s net asset value is estimated at $4.24 per diluted share at December 31, 2012 based on 10% discount (before tax) P+P reserves at December 31, 2012 and an independent land evaluation of our undeveloped land.
TriOil executed a very active drilling program during the first quarter of 2013 and we plan to continue active field operations through the month of April. The Company drilled 13 (9.4 net) wells and completed 8 (5.6 net) wells with a 100% success rate during the quarter. Our Lochend Cardium drilling and completion operations were cut short by warm weather and road bans that went into effect on March 1, 2012. As a result, we drilled 4 (2.7 net) wells and completed 2 (1.5 net) wells at Lochend in the first 2 months of the year and brought 2 (1.8 net) wells on production by the end of the first quarter. One (0.5 net) well that was completed during the quarter will be placed on production in July, while the additional 2 (1.4 net) wells drilled will be completed and placed on production as soon as equipment can be moved onto the locations.
We expanded our Kaybob Dunvegan drilling program to offset the reduced Lochend activity and have had 2 drilling rigs running at Kaybob plus a dedicated completion crew for the past month. To date this year we have drilled 8 (6.1 net) wells and completed 6 (4.3 net) wells at Kaybob. We expect to have a total of 9 (6.7 net) wells drilled and completed on our Kaybob Dunvegan light oil project by the end of April. Three (2.2 net) Kaybob wells were brought on production in late March and the remaining 6 (4.5 net) Kaybob wells are expected to be placed on production in the April to mid May period.
On the facilities front, TriOil is participating as to its 21 percent interest in the expansion of the Lochend oil battery from its current 5,000 bbl per day capacity to 10,000 bbl per day. Our budgeted capital for the expanded facility is $1.7 million and we expect that the expansion will be completed and operational by May.
Bank Lines Expanded
Based on the strong reserve additions achieved in 2012 and increased production levels, the lender has agreed to expand the Company’s main revolving credit facility by $20 million from $55 million to $75 million. Coupled with a development facility of $15 million, unchanged from the prior facility, the Company’s total credit facilities have been increased to $90 million from the previous $70 million.
Strategic Alternatives Update
TriOil’s independent committee of directors (the “Special Committee”) continues to work with its financial advisors in connection with the strategic alternatives process. Specifically, under the direction of the Special Committee, the financial advisors to the Special Committee and management have commenced populating the virtual data room to be used in connection with such process and continue their build out of the information memorandum that will be provided to interested parties. Following the completion of the virtual data room and information memorandum, expected within the week, the Special Committee’s financial advisors will immediately begin contacting a broad spectrum of parties to solicit interest in a possible strategic transaction with the Company.
Annual General Meeting
The annual general and special meeting of the holders of class A shares of the Company will be held at The Metropolitan Conference Centre 333 – 4th Avenue S.W. Calgary, Alberta, on Thursday, June 27, 2013, at 1:00pm (MST).
TriOil posted strong growth across the board in 2012 as the Company transitioned toward a pure development growth phase following 2 years focused primarily on resource capture, play delineation and facilities/infrastructure construction at Lochend and Kaybob. Our 2 key light oil resource plays generated top tier results for the Company in 2012, highlighted by:
- 110% Proved reserve growth
- 97% P+P reserve growth
- 38% per fully diluted share Proved reserve growth
- 30% per share P+P reserve growth
- $16.62 per BOE P+P FD+A costs (including FDC)
- 2.3 times P+P recycle ratio (including FDC)
- 1,435% production replacement with P+P reserves additions
- 65% average annual production growth
- 152% growth in funds from operations
- 48% per share growth in funds from operations
- 23% growth in operating netbacks
- 20% reduction in operating costs
With a strong balance sheet, significant undeveloped land positions, large scale de-risked development drilling inventories and ownership/operatorship of key production facilities on two proven light oil resource plays, TriOil is well positioned to deliver strong, multi-year per share growth.
Drilling results to date from our 2013 capital program are ahead of budgeted estimates and the Company is on track to meet or exceed its 2013 guidance. As previously released we are forecasting a capital expenditure program of $93 million, average production of 3,900 – 4,100 BOE per day, exit production of 4,400 BOE per day, cash flow from operations of $57 million and a year-end 2013 net debt of $60 million on current bank lines of $90 million.
Current production exceeds 4,000 BOE per day (65% oil and NGLs) with 5 (3.5 net) wells completed and waiting on production facility construction, 5 (3.7 net) wells drilled and waiting on completion, 1(0.7 net) well currently drilling and an active drilling program planned for the second half of the year.
We wish to thank the very talented and dedicated TriOil Team for the outstanding 2012 results and a great start to 2013.
|Financial and Operating Results|
|Three months ended December 31,||Year ended December 31,|
|2012||2011||% Change||2012||2011||% Change|
|(000s, except per share numbers)|
|Total petroleum and natural gas sales||17,080||8,333||105||50,051||26,580||88|
|Funds from operations (1)||8,812||3,572||147||24,911||9,897||152|
|Per share – diluted||0.14||0.10||40||0.46||0.31||48|
|Net income (loss)||5,099||(13,190)||–||10,895||(15,400)||–|
|Per share – basic and diluted||0.08||(0.37)||–||0.20||(0.48)||–|
|Net debt (working capital) (2)||23,302||(10,108)||(331)||23,302||(10,108)||(331)|
|Weighted average shares outstanding|
|Average daily production|
|Crude oil and NGLs (bbls/d)||2,132||850||151||1,563||663||136|
|Natural gas (mcf/d)||4,133||3,346||24||3,393||3,745||(9)|
|Average sales prices|
|Crude oil and NGLs ($/bbl)||80.21||92.75||(14)||81.73||87.51||(7)|
|Natural gas ($/mcf)||3.54||3.50||1||2.66||3.95||(33)|
|Wells drilled – gross (net)||5(3.9)||5(2.5)||–||32(21.4)||13(6.9)||–|
|Drilling success rate (%)||100||100||–||100||92||–|
|Operating netback ($/boe)|
|Oil and natural gas sales||65.80||64.33||2||64.25||56.57||14|
|Operating netback before hedging||37.98||42.23||(10)||37.57||30.41||24|
|Realized gain (loss) on financial derivative contracts||2.37||(2.10)||(213)||0.23||0.26||(12)|
|(1)||Funds from (used in) operations is a non-GAAP measure and is calculated as cash flow from operating activities before the change in non-cash working capital, abandonment expenditures and transaction costs.|
|(2)||Net debt (working capital) is a non-GAAP measure and is calculated as current assets less current liabilities and excludes financial derivative contracts and flow through share liability.|
|(3)||Capital expenditures include property acquisitions and are presented net of proceeds of disposals.|
Corporate Reserves Summary
Sproule Associated Limited (“Sproule”) was engaged to prepare evaluations of the Company’s reserves as of December 31, 2012. The evaluations of petroleum and natural gas reserves were conducted pursuant to National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook and were based on Sproule’s forecast price assumptions as at December 31, 2012.
As at December 31, 2012, TriOil’s P+P reserves were evaluated at 20,202 MBOE and total proved (“TP”) reserves were evaluated at 12,242 mBOE. On a BOE basis, TriOil replaced 1435% of production with P+P reserve additions in 2012 and 961% of production with TP reserve additions. The Company’s reserve life indices are 19.6 years based on P+P reserves and 11.9 years based on TP reserves based on fourth quarter 2012 production of 2,821 BOE/d.
|December 31, 2012 Summary Reserves (Gross)|
|Proved Developed Producing||3,001.3||11,850.0||238.0||5,214.3||114,198.2|
|Proved Developed Non Producing||126.9||1,296.0||42.0||384.9||6,593.0|
|Total Proved Developed||3,128.2||13,146.0||280.0||5,599.2||120,791.2|
|Total Proved + Probable||9,718.5||57,756.0||857.7||20,202.4||247,943.4|
Corporate Gross Working Interest Reserves Reconciliation (Forecast Prices and Costs)
|Oil Equivalent (Mboe)||Total
|Total Proved +
|Technical Revisions/Economic factors||1,010||725|
|Net Asset Value (“NAV”) (1)|
|As at December 31, 2012|
|P+P reserves (pretax 10% discount rate)||247,943|
|Undeveloped land (2)||52,226|
|Stock option proceeds (3)||7,560|
|Net asset value estimate, December 31, 2012||284,427|
|Net asset value estimate per diluted share, December 31, 2012 (4)||$||4.24|
|(1) The NAV calculation is based on the Company’s December 31, 2012 reserves report prepared by Sproule using|
|forecast future prices and costs as at December 31, 2012. The value is a snapshot in time and is based on various|
|assumptions, including commodity prices and foreign exchange rates that vary over time. It should not be assumed|
|that the NAV represents the fair market value of TriOil shares.|
|(2) Seaton Jordan evaluation using a total net undeveloped acreage number of 91,978 at an average price of $568 per acre.|
|The Lochend portion of the total net undeveloped acreage number is based on Cardium ‘A’ status only.|
|(3) Proceeds from 3,143,500 in the money stock options based on a closing share price on December 31, 2012 of $2.99 per share.|
|(4) Based on 67,125,564 outstanding shares on a fully diluted share basis|
|Finding Development and Acquisition (FD&A) Costs|
|2012||Three year average|
|Total Proved||Proved plus
|Total Proved||Proved plus
|2012 Capital Expenditures ($000s)|
|Exploration and development expenditures||94,963||94,962||163,333||163,333|
|Acquisitions net of dispositions||(6,013)||(6,013)||2,952||2,952|
|Non cash acquisitions||–||–||65,986||65,986|
|Total finding and development expenditures||118,654||118,653||273,465||273,465|
|Change in FDC||46,457||59,680||112,459||150,872|
|Change in FDC, excluding acquired/disposed||51,120||64,343||96,350||119,478|
|2012 Reserve Additions (mboe)|
|Acquisitions net of dispositions||(289)||(449)||3,432||5,624|
|F&D Costs ($/boe)|
|Excluding FDC, land and major facilities||12.68||8.49||16.92||10.93|
|Including FDC, excluding land and major facilities||19.50||14.25||26.90||18.93|
|FD&A Costs ($/boe)|
|Excluding FDC, land and major facilities||12.35||8.29||17.75||11.30|
|Including FDC, excluding land and major facilities||18.80||13.85||26.34||18.63|
(1) F&D costs in 2011 were $111.00 per BOE proven and $36.86 per BOE P+P, including technical revisions and change in FDC. Excluding technical revisions and including change in FDC, F&D costs in 2011 were $33.09 per BOE proven and $21.37 per BOE P+P.
The following are summaries of Sproule’s estimated FDC required to bring proved and probable undeveloped reserves on production.
|Future Development Capital Costs|
|(amounts in $000s)||Total Proved||Total Proved +
|2016 and subsequent||14,329||23,420|
|Total undiscounted FDC||113,623||154,041|
TriOil is a publicly traded junior oil resource player in Western Canada. Substantial land positions have been acquired on early stage light oil resource opportunities to capitalize on improvements in horizontal drilling and multi-stage fracture stimulation technologies, specifically targeting opportunities in the emerging Cardium and Dunvegan oil trends in Alberta. TriOil has successfully executed its business plan and has positioned the Company for solid growth in production, reserves and shareholder value.
TriOil trades on the TSX Venture Exchange under the symbol “TOL”. As of April 1, 2013, there were approximately 64.0 million shares issued and outstanding (70.0 million fully diluted).
Forward Looking Statements
This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “believe”, “plans”, “intends”, “confident”, “may”, “objective”, “ongoing”, “will”, “should”, “project”, and similar expressions are intended to identify forward-looking information. More particularly, this document contains forward looking statements which include, but are not limited to, expected future drilling and completion plans, expected capital expenditures, expected production and reserves growth, expectations of TriOil delivering strong, multi-year per share growth, timing of completion of the Lochend oil Battery, expectations of the effect of drilling and completion programs on productivity, recoveries and costs and the future operations of TriOil.
The forward-looking statements contained in this document are based on certain key expectations and assumptions made by TriOil, including with respect to the anticipated exploration and development opportunities and the outlook for the fiscal year ending December 31, 2012, expectations and assumptions concerning the success of future exploration and development activities, production guidance, the performance of new wells and drilling and completion programs, prevailing commodity prices and the availability of additional capital if and when required by the Company.
Although TriOil believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because TriOil can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy the conditions to closing the transaction, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in TriOil’s Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com and TriOil’s other public disclosure documents which have been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and TriOil undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Finding and Development (“F&D”) Costs
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 F&D costs related to reserve additions for that year.
This document contains the terms “funds from operations”, “net debt” and “operating netback”, which do not have a standardized meaning prescribed by Canadian Generally Accepted Accounting Principles (“GAAP”) and therefore may not be comparable with the calculation of similar measures by other companies. Management uses funds from operations to analyze operating performance and leverage. Management believes “net debt” is a useful supplemental measure of the total amount of current and long-term debt of the Company. Mark-to-market risk management contracts are excluded from the net debt calculation. Management believes “operating netback” is a useful supplemental measure of the amount of revenues received after royalties and operating and transportation costs. Additional information relating to these non-GAAP measures, including the reconciliation between funds from operations and cash flow from operating activities, can be found in the MD&A.
Meaning of BOE
The term “BOE” may be misleading, particularly if used in isolation. A BOE conversion 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. All BOE conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE: TriOil Resources Ltd.